CSX’s intermodal volumes
In recent weeks, CSX’s (CSX) intermodal traffic has been almost flat. In the week ended April 29, 2017, its intermodal volumes rose 3%. Overall intermodal volumes reached 54,000, compared with 53,000 units in the week ended April 30, 2016. Trailer volumes stood at 1,900 units, 5.4% lower than last year. In the 17th week of 2017, CSX’s intermodal volumes were lower than rival Norfolk Southern’s (NSC) and similar to the figures reported by US railroad companies overall.
Why intermodal volumes matter to CSX
Key corridors such as the I-95, I-90, and certain southeastern US corridors drive growth in merchandise and intermodal volumes. CSX expects 96.0% clearance for its double-stack container traffic on the East Coast by the end of 2017. Its new Carolina Connector terminal is expected to provide hub connectivity to additional lanes in the mid-Atlantic market.
For CSX, excess truck capacity is a deterrent to intermodal business growth. The company expects some short-haul volume losses in the domestic intermodal space over the next few quarters. It’s hopeful that the implementation of trucking regulations, such as the use of electronic logging devices, could tighten truck capacity. These regulations could lead to higher intermodal volumes in the future.
Railroad companies (GWR) are four times more fuel-efficient than trucks (JBHT). About half of US rail intermodal volumes consist of imports and exports. Railroads are also more environmentally desirable than truck freight transportation, given the latter’s heavy reliance on highways.
If you prefer broad-based exposure to the transportation space, you could consider the VanEck Vectors Morningstar Wide Moat ETF (MOAT). All major US-originated railroad companies are included in MOAT’s portfolio. In the next part of this series, we’ll look at Union Pacific’s (UNP) freight volumes and trends.