Canadian Pacific: Domestic Intermodal Lifts Its Volumes

Canadian Pacific (CP) has witnessed a steady rise in intermodal volumes for the past few weeks. In the week ended March 25, 2017, it reported a 13.7% rise in overall intermodal traffic. Domestic container and trailer traffic rose 22.8% to 9,000.

There was also a rise of 6.8% YoY (year-over-year) in CP’s international intermodal business. Its volumes reached ~10,500 containers and trailers, similar to the previous year’s level. In the week ended March 25, 2017, its intermodal traffic was similar to the overall trend of Canadian railroad companies.

Increased truck capacity in Canadian Pacific’s short-haul lane will likely result in tough competition in the domestic intermodal space. Since the company gets most of its domestic intermodal business from Canada, it will likely be heavily affected by growth in the Canadian economy.

The international intermodal business of Canadian Pacific consists of containerized traffic between the ports of Vancouver, Montreal, and New York. CP’s international intermodal growth is tied to capacity growth at these ports. Retail demand and the pace of transpacific trade with China also influence the international intermodal volumes of other Class I rail carriers (XLI).

Railroad companies’ intermodal segments compete with major US trucking companies such as JB Hunt Transport Services (JBHT), Old Dominion Freight Lines (ODFL), Swift Transportation (SWFT), and XPO Logistics (XPO).

The ProShares Ultra S&P 500 (SSO) invests ~7.6% in the industrial sector, which includes transportation and logistics.

If you want to compare this week’s freight volume data with the previous week’s, check out Market Realist’s Week Ended March 18: US Freight Rail Traffic Gains More Momentum. 

In this series, we looked at the freight rail traffic data of all Class I railroads for the week ended March 25, 2017, or the 12th week. For ongoing updates on major US railroad stocks, keep checking in with Market Realist’s Railroads page.