Posts Tagged ‘Canadian National’

CN Net Income Up 20% in 2nd Quarter

July 29, 2017

Canadian National said that its net income rose 20 percent in the second quarter of 2017 due to strong volume growth across most commodity groups.

The company reported net income of CA$1.03 billion or CA$1.36 diluted earnings per share, compared with CA$858 million, or CA$1.10 diluted EPS, during the second quarter of 2016.

Revenue rose 17 percent to CA$3.3 billion, carloadings increased by 14 percent and revenue ton-miles gained 18 percent compared with the same period in 2016.

In a news release, CN attributed its revenue increases to higher volumes across several sectors, including Canadian grain and fertilizers, overseas intermodal traffic, frac sand, coal and petroleum coke exports, crude oil, and finished vehicles.

Another factor was higher fuel surcharge rates, freight rate increases and the positive translation impact of a weaker Canadian dollar.

Compared with 2016, revenue was up 33 percent for metals and minerals, 33 percent for coal, 23 percent for grain and fertilizers, 20 percent for automotive, 17 percent for intermodal, 12 percent for petroleum and chemicals, and 6 percent for forest products.

Operating expenses rose 18 percent to CA$1.8 billion compared with a year ago.

CN posted an operating ratio of 55.1 percent for the quarter, an increase of 0.6 points over the prior-year quarter.

“Once again, CN delivered solid quarterly performance with strong volume growth across most commodity groups, building on the momentum started in the fourth quarter of 2016,” said President and CEO Luc Jobin in a statement. “Our team of railroaders remained focused on balancing operational and service excellence while efficiently adjusting to the growing demand.”

In looking to the second half of 2017, Jobin said the period will present challenges due to a strengthening of the Canadian dollar.

The Montreal-based railroad said its goals for the remainder of 2017 includes an adjusted diluted earnings per share in the range of CA$4.95 to CA$5.10 compared with last year’s adjusted diluted EPS of CA$4.59.

Appeals Court Strikes Down STB On-Time Standards

July 18, 2017

Another federal court has struck a blow to the efforts of the U.S. Surface Transportation Board to establish on-time standards for Amtrak trains.

The Eighth U.S. Circuit Court of Appeals found the STB standards to be unconstitutional, saying that the STB had “exceeded its authority” in creating the standards.

The appeals court ruling came in the wake of a similar U.S. Supreme Court decision that development of on-time metrics by the Federal Railroad Administration and Amtrak as directed by Section 207 of 2008’s Passenger Rail Investment and Improvement Act was unconstitutional.

In the Eighth Circuit ruling, Chief Judge Lavenski R. Smith acknowledged that the absence of on-time standards would make it impossible for the STB to investigate or adjudicate disputes brought by Amtrak against its host railroads in the event that punctuality fell below 80 percent for two consecutive quarters.

However, the court in essence decided that the STB’s inability to measure on-time performance is not a problem for the judiciary to solve.

There are two cases pending before the STB in which Amtrak alleges that host railroads needlessly delayed Amtrak trains.

One case involves the handling by Canadian National of the Saluki and Illini between Chicago and Carbondale, Illinois, while the other regards Norfolk Southern’s handling of the Capitol Limited west of Pittsburgh.

In both cases, Amtrak contends that dispatching decisions made by the host railroads are delaying its trains.

The STB had contended that it had the legal right to establish on-time standards “by virtue of its authority to adjudicate complaints brought by Amtrak. Any other result would gut the remedial scheme, a result Congress clearly did not intend.”

Supporting the STB’s position were 13 intervenors, including the National Association of Railroad Passengers and its state affiliates, and the U.S. Conference of Mayors.

Challenging the on-time standards were Union Pacific, CSX, CN and the Association of American Railroads.

They argued that the “gap-filling rationale does not allow one agency to assume the authority expressly delegated to another.”

The court found that the only place in federal law where the 80 percent standard was spelled out was in section 207, which the Supreme Court ruled unconstitutional because Amtrak had a hand in developing it.

Although the court let stand Congress’ setting a statutory right of passenger train “priority” over freight trains, the practical effect of the court decision is that Amtrak has no way to challenge a host railroad’s systematic denial of that right.

