With commercial alignment driving grain supply chain back in sync, CN's
Claude Mongeau urges Ottawa to carefully limit the scope of new rail
regulations
MONTREAL, July 28, 2014 /CNW Telbec/ - CN (TSX: CNR) (NYSE: CNI) said
today Canada's rail transportation system is ready to accommodate the
new harvest with a solid throughput rate in line with the grain supply
chain. The supply chain will also be able to address the excess
carry-over from last year's extraordinary crop by as early as next
spring.
Claude Mongeau, president and chief executive, said: "CN posted a record
performance in the 2013-2014 crop-year just ending - our movement of
Western Canadian grain was a full 25 per cent greater than past average
performance.
"We can be proud of our performance and for making good on the
commitments we gave the federal government a month before the
order-in-council requiring railways to move specific grain volumes took
effect last March.
"By virtue of normal commercial incentives, the grain handling and
transportation system is now fully back in sync and ready to
accommodate the upcoming harvest.
"This positive development is very encouraging and calls for careful
balance from the federal government in how it pursues the regulatory
agenda it announced in haste in the midst of a very difficult winter."
Mongeau said CN transported record grain volumes last fall until extreme
cold weather affected the rail industry's ability to move grain
efficiently between mid-December and early March. In February, CN
promised the federal government it would ramp back up to record
performance as soon as the weather eased - and it did just that. The
weather clearly challenged CN's operations, but the company's winter
grain shipments ultimately turned out to be only two per cent below
normal winter volumes.
CN's run rate of spotting approximately 5,500 grain hopper cars per week
since April 2014 has exceeded unconstrained orders placed by its
customers, and its wait-list has declined significantly in the last few
months due to a high level of order cancellations. As such, CN's
wait-list now represents a normal level of only one week of shipments.
With the rail transportation system running efficiently, Mongeau said
the grain supply chain is very well positioned to handle the coming
harvest.
"According to Agriculture Canada, the carry-over from the crop-year just
ending will be about 18 million tonnes, only 5.5 million tonnes higher
than an average carry-over. Given a late-planted crop this spring, the
supply chain will have another five or so weeks to deplete stocks
further by five to six million tonnes prior to the harvest starting in
full gear. All this means there should be sufficient storage capacity
available in the system.
"Looking forward, given Agriculture Canada's latest 2014-2015 crop
forecast of 59 million tonnes - slightly higher than a trend-line
average crop - the current throughput level for the rail industry
should be sufficient to eliminate all the excess carry-over of grain by
as early as next spring."
Mongeau concluded: "End-to-end balance has been restored to the grain
supply chain through hard work and normal commercial incentives. As
there is no structural problem to fix, the government of Canada should
limit the scope of new rail regulations, and instead focus on
encouraging true supply chain collaboration.
"CN urges the federal government to adopt such a commercial approach and
is ready to play its key role in the grain handling and transportation
system for the benefit of Canadian grain growers."
CN (TSX: CNR) (NYSE: CNI) is a true backbone of the economy,
transporting approximately C$250 billion worth of goods annually for a
wide range of business sectors, ranging from resource products to
manufactured products to consumer goods, across a rail network spanning
Canada and mid-America. CN - Canadian National Railway Company, along
with its operating railway subsidiaries -- serves the cities and ports
of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and
Mobile, Ala., and the metropolitan areas of Toronto, Edmonton,
Winnipeg, Calgary, Chicago, Memphis, Detroit, Duluth, Minn./Superior,
Wis., and Jackson, Miss., with connections to all points in North
America. For more information on CN, visit the company's website at www.cn.ca.
Forward-Looking Statements
Certain information included in this news release is "forward-looking
statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and under Canadian securities laws. CN
cautions that, by their nature, these forward-looking statements
involve risks, uncertainties and assumptions. The Company cautions that
its assumptions may not materialize and that current economic
conditions render such assumptions, although reasonable at the time
they were made, subject to greater uncertainty. Such forward-looking
statements are not guarantees of future performance and involve known
and unknown risks, uncertainties and other factors which may cause the
actual results or performance of the Company or the rail industry to be
materially different from the outlook or any future results or
performance implied by such statements.
Important risk factors that could affect the forward-looking statements
include, but are not limited to, the effects of general economic and
business conditions, industry competition, inflation, currency and
interest rate fluctuations, changes in fuel prices, legislative and/or
regulatory developments, compliance with environmental laws and
regulations, actions by regulators, various events which could disrupt
operations, including natural events such as severe weather, droughts,
floods and earthquakes, labor negotiations and disruptions,
environmental claims, uncertainties of investigations, proceedings or
other types of claims and litigation, risks and liabilities arising
from derailments, and other risks detailed from time to time in reports
filed by CN with securities regulators in Canada and the United States.
Reference should be made to "Management's Discussion and Analysis" in
CN's annual and interim reports, Annual Information Form and Form 40-F
filed with Canadian and U.S. securities regulators, available on CN's
website, for a summary of major risks.
CN assumes no obligation to update or revise forward-looking statements
to reflect future events, changes in circumstances, or changes in
beliefs, unless required by applicable Canadian securities laws. In the
event CN does update any forward-looking statement, no inference should
be made that CN will make additional updates with respect to that
statement, related matters, or any other forward-looking statement.
SOURCE CN
