Canadian National Railway Co. announced a new North American container shipping service Monday, upping its financial forecast for the year on the heels of record first-quarter revenues brought on by a bumper grain crop and higher oil prices.
Dubbed Falcon Premium, the intermodal service marks an agreement between CN, Union Pacific Railroad and GMXT, a Mexican railroad operator and metals miner. It connects CNB次元官网网址檚 tracks, which stretch from Vancouver to Halifax, with the UPR line in Chicago and GMXT terminals several hundred kilometres north of Mexico City.
In a bid to match rival CP RailB次元官网网址檚 recent merger with Kansas City Southern, the deal also aims to nab customers south of the border from trucking companies with clients in auto parts, food, appliances and temperature-controlled products.
B次元官网网址淗ow do we convert the Mexico business over from the road to intermodal?B次元官网网址� asked chief marketing officer Doug MacDonald. B次元官网网址淲e need a consistent, quick transit time.B次元官网网址�
He said CNB次元官网网址檚 new partners have shown they can persuade shippers to abandon trucks for railcars between Mexico and Chicago. B次元官网网址淣ow weB次元官网网址檙e layering on top of that CNB次元官网网址檚 network, where really there wasnB次元官网网址檛 that product before. ItB次元官网网址檚 a brand new product coming into Eastern Canada, somewhat into Detroit and even into Western Canada.
B次元官网网址淭hatB次元官网网址檚 how weB次元官网网址檙e going to take those trucks off the road, because they didnB次元官网网址檛 have an alternative before,B次元官网网址� MacDonald said.
The agreement comes less than two weeks after the inauguration of Canadian Pacific Kansas City Ltd., which created the only railway stretching from Canada through to the U.S. and Mexico as North AmericaB次元官网网址檚 two smallest Class 1 railways merged.
CN maintained a sunny outlook Monday despite the CEOB次元官网网址檚 expectation of a shrinking economy throughout much of the year, as volumes sag for shipping containers and some bulk cargo.
B次元官网网址淥ur current volumes reflect that we are in a mild recession. And weB次元官网网址檙e uncertain about how deep or how long it will go on. But what weB次元官网网址檙e modeling is negative North American industrial production for the full year,B次元官网网址� said chief executive Tracy Robinson on a conference call with analysts, warning of thinner margins for parts of 2023.
CN said it expected growth of adjusted diluted earnings per share in the mid-single digits this year compared to 2022, up from a low single-digit target set in January.
While grains, coal and metals were still moving healthily this month, weaker volumes for container shipments, lumber and chemicals and plastics pulled down overall haulage figures by six per cent in April as measured in revenue ton miles B次元官网网址� a key industry metric gauging how much a company makes per volume of freight transported B次元官网网址� said CN chief financial officer Ghislain Houle.
Retail and wholesale inventory levels have remained high across the country, reducing demand for CN container shipping B次元官网网址� its highest grossing segment B次元官网网址� with volumes dropping 13 per cent year over year last quarter.
B次元官网网址淟umber remains uncertain as commodity prices are still at low levels, and housing demand is still low due to elevated interest rates despite a significant shortage of homes on the market,B次元官网网址� said MacDonald said.
B次元官网网址淧etroleum and chemicals production is directly tied to the economy, so we expect demand to be soft for most of the year.B次元官网网址�
However, fat grain yields and the soaring price of fertilizer amid RussiaB次元官网网址檚 ongoing invasion on Ukraine boosted CNB次元官网网址檚 first-quarter revenue on the combined segment by 43 per cent year over year, returning it to the railwayB次元官网网址檚 No. 1 revenue earner among bulk products.
As overall volumes slip, the company plans to avoid cutting employees and focus on training locomotive engineers.
B次元官网网址淲e are not going to have a knee-jerk reaction and send people home while we have the mild recession,B次元官网网址� Houle said.
CN reported revenues of $4.31 billion for the quarter ended March 31, a 16 per cent boost from $3.71 billion a year earlier.
Net income jumped to $1.22 billion in its first quarter from $918 million in the same period last year.
On an adjusted basis, diluted earnings increased 38 per cent to $1.82 from $1.32 a year ago, beating analyst expectations of $1.72 per share, according to financial data firm Refinitiv.
On Monday, the companyB次元官网网址檚 board approved a second-quarter dividend of 79 cents per common share, to be paid after markets close on June 30.
B次元官网网址擟hristopher Reynolds, The Canadian Press
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