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BNSF Railway’s Intermodal Volumes: Containers Surge, Trailers Lag

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Mar. 28 2017, Updated 2:05 p.m. ET

BNSF Railway’s intermodal volumes

In the 11th week of 2017, BNSF Railway’s (BRK-B) overall intermodal traffic rose 6.7% on a YoY (year-over-year) basis to over 93,000 containers and trailers, up from over 87,000 containers in the corresponding week of 2016. The company’s container volumes rose 7.8% to slightly less than 83,000 containers in the 11th week of 2017.

However, BNSF’s trailer volumes fell 1.5% YoY (year-over-year) to ~10,000 trailers. The company’s rise in intermodal traffic was far higher than the overall rise reported by US railroad companies in the same category.

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Why is intermodal traffic 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. This segment accounted for ~31% of BNSF’s total revenue in 2015.

The company’s share of Western US rail traffic in 2016 was slightly less than 50%. BNSF handles 1 million more intermodal units every year than any other Class I railroad company, and its intermodal volumes represent nearly 50% of its business portfolio.

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. 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 could consider the WisdomTree Earnings 500 ETF (EPS). All US-born Class I railroad companies are included in its portfolio.

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

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