CSX’s intermodal volumes
In recent weeks, CSX’s intermodal traffic had been on an upward path. However, in the week ended March 4, 2017, CSX’s (CSX) total intermodal traffic dropped 3.2%. Overall intermodal volumes reached ~55,000 as compared to 57,000 units in the week ended March 5, 2016. Trailer volumes saw a double-digit fall of 7.4%.
The percentage fall in CSX’s overall intermodal traffic contrasted with the rise reported by rival Norfolk Southern (NSC) during the period. In the ninth week of 2017, the percentage fall in CSX’s intermodal traffic was in line with the 2.3% fall reported by US railroads.
Why intermodal matters for CSX
Key corridors such as I-95, I-90, and some Southeastern US corridors drive growth in merchandise and intermodal volumes. CSX expects a 95% clearance at the end of 2016 for its double-stack container traffic on the East Coast. CSX’s 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 for intermodal business growth. The company expects some short-haul volume losses in the domestic intermodal space over the next few quarters.
However, for 2017, the company is hopeful that the implementation of trucking regulations such as the electronic logging device will tighten truck capacity. These regulations could lead to higher intermodal volumes going forward.
Railroads (GWR) are four times more fuel efficient than trucks (JBHT), and about half of US rail intermodal volume consists of imports and exports. Railroads are also more environmentally desirable than truck freight transport, 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 railroads are included in MOAT’s portfolio.
If you want to compare this week’s freight volume data with the previous week’s, check out Market Realist’s US Freight Traffic Takes the High Rail: Week Ended February 25.
Continue to the next part of this series for a look at Union Pacific’s (UNP) railcar traffic.