Instead, the only motivation for railroads to keep Amtrak trains on time are the proprietary and confidential incentive contracts Amtrak has been able to negotiate with its host railroads pertaining to on-time handling.

The only action Amtrak can take against a host railroad would be to refuse to make incentive payments due to non-performance under the terms of its operating contract with a host railroad.

The court rulings do suggest that Congress could give the FRA a mandate to establish on-time standards provided that Amtrak was not a participant in the writing of those standards.

CN, INRD Continue Cooperative Ventures

June 6, 2017

The Indiana Rail Road and Canadian National continue to work together in moving freight with their latest cooperative venture being construction of a 16,000-foot interchange track in Newton, Illinois, to interchange intermodal and other freight.

The lines of both railroads run parallel west of Newton for three miles. Newton is the eastern terminus of CN’s Effingham District while it is the western end of the INRD line from Indianapolis.

Both rail lines were formerly owned by the Illinois Central.

Before expanding the siding, the only place for the two railroads to interchange freight was a 2,600-foot siding, which has become inadequate due to an increase in intermodal and carload traffic shared by the two railroads.

The expanded siding is also expected to be used by coal and grain traffic as well.

Since launching their joint intermodal service in July 2013, the “direct-to-Indianapolis” intermodal traffic has grown an average of 44 percent a year.

Container moves have grown from 12,500 in 2014 to 17,200 in 2015 to 26,100 units in 2016.

INRD is expanding its Indianapolis intermodal terminal located just south of downtown.

Major improvements at Canadian west coast ports are expected to drive more intermodal traffic growth to Indianapolis.

The Port of Prince Rupert, British Columbia, and the Vancouver Deltaport are currently being expanded.

Prince Rupert is the closest port to Asia and is 2.5  days sailing time closer than Los Angeles. Vancouver is 24 hours closer and is the fourth-largest port in North America.

The average transit time from major Asian ports to Indianapolis is 22 days via Prince Rupert and 24.5 days via Vancouver.

CSX, CP May Launch Run-Through Trains

May 29, 2017

CSX and Canadian Pacific are reportedly discussing ways to eliminate traffic congestion in Chicago, including creating run-through trains.

 “We’ve had some discussions with CSX operationally as well as commercially,” CP CEO Keith Creel said last week at an investor conference.
Noting that the talks are in the early stages, Creel said that the goal is to reduce transit time and improve service reliability.

CP currently relies on Norfolk Southern to move CP trains between Chicago and Detroit because CP does not have its own route from the east.

Stack trains cannot use the Windsor Tunnel beneath the Detroit River and CP has used CSX in recent years to move double stacked container between Chicago and Buffalo.

This puts CP at  competitive disadvantage against its chief rival Canadian National, which reaches Chicago over the former Grand Trunk Western and when can get through Chicago on the Elgin, Joliet & Eastern, which CN acquired in 2009.

CSX and CP interchange about 400 cars per day in Chicago, making CSX CP’s largest interchange partner railroad there.

Creel told the investor conference that 100 of those cars could be sent deep into CSX territory as a run-through train to avoid handling in Chicago. CSX could build trains destined for points on CP.

Cliffs Moving New Pellet Type by Rail

May 25, 2017

Cleveland-based Cliffs Natural Resources has begun shipping new “Mustang” flux taconite pellets via rail to ArcelorMittal’s Indiana Harbor Mill.

The iron ore is routed from Cliff’s United Taconite facility at Forbes via Canadian National’s foremer Duluth, Missabe & Iron Range dock in Duluth, Minnesota.

The Mustang flux pellets replace Viceroy taconite pellets previously produced at the Empire Mine near Marquette, Michigan, which closed in 2016.

Specially created for ArcelorMittal, the Mustang pellet uses a limestone binder during its production.

CN brings limestone from the Hallett Dock in Duluth to the plant to produce the Mustang pellets.

Cliffs invested $75 million for a new storage facility, silos, and a limestone crusher, conveyors, and rail infrastructure to support production of the Mustang pellet.

Work on the facility began in August 2016. About 40 percent of United Taconite’s production involves the Mustang pellets. About 60 percent of the plant production makes standard iron ore pellets.

IC, CP and an All Day Wait for NS 1074

May 6, 2017

Achieving my first objective of the day was easy. A Canadian National train with three Illinois Central locomotives showed up shortly after I arrived in Conneaut.

