CN Cutting Workforce, Trains During Pandemic

Canadian National CEO J.J. Ruest provided a glimpse of how Class 1 railroads are scaling back operations in the wake of a falloff of freight traffic during the COVID-19 pandemic.

CN has furloughed more than a thousand workers and has reduced the number of trains that it operates.

It has closed its yard in Battle Creek, Michigan, because finished vehicle volume has dropped by 50 percent after major automakers closed their plants to prevent the spread of coronavirus.

Speaking during a webcast hosted by Citibank analyst Christian Wetherbee, Ruest said CN carload traffic fell 13 percent with automotive traffic, crude oil shipments, and frac sand in particular showing declines.

CN continues to enjoy strong volumes of Canadian grain, Canadian export coal, propane, and domestic intermodal traffic.

Ruest said overall volume will continue to diminish in the coming weeks as factories close or reduce production and consumers cut their spending.

At the same time, Ruest said CN wants to be ready when traffic returns although he said there is much uncertainty over when that will occur.

CN plans to open a sixth dispatching office, which it calls a rail traffic control center, in order to minimize the risk of COVID-19 affecting operations.

The Montreal-based carrier has had some difficulty purchasing disinfecting products, Ruest said and has turned to making its own disinfectants in shops as well as having employees of its freight forwarding business in China buy disinfectants and send them to North America via air freight.

Chief Financial Officer Ghislain Houle said during the webcast that CN is likely to reduce capital spending this year but will continue with capacity expansion projects scheduled for its main lines to Vancouver and Prince Rupert, British Columbia, where intermodal and coal traffic are expected to rise.

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