Shipping via highway has become more difficult thanks to increased congestion, higher costs for fuel, shortages of drivers, and increased regulation of motor carriers. According to Intermodal Association of North America CEO Joni Casey, America’s rail companies have stepped in to fill the void by developing world-class efficiency. From 2000 to 2013, intermodal freight volumes increased over 50%.
Over the last two years, intermodal has driven growth at Union Pacific (UNP). New rules shortening how long truckers can drive per day increase the attractiveness of rail shipping in comparison. Union Pacific’s new Santa Teresa facility in New Mexico is going to be a major hub for intermodal traffic to and from Mexico. Santa Teresa is a critical link between the shipping hubs of Los Angeles on the West Coast and Houston on the Gulf Coast and Fort Worth, Texas in the middle, where the Fort Worth Alliance Airport, the world’s first 100% industrial airport designed for cargo and corporate aviation, is located. Eventually, the Santa Teresa facility may even be linked to Mexican railways, further increasing traffic on UP’s tracks.
My relative strength chart shows that Union Pacific has beaten the S&P by nearly 80% over the last five years and built a powerful trend of outperformance. Buy shares today.
Richard C. Young, Richard C. Young’s Intelligence Report, www.intelligencereport.com, 800-301-8968, August 2014
