CSX Corp.
(
CSX
), one of the leading North American railroads, has begun
operations on New England's first double-stack cleared intermodal
route between N.Y. and Worcester, Mass. The new service is
expected to reduce transit time by almost a day and benefit
customers in central New England.
Given the growing importance of rail intermodal, rail
infrastructural development has been at the focus of all
investments undertaken by the railroads. In 2012, another major
railroad,
Norfolk Southern Corporation
(
NSC
) sought expansion plans worth $2 billion within its
territory.
Norfolk's expansion strategies were fueled mostly by the
development of the energy sector, including the gas exploration
projects in Marcellus and Utica shale plays as well as ventures
associated with coal and power generation. Over the coming years,
it plans to introduce 32 energy-related projects in 14 states
under it service areas.
Coming back to the recent development, besides CSX, rail
freight carriers like
Canadian National Railway Company
(
CNI
) and
Canadian Pacific Railway Limited
(
CP
) have also shown significant activities in terms of terminal and
capacity developments. While Canadian National collaborated with
Indiana Rail Road Company to set up an intermodal terminal in
Indianapolis, Canadian Pacific started operations in its latest
intermodal terminal at Saskatchewan's Global Transportation Hub
in Regina.
All these recent events only lead to the fact that railroads
are experiencing increased growth in their intermodal services.
We expect all these investments to remain accretive over the long
term, supporting volume growth. However, given the current
economic backdrop, these investments can likely weigh on the
margins in the foreseeable future until there is a significant
improvement in the market fundamentals that will drive revenues
upward.
Currently, CSX Corporation has Zacks Rank #5 (Strong Sell)
rating. Other railroad stocks -Norfolk Southern, Canadian
National and Canadian Pacific - retain a Zacks Rank #3
(Hold).
CDN NATL RY CO (CNI): Free Stock Analysis
Report
CDN PAC RLWY (CP): Free Stock Analysis Report
CSX CORP (CSX): Free Stock Analysis Report
NORFOLK SOUTHRN (NSC): Free Stock Analysis
Report
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