Canadian National (NYSE: CNI) announced that its network performance has “normalized” to levels experienced prior to the work stoppage that affected the railroad for eight days.
The November strike of approximately 3,200 of the railroad’s conductors, trainspersons and yard workers left the network operating at just 10% of its total capacity. As weekly revenue-ton-miles (RTMs) dropped by more than 30%, the company accumulated a large backlog of shipments that would require weeks to work through.
According to a press release from the company, “every strike day can cause several days of backlog, requiring time for the network to be fully current once it has returned to normal operational ranges.”
“I’m pleased to announce that our focused and methodical recovery plan is working and that the performance of our movements has recovered to normal ranges. We will remain focused on safety as we continue to clear the backlog caused by the work stoppage, said CN President and CEO JJ Ruest.
In the week ended Dec.14, CN reported only a 3% year-over-year decline in RTMs. This is significantly better than the company’s average over the past four weeks, down 20.1%, which includes the labor strike.
Canadian competitor, Canadian Pacific (NYSE: CP), reported a 5% year-over-year decline in RTMs for the same week.
Total traffic on the Class I North American railroads declined 7.3% for the week, with U.S. traffic falling 8.3% year-over-year.
Year-to-date, total North American rail originations stand at 35.3 million carloads and intermodal units, 3.8% lower compared to the same period in 2018.
While carloads appear to be back on track for CN, the slowdown will impact the rail line’s earnings.
Softer demand and the strike forced management to lower its full-year 2019 adjusted earnings-per-share (EPS) forecast on Dec. 3. The company now expects 2019 EPS to increase in the low- to mid-single-digit range, compared to its prior expectation of high single-digit growth.
C$0.15 per share of the forecast reduction was directly tied to the negative impact from the strike.