Norfolk Southern’s intermodal volumes
Norfolk Southern’s (NSC) total intermodal traffic rose a marginal 1.2% in the week ended April 22, 2017. Its volumes reached more than 74,000 containers. NSC’s container traffic rose a negligible 0.6%, although its trailers witnessed a rise.
NSC’s trailer traffic rose 7.0% YoY (year-over-year) to nearly 6,300 units in the week, compared to 5,900 units in the week ended April 23, 2016. Since the beginning of 2017, Norfolk Southern’s overall intermodal traffic has risen 3.2% YoY compared to US railroad companies overall.
Why is intermodal traffic vital for NSC?
NSC’s rise in trailer volumes appears to mark the end of its hardship due to its restructuring of TCS (Triple Crown Services), its underperforming subsidiary. NSC has been shifting shippers to other intermodal lanes. The restructured TCS aims to focus on specific merchandise such as auto parts (TM).
Norfolk Southern expects its truck capacity (JBHT) to tighten during 2H17. It also anticipates that its implementation of fixing ELDs (electronic logging devices) in trucks will result in service issues, paving the way for railroad intermodal to benefit from the situation.
In addition, the inventory-to-sales level has fallen to its lowest point since 2014, according to Norfolk Southern. Such a fall should boost its intermodal volumes in the coming quarters.
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In the next article, we’ll look at the freight volumes of Norfolk Southern’s primary rival, CSX Corporation (CSX).