Last Sunday didn’t get off to a good start. I got up later than I expected or wanted.

I had toyed with the idea of leaving at 5 a.m. and trying to catch the eastbound Lake Shore Limited in Conneaut or North East, Pennsylvania.

But with the weather looking iffy, I didn’t want to get an early start only to have mostly cloudy skies. Catching No. 48 can wait for a better day.

Shortly before 7 a.m. someone posted on Heritageunits.com that the Lackawanna heritage locomotive of Norfolk Southern was leading the 14M at Wampum, Pennsylvania.

A quick online check of NS train symbols showed the 14M to be a Conway to Buffalo, New York, train.

How long would it take to get to Conneaut? I figured it to be a manifest freight that might work in Youngstown and even in Conneaut. Somewhere along the way it would need to change crews.

I didn’t get away until about 8:30. As I drove on I-90 past Carson Yard on the NS Youngstown Line south of Ashtabula I looked to see if the 14M was there. It wasn’t.

Once in Conneaut I headed north on Mill Street but nothing was sitting in the yard other than the usual yard power.

I got stopped at the CSX crossing by an eastbound ballast train. I parked in the lot for the Conneaut Historical Society across from the CSX Erie West Subdivision tracks.

I had three objectives for the day. Catch a train on Canadian National – the former Bessemer & Lake Erie – get the 14M and bag a pair of those Citirail units that CSX has been leasing of late.

There was no guarantee the Bessemer would be operating today from Conneaut, but there was  a good chance that it would and that it would have Illinois Central motive power.

The 14M looked like a good bet but bagging the Citirail units would be a long shot.

I set up my antenna, checked the frequencies on my scanner and waited. Less than two minutes later I heard a transmission on the B&LE channel. A train was working in the yard.

Over to the Main Street crossing I went. The B&LE channel got quiet for about 10 to 15 minutes before the switching moves resumed.

By now NS 316 had arrived in town and was working the yard. In the process they discovered they had a loaded car destined for Bellevue. Should they leave it in Conneaut or take it to Buffalo?

“Take it with you,” was the response of the Youngstown Line dispatcher.

It was getting to be late morning when Illinois Central 1034 and two sister IC units came out of the yard and poked their noses out beyond the NS trestle over Conneaut Creek.

The crew was wrapping up putting together its train. I was hoping to get the lead unit of the NS 316 crossing the trestle above IC 1034, but it was not to be.

The CN train had left town by the time the 316 ambled eastbound with Canadian Pacific No. 8917 on the point.

Under normal circumstances, I would have chased the CN train into Pennsylvania. But today I still had unfinished business. I returned to the historical society parking lot next to the CSX tracks.

It was about noon when I heard the Youngstown Line dispatcher make radio contact with the 14M.

The discussion occurred on the Youngstown Line frequency so 14M still had yet to reach Ashtabula.

Eastbound traffic on the former Nickel Plate Road mainline through Ashtabula was heavy, so the dispatcher agreed to recrew the 14M at Carson.

In the eastbound parade were intermodal trains 22K and 206 along with auto rack train 28N.

I didn’t bother to seek out the 22K or 206. Instead I focused on CSX for awhile.

An eastbound rail train came through around 12:30 p.m. that was followed by an eastbound stack train.

Shortly thereafter, a westbound monster freight, the Q393, slowly made its way through town with all 15,000 feet of it making all of 30 mph.

Welcome to the world of E. Hunter Harrison’s precision scheduled railroading.

I later heard the IH dispatcher tell another train he would do his best to get that train around the Q393, but it would be difficult.

Around 1:38 p.m. the Youngstown Line dispatcher talked with the 14M again. The new crew was on board and the train was on the move.

It must have moved slowly because by mid-afternoon it still wasn’t out of Ashtabula. It would follow train 310.

In the meantime, another story began playing out on NS. I had heard the dispatcher periodically tell the crew of westbound 287, an auto rack train, that it would be waiting in yet another siding for yet another eastbound.

The 287 must have been in and out of every siding between here and Buffalo.

Around 3 p.m. the dispatcher told the 287 it would have to go into the siding at PA for the 310 and the 14M. The latter was just now coming around the Buffalo connection in Ashtabula.

