U.S. Equity Research Report: CN Rail’s Strategic Path Amid North American Economic Weakness (NYSE: CNI)

The intermodal commodity group comprises rail and trucking services and consists of two markets: domestic intermodal and international intermodal. Domestic intermodal transports consumer goods and finished products, serving retail and wholesale channels within Canada, the U.S., Mexico, and across borders; international intermodal handles import/export container traffic, serving major ports including Vancouver, Prince Rupert, Montreal, and Halifax. Domestic intermodal is driven by consumer demand and typically grows in tandem with the broader economy; international intermodal, by contrast, is driven by North American economic conditions and trade dynamics. Revenue declines in this commodity group during H1 2019 and H1 2020 were primarily attributable to reduced domestic and international intermodal volumes resulting from the COVID-19 pandemic. The automotive commodity group’s primary market drivers are North American automobile production and sales—factors heavily influenced by the average age of vehicles in North America and fuel prices. Revenue declines in this group during H1 2019 and H1 2020 stemmed mainly from temporary shutdowns of domestic vehicle assembly plants and auto parts manufacturing facilities caused by the pandemic. Other revenue stems from non-rail logistics services supporting the company’s rail operations—including marine and terminal services, transloading and distribution, automotive logistics, and freight and transportation management. The revenue decline observed in both H1 2019 and H1 2020 was primarily driven by lower revenues from automotive logistics and marine services, partially offset by increased freight forwarding revenue. 3.2 Q4 2019 Performance Compared to the same period in 2018, the company’s revenue declined by USD 224 million—or 6%—to USD 3.584 billion in Q4 2019. This decline was primarily attributable to North American economic weakness, a railway labor union strike in November, and a USD 64 million reduction in fuel surcharge revenue. Labor Strike: The railway industry is highly unionized. In November 2019, Canadian National Railway experienced a large-scale railway union strike—the longest in the Canadian rail industry in nearly a decade. The strike arose from multiple factors: declining freight volumes due to an economic slowdown prompted the company to plan layoffs of 3,000 employees; meanwhile, a collective agreement guaranteeing job security and employee welfare benefits had expired on July 23, 2019, yet no new agreement had been reached by November. The dispute centered on unresolved worker health and safety concerns. The strike triggered consecutive days of share price declines and severely disrupted cargo transportation, significantly impacting the national economy. 3.3 Q1–Q2 2020 Performance In Q2 2020, the company’s revenue totaled USD 3.209 billion—a decrease of USD 750 million, or 19%, year-on-year. For the first half of 2020, CN’s total revenue amounted to USD 6.754 billion—down USD 749 million, or 10%, compared to H1 2019. Revenue declines in both Q1 and Q2 were driven by reduced shipment volumes across most commodity groups and lower applicable fuel surcharges, both consequences of the COVID-19 pandemic. However, these declines were partially offset by increased grain shipments from Canada, higher coal exports through West Coast ports, and rising freight rates.

Apu Research Report: The Ivy League of Rail Transport—Canadian Pacific Railway Company

Shortly after commencing operations, Canadian Pacific Railway (CPR) engaged in land transactions and immigration services, and built a telegraph system along its transcontinental railway line. In 1882, CPR transmitted its first commercial telegram; that same year, it entered the express delivery business by acquiring Dominion Express. In 1883, CPR began constructing its own steam locomotives and later built its own passenger cars. Concurrently, the company expanded into hotel, dining, and tourism services. CPR provides over 12,700 miles of transcontinental rail and intermodal services across Canada and the United States. Its network spans Canada from Vancouver on the west coast to Montreal on the east coast, and extends into key U.S. cities including Minneapolis, Chicago, and New York in the Northeast and Midwest. Through agreements with other carriers, CPR further expanded its market reach across Canada, the U.S., and even into Mexico. Additionally, CPR operated a fleet of vessels on the Great Lakes and launched shipping routes connecting Great Lakes ports to the Atlantic Ocean. Throughout its history, Canadian Pacific Railway diversified far beyond rail transport—venturing into livestock farming, natural gas energy, bus transportation, ceramics, container shipping, immigration and colonization, tourism, mining, and media. It played a distinctive role during the Second Industrial Revolution and in both World Wars. By 1986, Canadian Pacific Railway had become Canada’s second-largest railway operator, generating CAD 15 billion in revenue. As the Pacific region of Canada continued to diversify economically, CPR—under the leadership of its Chairman and CEO—refocused on its core rail business and pursued strategic renewal. In 1990, CPR expanded its rail network by fully acquiring the Soo Line Railroad in the U.S. Midwest—the company CPR had most desired to acquire since 1890. The Soo Line itself had acquired several regional railroads and highways—including those in Milwaukee, Minneapolis, and Northfield—during the 1980s. Today, Canadian Pacific Railway operates a vital rail network linking Canada and the United States, directly connecting major ports on Canada’s east and west coasts. It delivers high-quality rail services to North American customers and seamlessly connects them to global markets—offering comprehensive freight services, integrated logistics solutions, and specialized supply chain expertise. 02 North American Railway Industry Overview The entire North American rail transport industry is dominated by seven ‘Class I’ railroads—most formed through mergers in the 1980s and 1990s. U.S.-based Class I railroads include Union Pacific (UNP), BNSF Railway, Norfolk Southern, Kansas City Southern (KSU), and CSX Corporation. Canada’s two major Class I railroads are Canadian National Railway (CNI) and Canadian Pacific (CP). Rail transport offers investors an attractive investment opportunity. The greatest advantage of investing in this sector lies in rail transport’s inherently stable, robust market position and relatively high degree of safety.

North America Chemical Rail Gains Stable on Support from Canada

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North American chemical rail traffic totaled 48,508 carloads in late October, remaining strong as Canadian gains offset US softening per AAR data. Year-to-date volumes increased 2% across the region.

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North America Chemical Rail Gains Stable on Support from Canada

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