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Intermodal Weakness Hurts Canadian National’s Rail Traffic

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CNI’s rail traffic fell

In Week 21, Canadian National Railway’s (CNI) total traffic volumes inched down 0.5% YoY (year-over-year) to 112,176 railcars from 112,694 railcars. Six out of seven Class I railroad companies reported YoY declines in their freight rail traffic during the week.

BNSF Railway recorded the highest fall of 7%, while Canadian Pacific Railway (CP) was the only gainer with volume growth of 2.3%.

The YoY decrease in CNI’s Week 21 rail traffic was mainly the result of a 1.4% decline in its intermodal volumes. The company hauled 47,471 containers and trailers during the week compared to 48,134 units in Week 21 of 2018. Five out of seven Class I railroad companies recorded intermodal volume declines during Week 21. CSX (CSX) registered the highest fall of 13%. Kansas City Southern (KSU) and CP were the only two companies to record intermodal volume gains, rising 2.4% and 1.8%, respectively.

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Carload traffic grew

CNI’s carload traffic inched up 0.2% YoY to 64,705 railcars in the week from 64,560 railcars in Week 21 of 2018. The company’s carload traffic excluding coal and coke decreased 2.1% YoY to 58,042 railcars from 59,306 railcars. However, its coal and coke traffic grew 26.8% YoY to 6,663 units from 5,254 units in Week 21.

The company recorded volume growth across the petroleum, chemicals, nonmetallic minerals, metallic ore, and automotive commodity groups. It registered volume declines across forest products, metals, and iron and steel scrap products.

Five out of seven Class I railroad companies recorded carload traffic declines in the week. Norfolk Southern (NSC) recorded the highest carload traffic decline of 7.9%. Apart from CNI, CP recorded carload volume growth of 2.6%.

CNI stock has gained 20.5% year-to-date, outperforming the returns of the SPDR S&P Transportation ETF (XTN), which is up 7.1%. The ETF invests in US transportation companies and has allocated 42.8% of its funds to the freight and logistics services industry.

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