The 287 crew reminded the dispatcher it had been on duty since 5 a.m. But his brushed that aside saying they needed to take that up with the first trick dispatcher who was on duty “when that baby was born.”

I also learned that the 14M would be dropping off a locomotive at Conneaut. Less than 15 minutes later the dispatcher, his supervisor or the NS computer program that makes train dispatching decisions had a change of heart.

The 287 would come into Conneaut for a recrew. But the new crew would have the same experience the old crew old had, having to wait for opposing traffic. In this case it would mean waiting at the west end of Parish siding for the 310 and 14M.

It was getting to be late afternoon and I was getting impatient. Where was the 14M?

I decided to go look for it. I drove out to Parish Road on the west side of Conneaut, parked and walked up onto the bridge.

But there was no sign of the 14M and the signal at the west end of the yard for eastbounds was red. A CSX westbound passed by but I didn’t pay it much mind.

I noticed that the connecting track from NS to CSX, which I’ve been told was put in during the Conrail era and once hosted a detour of Amtrak’s Lake Shore Limited, is still in place, but overgrown with weeds.

NS has altered the switch so that it now appears to act as a derail yet it is no longer possible to move a train into the connection track to CSX.

As I waited for the 14M, a large bank of clouds moved in and covered the sun. It had been sun and clouds for most of the day, but the weather was taking a turn.

I was about to give up and go back into town when I heard a horn to the west. Maybe that was the 14M.

Soon a headlight popped up on the horizon. The signal at the west end of the yard was still red and the train was moving slowly.

A glimpse through my telephoto lens confirmed that the Lackawanna H unit was on the point.

The 14M stopped but it didn’t last long because the signal turned to an approach indication.

I got my photographs and drove back to the historical society. Shortly after arriving, the heavens opened and we had an intense, although brief, shower that produced small hail pellets.

I listened to the 14M on the radio as it worked in the Conneaut Yard. During the process I got a CSX westbound freight that was a mere 300 plus axles. I guess those cars wouldn’t fit on the Q393.

By now it was apparent I wasn’t going to get any Citirail units leading on CSX today.

The 14M finished its work and I drove over to the Main Street crossing of the B&LE to photograph NS 1074 on the trestle over Conneaut Creek.

It was nearly 5:30 p.m. and I needed to head for home. It had taken all day, but I had finally got a heritage unit, the first one I’ve photographed since January.

Article and Photographs by Craig Sanders

Looks like it is going to be a nice spring day.

IC 1034 and its train will be leaving town shortly.

Looking west down Main Street.

NS train 316 had a Canadian Pacific leader and a loaded car that was supposed to have been routed to Bellevue.

The W021 has a load of rail bound for some eastern work site.

The ATVs racing along side this eastbound CSX stack train were not part of the original plan for making this image.

Trying to show Q017 along with a pair of flowering trees.

The crew of NS train 287 was relieved to hear the dispatcher say there had been a change of plans and they would come into Conneaut sooner rather than later.

A black locomotive and a bright red garage.

At last the 14M is approaching Conneaut with the feature attraction of the day on NS.

Coming into Conneaut on an approach.

After the rain came a short by today’s CSX standards manifest freight.

The last image of the day was one I waited several hours to get.

Easy Catch in Conneaut

May 4, 2017

I had a hankering to see some Illinois Central motive power so, naturally, I went to Conneaut to find it.

It didn’t take long. I had parked opposite of the former New York Central passenger station along the CSX Erie West Subdivision.

I turned on my scanner and the first radio transmission I heard was a Canadian National crew making switching moves in the yard of the former Bessemer & Lake Erie.

So off I went to the Main Street crossing to wait. Within 15 to 20 minutes IC SD70 No. 1034 and two other IC sister units pulled down by the Norfolk Southern trestle.

It would be the easiest catch of the day.

Article and Photographs by Craig Sanders

Mantle Ridge Pushes CSX Stockholders to Vote ‘Yes’ On Additional Harrison Compensation

April 26, 2017

The campaigning has begun to win the votes of CSX shareholders as to whether new CEO E. Hunter Harrison should be reimbursed for the money he gave up when he retired early from Canadian Pacific.

