CN and CP quietly posted strong results

Grain and intermodal were among strong sectors as the railways enhanced their networks

CN and CP’s financial and operating results for the second quarter both made records.

Canada’s two major railways have quietly gone about their business in the past year, turning in strong financial performances and building up their networks, even as economic storm clouds gather.

They overcame wicked winter weather to record a record grain haul for the crop year ending July 31. As of September, they were still enjoying overall traffic increases of about two per cent compared to the same period last year while American railroads were suffering traffic drops.

CN and CP’s financial and operating results for the second quarter ended June 30 were both records. CN revenues increased by nine per cent to $3.96 billion while CP rose 13 per cent to $1.98 billion compared to last year.

The growth in grain shipments came despite the restrictions on Canadian canola exports to China. CN moved more than 27 million tonnes, bettering its previous best of 26 million tonnes set in 2016-17. CP hauled 26.8 million tonnes breaking its record set last year.

CN, which has been celebrating its 100th anniversary, went into the second half of the year optimistic “while maintaining our vigilance on costs,” said president and CEO JJ Ruest. “Our focus on delivering profitable growth and advanced technologies to modernize our scheduled railroading model is expected to continue driving long-term value creation for our shareholders.”

Keith Creel, CP’s president and CEO, said the railway has seen revenue growth across every line of business. “As has been proven time and again, our operating model can perform well in all economic conditions and we will remain disciplined in controlling our costs and doing what we said we would do. Our strategy for sustainable, profitable growth is working and we look forward to a strong finish to 2019.”

Among CN’s business building developments this year are agreements to extend commercial relationships with container lines Evergreen and Cosco. As well, ZIM began a weekly call at Prince Rupert’s Fairview Container Terminal.

CP announced a three-year agreement to handle all Yang Ming’s containers through Vancouver starting Jan. 1, 2020 as well as an extension of its long-term agreement with Hapag-Lloyd covering the ports of Montreal and Vancouver. The moves will benefit all of CP’s container movements in and out of the Deltaport Global Container Terminal.

In October, CN will launch a new intermodal service in partnership with CSX connecting its greater Montreal and southern Ontario network with the ports of Philadelphia and New York-New Jersey along with the New York City metropolitan area. CN also acquired CSX’s line between Valleyfield and Woodard, N.Y. opening new freight possibilities.

Federal infrastructure support of $153.7 million was awarded to the Port of Prince Rupert for several projects including the building of a double-track rail bridge across the Zanardi Rapids to increase rail capacity in and out of the port. Other projects include additional rail capacity for bulk and container facilities on Ridley Island and better container handling facilities in other parts of the port.

Meanwhile a $20-million investment from the National Transportation Corridors Fund will enable CN to twin about 5.6 kilometres of track near Abbotsford, B.C. the last section of single-track rail line leading into the Port of Vancouver. That development will reduce bottlenecks and improve capacity and fluidity to the port’s facilities.

CN also signed a new multi-year agreement with General Motors for the transportation of finished vehicles and assembly parts. GM will also be the first customer to use CN’s new automotive compounds in Vancouver and in Minneapolis.

CP opened its new Vancouver Automotive Compound (VAC) on 19 acres of CP-owned land adjacent to its Vancouver Intermodal Terminal for North American-made motor vehicle distribution in British Columbia, northern Washington state and parts of Alberta, as well as vehicles imported through the Port of Vancouver. The facility will be able to handle 168,000 vehicles annually.

With the Deltaport Rail Expansion Project now complete, CP and its customers will continue to benefit from increased capacity and production. Since 2016, CP has steadily increased its market share at Deltaport and will now become the largest rail provider at the terminal. CP says its intermodal franchise has the lowest on-dock dwell and best on-time performance at the Port of Vancouver, ensuring faster end-to-end transits for shippers.

CP has deployed a new yard logistics system that automates yard processes and supports real-time inventory reporting to give customers better visibility of their shipments. It also strengthens CP’s damage prevention processes by enabling immediate uploading of inspection images. This new system was introduced in Vancouver and is being rolled out to all CP automotive compounds.

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