Canadian National (NYSE: CNI) announced that its western Canadian grain shipments exceeded 2.3 million metric tons in June, 15.6 percent higher year-over-year and well ahead of the three-year average of 1.8 million metric tons.
From the press release, “The cumulative total of tonnage moved for the 2018-19 crop year is on record pace at 25.5 [million metric tons], or one million metric tons ahead of the previous record pace, despite the restrictions on Canadian exports to China.”
Additionally, the company announced a C$210 million investment in rail capacity in North Vancouver to support export movements. (A Canadian dollar has an equivalent value of US$0.76.)
“We are investing $210 million in rail capacity in North Vancouver to support the expanding coal and grain export terminals and to further encourage the growth of natural resources export supply chains,” said Canadian National’s President and Chief Executive Officer J.J. Ruest.
Canadian National had previously said that it was planning track and tunnel improvements to increase capacity to expand the North Shore terminals in Vancouver and to double track portions of the rail line for expansion at the South Shore Centerm and Vanterm terminals.
Canada’s western grain exports have been a point of contention in recent years, with both Canadian National and Canadian Pacific (NYSE: CP) called out for not properly investing in capacity to support these movements. Three Class I railroads, Canadian National, Canadian Pacific and BNSF (NYSE: BRK), were investigated by the Canadian government for congestion and capacity issues that were problematic during the 2018 fall harvest. The Canadian government found that Canadian National hadn’t taken appropriate measures to ease congestion at the port of Vancouver, a decision the company is appealing.
Canadian National has recorded C$7.9 billion in capital expenditures in the last two years. The bulk of its 2018 investment included efforts to bolster its western network, including Canada’s west coast.
“Our investments and dedicated grain team focused our efforts onto what is going to be a record year. We are optimistic that the strong pace of shipments we’ve seen in June takes us through to the end of the crop year and we can build on our record shipment pace,” said Allen Foster, Canadian National’s Vice President of Bulk.
Canadian National will announce earnings results on July 23, 2019 after market close with a call to follow at 4:30 PM EDT.