Not surprisingly, the hedge fund Mantle Ridge is supporting giving Harrison the money. Mantle Ridge lured Harrison away from CP by promising to pay him what he would give up by leaving early. Now Mantle Ridge wants to be reimbursed for what it paid Harrison.

Mantle Ridge has launched a website, www.csxadvisoryvote2017.com to make its case.

“We believe that Mr. Harrison is the most effective and successful railroad leader of our times, having led the dramatic turnaround of three major railroads over the last 25 years,” Mantle Ridge founder and CEO Paul Hilal wrote in a letter to shareholders. “In those undertakings, he drove operating ratios to industry-leading levels while delivering total shareholder returns of 450 percent, 353 percent, and 319 percent, respectively.”

CSX stockholders will vote at the annual meeting on June 5 in a non-binding referendum on the reimbursement. Harrison has said he will resign if he doesn’t get the additional compensation.

The referendum seeks approval for CSX to pay Mantle Ridge $55 million and Harrison $29 million, which would pay his tax bill.

Hilal said the cost of the reimbursement amounts to less than 12 cents per share.

Papers filed with regulatory authorities last week indicate that Harrison gave up $89 million in salary and benefits to win release from his CP contract.

Many analysts expect the referendum to win approval because of the value that hiring Harrison has added to CSX stock.

The shares jumped in value by $12.91, an increase of 35 percent, after CP said it would allow Harrison to retire early.

The value of CSX stock rose against last week after the company announced its first quarter 2017 financial performance.

The CSX board of directors has not taken a position on the Harrison compensation referendum, but before hiring him the board had expressed concern about the size of the compensation package that he wanted.

The board did approve a statement to stockholders outlining the pros and cons of voting in favor of the compensation.

After acknowledging Harrison’s track record at Illinois Central, Canadian National and CP, the advisory noted that other side of the argument is that there is a risk that Harrison won’t be able to serve the full four years of his contract due to the potential for death, disability or other reasons.

It also said that Harrison may not be able to achieve results similar to those at IC, CN, and CP.

The board said it would take the referendum into account and “ . . . act promptly in the exercise of its fiduciary duties with respect to whether to commit to the reimbursement after the shareholders have voted.”

CN Net Income up 12% in 1st Quarter

April 26, 2017

Canadian National’s first quarter 2017 net income increased by 12 percent to C$884 million, while diluted earnings per share increased 16 percent to C$1.16, compared with the first quarter of 2016.

Adjusted net income increased 11 percent to C$879 million, with adjusted diluted EPS increasing 15 percent to C$1.15.

Operating income increased 7 percent to C$1.3 billion. Revenues increased by 8 percent to C$3.2 billion. Carloadings increased 9 percent and revenue ton-miles increased 14 percent. Operating expenses increased 9 percent to C$1.9 billion, mainly due to higher fuel prices and higher costs due to increased volumes of traffic. The operating ratio of 59.4 percent, was an increase of 0.5 of a point from the prior-year quarter. Free cash flow was C$848 million, up from C$584 million in the year-earlier quarter.

Revenues increased for coal (39 percent), grain and fertilizers (16 percent), metals and minerals (16 percent), automotive (10 percent), intermodal (7 percent), and petroleum and chemicals (1 percent). Revenues declined for forest products (3 percent).

CN said the increase in revenues was mainly attributable to higher volumes of Canadian and U.S. grain, frac sand, coal exports, overseas intermodal traffic, and finished vehicles; freight rate increases; and higher applicable fuel surcharge rates. These factors were partly offset by the negative translation impact of a stronger Canadian dollar on U.S.-dollar-denominated revenues. Rail freight revenue per carload decreased by 1 percent.

Fundraiser Set for Algoma Central Passenger Service

March 31, 2017

A fundraising campaign to help kick start the return of rail passenger service to the Algoma Central Railway will be held on April 6.

Sponsored by the Coalition for Algoma Passenger Trains, the event will have folk music and a silent auction at the Algoma Water Town Inn & Suites in Sault Ste. Marie, Ontario.

Proceeds of the event will be used to support the efforts of the Missanabie Cree First Nation to create a non-profit passenger train between Sault Ste. Marie and Hearst that would be named the “Mask-wa Oa-ta-ban” or “Bear Train.”

Service on the route ended in 2015 when funding from the Canadian government dried up. The Algoma Central is today part of Canadian National.