By Alex Binkley
The second quarter results posted by Canadian National and Canadian Pacific show the two railways made the best of the bad economic situation caused by COVID-19 while keeping their vision focused on the future. CN posted revenues of $3.2 billion, a 19 per cent decrease from 2019 but its operating ratio rose 18 points to 75.5 per cent. Canadian Pacific’s second-quarter revenues were $1.79 billion and its operating ratio came in at 57 per cent.
The railways were rocked by blockades in February and the subsequent pandemic since but generally fared better than their U.S. counterparts in terms of freight volumes.
Since March, the Association of American Railroads reported Canadian rail freight was about 10 per cent below 2019 figures while in the U.S. it often ranged 15 to 20 per cent below the previous year. In mid-August, CP and CP were running 8.5 per cent below last year while the U.S. carriers were 12 per cent lower.
Through this period, farm and food products along with grain shipments have been the bright lights for the Canadian carriers coming in above 2019 numbers most weeks. Both railways set grain hauling records for the 2019-20 crop year which ended July 31.
CN CEO JJ Ruest says, “By being adaptable, we were able to swiftly rightsize our resources and continue to provide our essential transportation services to our customers, the economy, and the communities we serve. “The decisive actions we took early on in March, well before the pandemic impacted the North American economy, allowed us to deliver over $1 billion of free cash flow during this recessionary quarter,” he said. The railway is helping encourage “the economic recovery through our $2.9 billion capital investment plan for 2020 as well as our new investment announcement of the purchase of approximately 1,500 new, efficient, high-capacity, covered hopper cars to expand our grain export business for delivery starting in January of 2021.” CN has begun recalling some of its laid off employees as traffic rose during mid-2020.
CP CEO Keith Creel says CP’s “second-quarter results showcase the resiliency of our people and of the precision scheduled railroading operating model. The COVID-19 pandemic has created immense challenges, but CP has risen to the occasion, adapted and responded to the benefit of our customers, communities and shareholders. “While economic uncertainty remains, we’re controlling what we can control – our costs. Our strong bulk franchise, which included record movements for Canadian grain and potash in the first half of the year, helped to offset some of the declines we experienced in other lines of business.”
The acquisition of the Central Maine and Québec Railway “combined with our continuing pipeline of unique growth opportunities, provides me with optimism for the remainder of 2020 and into 2021,” Creel said.