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Understanding Union Pacific’s Intermodal Volumes versus the Industry’s

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UNP’s latest intermodal volumes

Union Pacific’s (UNP) overall intermodal volumes in the week ended July 8, 2017, showed a marginal loss. The company hauled nearly 60,000 containers and trailers in the 27th week of 2017, almost matching its volumes during the same week last year.

Normally, trailers account for less than 5% of intermodal volumes for Union Pacific, but trailers reported a 9.3% rise in volumes to 2,300 trailers, compared with 2,100 trailers last year. Container volumes were 0.4% lower YoY (year-over-year).

Overall US railroad intermodal traffic rose 3.7% last week, but Union Pacific posted a slight volume loss in this category. The company’s decline in intermodal volume comes in contrast with the gain seen by rival BNSF Railway (BRK-B) last week.

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UNP’s intermodal volumes for the first 27 weeks

Union Pacific saw a mere 1% rise in overall intermodal volumes in the first 27 weeks of 2017. But US railroads, according to the AAR (Association of American Railroads), posted a 2.7% volume gain during the same period.

UNP’s containers, which account for ~95% of its intermodal volumes, reported volume gains of 1% in the first 27 weeks of 2017, while its trailer traffic contracted by 2%.

Union Pacific also competes with major trucking companies (JBHT) (SWFT) in the intermodal space. Due to moderate fuel prices, truck intermodal has an edge over rail intermodal, even in long-haul networks, and this has impacted intermodal growth for railroads like Union Pacific over the past few quarters.

ETF option

Unlike railroads, which are organized, the trucking industry is scattered. Investors interested in transportation stocks can opt for the iShares US Industrials ETF (IYJ), which has a stake in major US railroads (CSX) and airlines (JBLU).

In the next part, we’ll update BNSF Railway’s (BRK-B) railcars.

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