CN officials say they're overcoming capacity pinch-points

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A Chicago-bound Canadian National intermodal train passes a CN hopper train stopped on a siding near Theresa, Wis., in November 2017.
TRAINS DRONE: Steve Sweeney
NEW YORK — Canadian National is in a better position to handle a growing North American economy because it continued investing in infrastructure during the traffic downturn last year, its chief financial officer says.

CN is capacity-constrained on its main line linking Edmonton, Alberta, and Chicago due to stronger-than-expected traffic growth, primarily shipments of intermodal and frac sand.

The railroad accelerated capital projects to ease some pinch points before winter set in, Chief Financial Officer Ghislain Houle told the Credit Suisse Industrials Conference last week. These include siding extensions and connecting sidings to form double-track; yard bypasses and frac sand support-yard expansions in Wisconsin; and adding track and cranes to intermodal terminals in Toronto.

CN will have more projects shovel-ready when spring arrives, and has ordered turnouts and other equipment so it will be ready to go as soon as the ground thaws, he says.

CN has the best long-siding network in the industry, Houle says, with 188 sidings across the system that can handle trains of 10,000 to 12,000 feet. It was smart to continue extending sidings when traffic fell in 2016, he adds, noting that some analysts were critical of the railway’s capital spending during a downturn.

The addition of crews, power, and yard and mainline capacity will help CN improve service and return key operating metrics to normal by the middle of 2018, officials say.

But CN will continue to boost capacity because its goal is to grow faster than the overall economy.

“All boats rise with the tide. You’d like to do better than what the tide gives you,” CN Chief Marketing Officer Jean-Jacques Ruest told the RailTrends 2017 conference last week.

CN is certainly outperforming the economy at its Western Canadian ports of Vancouver and Prince Rupert, B.C.

The Prince Rupert container-port expansion, completed in the fall, boosted capacity by 60 percent, to 1.35 million twenty-foot equivalent units. CN and its port partners expected the expanded container-port to operate at 80 percent of capacity by 2020.

It’s already at 75 percent, Houle says, as Prince Rupert container traffic grew 36 percent in the third quarter.

A recently completed containerport expansion at Vancouver’s Delatport helped drive a 29-percent rise in CN’s intermodal traffic at Canada’s largest port, where it handles 70 percent of container shipments.

Prince Rupert, served only by CN, also is expanding to handle bulk export commodities, including propane, polyethylene, and grain and other agricultural products.

CN and Canadian Pacific historically have split the Canadian grain crop equally. But last year, CN had a 52 percent share of the Canadian grain market, Houle says, and is eyeing a 55-percent share by 2020.

Of the 20 high-throughput grain elevators on the drawing board in Canada, 15 or so will be built alongside CN lines, he says. The elevators will feature 105-car loop tracks that allow CN power to hook up, double the train, and depart for export with a monster, 210-car consist.

CN also expects to grow its automotive, frac sand, coal, and plastics and chemicals traffic, railway executives say.

“We’re pretty bullish about the next two to three years,” Houle says.

Information technology, along with other technology-related improvements, will take up more and more of CN’s capital budget in the next few years.

CN is in the midst of a four-year project to bring together various information technology systems that will provide intermodal customers with better information about their shipments, wherever they are in the supply chain.

The $250 million Enable project, as it’s called, will make it easier to do business with CN and should accelerate intermodal growth, Ruest told RailTrends 2017, a conference sponsored by analyst Anthony Hatch of ABH Consulting and the industry trade publication Progressive Railroading.

NEWSWIRETrains News Wire

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