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Inside CSX’s Intermodal Traffic in Week 19

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CSX’s intermodal volumes

In recent weeks, CSX Corporation’s (CSX) intermodal traffic has been almost flat. In the week ended May 13, 2017, its intermodal volumes rose 2.8%. Overall, its intermodal volumes reached 55,300, compared to 53,800 units in the week ended May 14, 2016. Its trailer volumes stood at 1,900 units, 3.8% lower than last year.

In the 19th week of 2017, CSX’s intermodal volumes were lower than rival Norfolk Southern’s (NSC) volumes and the figures reported by US railroad companies overall.

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Why intermodal volumes matter to CSX

Key corridors such as the I-95, the 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, including the use of electronic logging devices, could tighten truck capacity. These regulations could lead to higher intermodal volumes.

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.

ETFs

If you prefer broad-based exposure to the transportation space, you may want to 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.

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