One of the leading rail freight carriers,
) has started construction of its Quebec Intermodal terminal,
which is expected to begin operations in 2015. The $107 million
project is expected to facilitate CSX in tapping business
opportunities from shippers resorting to intermodal rail between
Montreal and Quebec City.
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Given the growing importance of rail intermodal, rail
infrastructural development has been the focus of all investments
undertaken by the railroads. In 2012, another major railroad,
Norfolk Southern Corp
), 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 its service areas.
Coming back to the recent development, apart from CSX, rail
freight carriers like
Canadian National Railway Co
Canadian Pacific Railway Ltd
) have also undertaken terminal and capacity development. 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 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 until
there is a significant improvement in market fundamentals that
will drive revenues upward.
Currently, CSX Corporation has Zacks Rank #3 (Hold) rating.