Yahoo Finance Union Pacific’s Intermodal Traffic Slumps More than BNSF’s
North American Rail Traffic Saw Double-Digit Slump
Union Pacific’s intermodal traffic
In the week ended May 7, 2016, Union Pacific’s (UNP) overall intermodal units fell by 16% compared with the corresponding period in 2015. While trailer traffic went down by 39.1%, container traffic fell by 14%. Container traffic went down from 77,000 containers to 66,000 containers on a year-over-year basis. In the latest reported week, UNP’s fall in intermodal volume was four times more than the 15.3% fall in overall US intermodal volumes.
Why is intermodal important to UNP?
For all the Class I railroads like Union Pacific, intermodal growth has assumed significance since energy commodity headwinds began. UNP’s intermodal volumes accounted for 38.4% of total volumes while intermodal revenues contributed nearly 20% in fiscal 2015.
The company’s intermodal volumes are specifically impacted by the pace of transpacific trade in the Chinese market. The other factors include retail stockpiles and retail demand. Higher stockpiles and lower demand negatively impacts all railroad’s intermodal traffic. Railroads’ intermodal segments compete with long-haul trucking companies like J.B. Hunt (JBHT), Swift Transportation (SWFT), Knight Transportation (KNX), Hub Group (HUBG), and XPO Logistics (XPO).
UNP has a 26% stake in Ferrocarril Mexicano (or Ferromex). Ferromex is in charge of the railway that connects with Manzanillo. Thus, UNP has an asset in Mexico in the form of access to the port of Manzanillo.
The transportation and logistics sector forms part of the industrial sector. The ProShares Ultra S&P 500 ETF (SSO) invests ~7.6% in the industrial sector.
For more information on the previous week’s rail traffic, visit Market Realist’s Week Ended April 30: North American Rail Traffic Falls, Mexico Up.
In the next part of this series, we’ll go through UNP rival BNSF Railway’s (BRK-B) rail traffic.
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