2018 was a great year for both of Canada’s railways.
For the fourth quarter CN’s revenues were up 16 per cent, and for the year revenues were up by 9.9 per cent to a record $14.3 billion. Operating income rose during the fourth quarter to $1.45 billion from $1.3 billion, resulting in a gross margin of 38.8 per cent. For the year, CN’s operating income rose to $5.5 billion from $5.25 billion, resulting in a gross margin of 38.4 per cent. Net income before taxes for the year rose 11.6 per cent to a record $5.7 billion. Cash flow from operations increased by 7.3 per cent to $5.9 billion. “Free” cash flow, the amount remaining from operating cash flow after subtracting net capital expenditures made during the year and dividends paid to investors, decreased from $1.6 billion to $1.25 billion. (more…)
By R. Bruce Striegler
Canada’s oil industry has been facing record-low prices for its exports, a glaring lack of insufficient pipeline capacity to bring its product to market, and an uncertain long-term outlook. None of these factors, however, are stopping Alberta oil producers from increasing production, and relying more heavily than ever on rail to move the product. According to Statistics Canada, the volume of oil on Canada’s railroads has soared by 64.6 per cent in just the past year. And in the past seven years, the number of rail cars carrying oil across Canada has quadrupled. As one pipeline project after another fails to launch, the industry is relying more heavily on rail than ever to ship its oil. (more…)
By Alexander Whiteman
The main North American rail freight carriers are reporting record revenue growth and strong profits, even with diesel prices surging. In the nine months to September, Union Pacific (UP) revenue grew 8 per cent to $15.9 billion, with its premium intermodal business volumes growing 6 per cent year on year to three million carloads. Even with profit growth of 28 per cent to $4.4 billion as “efficiencies were implemented”, Chief Executive Lance Fritz lamented the carrier’s failure to achieve the third-quarter productivity targets it had set itself. “While we reported solid financials, we did not make the service and productivity gains we expected during the quarter,” said Mr. Fritz. “We are making progress implementing our new Unified Plan 2020 and we are well positioned to drive improvement, going forward.” (more…)
Both of Canada’s major railways announced third quarter results for the period ended September 30, and put in strong performances.
During the quarter, CN’s revenues increased by 14.5 per cent to $3.69 billion. However, operating expenses rose by 19.2 per cent and, as a percentage of revenues increased from 57.2 per cent to 59.5 per cent. Higher expense levels were primarily driven by higher fuel prices, and higher labour and training costs to enable the company to deal with expected increases in volumes. Cash flow from operations increased to $1.56 billion from $1.4 billion, and “free” cash flow, the amount remaining from operating cash flow after subtracting net investments made during the quarter and dividends paid to investors, increased to $508 million from $373 million. However, during the first nine months of the year, “free” cash flow declined to $1.20 billion from $1.44 billion. From Jan 1 to Sept 30, CN spent $1.521 billion repurchasing its own shares (about the same amount as in 2017), and paid $1.0 billion in dividends. As of September 30, the company’s equity stood at $17.6 billion (as compared to $16.7 billion as at December 31, 2017). Total debt increased to $22.6 billion from $21.0 billion (Dec 31, 2017). (more…)
By Sam Whelan, Asia correspondent
It’s been another bumper year, so far, for China-Europe rail freight, but surging volumes are putting pressure on infrastructure and denting transit times. According to China Railway Corporation, 2,497 freight trains ran during the first six months, up 69 per cent year on year, with growth on target to reach 5,000 trains by year-end.
DB Schenker’s Greater China Chief Executive, Christopher Pollard, said the 3PL operated services on all of the 15 regular lines running from China to Europe, the vast majority of which terminate in Germany, via Poland. On average, the trains take 12 days to reach Poland, but 17 days to Germany – “two days slower than the lead time could be at best, due to efficiency issues along the route,” he told The Loadstar. (more…)
By Alex Binkley
Transport Minister Marc Garneau’s order to phase out two classes of tank cars used in transporting crude oil and condensates will complicate the petroleum industry’s logistics challenge but not completely disrupt shipments by rail, which are at record levels.
Brad Herald, Vice-President of Western Canada Operations for the Canadian Association of Petroleum Producers (CAPP), said the earlier than expected retirement of the two older classes of tank cars will be a challenge for the industry as it is struggling to clear as much product as possible. He described management of crude by rail shipments as a continental logistics exercise. In addition to making maximum use of the available tank cars, “we have to make sure there is capacity in the freight yards and on the rail lines to move them.” (more…)