14 Feb

BNSF Railway’s Intermodal: Your Industry Comparison

WRITTEN BY Samuel Prince

BNSF Railway’s intermodal traffic

In the fifth week of 2017, BNSF Railway’s (BRK-B) container traffic rose 6.2% on a YoY (year-over-year) basis, to more than 90,000 containers, up from ~85,000 containers in the same week of 2016. Trailer volumes rose 3.8% to ~11,000 trailers. BNSF’s percentage rise in intermodal traffic doubled the rise reported by US railroads.

BNSF Railway’s Intermodal: Your Industry Comparison

Why is intermodal important to BNSF?

BNSF Railway’s domestic and international intermodal operations are part of its Consumer Products Freight business. The business also includes automotive freight. It’s worth noting that this segment accounted for ~31% of BNSF’s total revenue in 2015.

The company’s share of Western US rail traffic in 2015 was ~50%. Notably, BNSF handles a million more intermodal units every year than any other Class I railroad, and intermodal represents nearly 50% of BNSF’s business portfolio by volume.

BNSF’s intermodal competition

BNSF Railway faces tough competition from truckers such as J.B. Hunt Transport Services (JBHT) and Swift Transportation (SWFT) in the intermodal space. Remember, intermodal volumes are impacted by seasonality, highway-to-rail conversions, and access to certain high-traffic ports.

If you’re interested in the transportation space, you may want to invest in the Wisdom Tree Earnings 500 ETF (EPS). All US-born Class I railroads are included in the portfolio holdings of EPS. Investors interested in comparing this week’s freight volume data with the previous week should check out Market Realist’s Your Freight Rail Traffic for the Week Ended January 28.

In the next part, we’ll take a look at the carloads of the smallest US Class I railroad, Kansas City Southern (KSU).

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