CN Rail CEO vows loyalty to grain farmers as oil shipments climb

Bloomberg

Crude oil demand may be on the rise again, but Canadian National (CN) Railway Co.’s new leader insists energy shipments won’t displace longtime railroad staples such as grain and lumber.
Grain farmers in the western Prairie provinces saw exports slow to a crawl when Canadian National proved unable to cope with a surge in demand starting in the second half of last year.
In March, with bottlenecks and customer complaints mounting, Canada’s biggest railroad ousted then-Chief Executive Officer Luc Jobin — prompting his successor, Jean-Jacques Ruest, to boost capital spending to a record $2.7 billion to start fixing the logjams.
“We do not want to kick out, or restrain, business that will be long-lasting to replace it by crude,” Ruest said.
“To the extent we have some spare capacity, which is what we are building here, to onboard crude without hurting grain, lumber and mining, then we will do that.”
Petroleum and chemicals was Canadian National’s second-largest line of business in the second quarter, climbing 12 percent to C$616 million.
That compares with revenue of C$591 million for grain and fertilisers, and C$490 million for forest products.
Canadian National had total sales of C$3.63 billion in the period, led by container-car shipments.
Crude oil demand’s volatile nature means Ruest is hesitant to build dedicated infrastructure for energy shipments without multi-year commitments from energy producers.
“CN has been in business for 99 years, and we’ve been in business for 99 years moving grain, lumber or mining products,” he said.
“Crude was not part of what we moved in 1919. This was not a product that we moved a couple of years ago, and a couple of years from now, we may not move it again.”
To handle additional volumes, Canadian National is adding staff, tracks, sidings and locomotives. The company is focussing investments on the western section of its network where growth is strongest.