Which US Railroad Posted Highest Intermodal Revenue Growth in 2Q17?


Sep. 14 2017, Updated 10:39 a.m. ET

Intermodal revenue

In this section, we’ll turn to intermodal, another major segment for US railroads. The intermodal business involves cargo movement in an intermodal container using various transportation modes like ship, rail, and truck. The US railroads’ (XLI) intermodal segment mainly competes with trucking companies.

In recent quarters, intermodal revenues assumed considerable importance due to weakness in revenues from hauling energy commodities.

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Eastern US railroads’ intermodal revenue

Major Eastern US railroad, Norfolk Southern (NSC), recorded the second-highest rise in 2Q17 intermodal revenues. The company said revenues jumped 10% to $593.0 million from $538.0 million in last year’s second quarter. The steady pace of highway-to-rail conversions coupled with new shipping partners on the East Coast boosted NSC’s intermodal revenues.

CEO Hunter Harrison led CSX (CSX) with a 7% rise in its 2Q17 intermodal revenues to $448.0 million from $419.0 million in the corresponding quarter last year. New customer additions in international intermodal along with the sustained growth of highway-to-rail conversions pushed CSX’s intermodal revenues.

Canadian National Railway (CNI) topped the peer group in intermodal revenue growth in 2Q17. Said revenues rose 17% to $815.0 million Canadian dollars from $697.0 million Canadian dollars in the same quarter last year. Increased domestic retail volumes along with higher traffic at the ports of Prince Rupert, Halifax, Vancouver, and Montreal led the rise. Competitor Canadian Pacific Railway’s (CP) same-segment revenues rose 8% in 2Q17 to $338.0 million Canadian dollars from $314.0 million Canadian dollars a year earlier.

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The US’s largest short-line operator, Genesee & Wyoming (GWR), recorded a sharp fall in 2Q17 intermodal revenues. GWR’s intermodal revenues fell 9% to $78.2 million from $85.9 million in the second quarter last year. Even after acquisitions in Europe, the company’s revenues fell in the reported quarter.

Kansas City Southern (KSU) was the second railroad to report a 1% loss in 2Q17 intermodal revenues. Fierce competition from trucking companies in KSU’s Mexican operations resulted in the loss of intermodal business.

Western US railroads’ intermodal revenue

Omaha-headquartered Union Pacific’s (UNP) intermodal revenues rose 3% to $939.0 million in 2Q17 from $909.0 million in 2Q16. Inventory restocking and higher westbound volumes drove the international intermodal revenues for UNP.

The company’s prime competitor in the Western US, BNSF Railway (BRK-B) reported an 8.4% increase in intermodal revenues in 2Q17 to $1.7 billion. BNSF books intermodal revenues in the Consumer Products segment along with automotive revenues. Lower retail inventory stockpiles along with increased market share led to the rise in its intermodal revenues.

Next, we’ll go through these railroads’ volumes changes in 2Q17.


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