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Behind Norfolk Southern’s Intermodal Volumes in Week 24

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Norfolk Southern’s intermodal traffic

Norfolk Southern’s (NSC) overall intermodal traffic rose 6.8% in the week ended June 17, 2017. The company’s intermodal volumes reached ~80,000 containers and trailers, compared to ~75,000 in the previous year. 

A further breakdown reveals that NSC’s container traffic rose 5.6% while its trailer traffic rose 19% YoY (year-over-year). The company moved ~7,500 trailers in week 24, compared to ~6,300 trailers in the same week in 2016.

NSC’s intermodal growth was higher than the growth reported by other US railroad companies in week 24. In fact, the company’s intermodal growth in the reported week was much higher than that of its close competitor CSX Corporation (CSX).

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Norfolk Southern’s intermodal business

In recent quarters, intermodal business growth was a major thrust for Norfolk Southern, mainly due to its weakening coal business and its shrinking coal volumes. NSC’s intermodal revenue rose 9% to $571.0 million in 1Q17, compared to the same period in the previous year.

Volume growth in East Coast ports has been fueling Norfolk Southern’s intermodal traffic. NSC’s restructuring of its TCS (Triple Crown Services) to focus more on automotive and parts (TSLA) has also boosted its overall intermodal volumes in 2017.

Investing in ETFs

Railroad companies form part of the transportation sector, a subgroup of the industrial sector. Investors who want indirect exposure to transportation stocks can invest in the First Trust Industrials/Producer Durables AlphaDEX ETF (FXR). FXR’s portfolio holdings include major US airlines (JBLU) and prominent railroad companies (UNP).

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