Canadian National (NYSE: CNI) reached an all-time record for hauling grain in the 2018-2019 crop year.
The railway moved over 27 million metric tonnes (mmt) of grain for the crop year, beating a previous record of 26 mmt in 2016-2017. Canadian National also reached an all-time monthly record in April of 2.72 mmt, and it hit monthly records in November and December 2018 and January 2019. The crop year runs from August 1 to July 31.
The records occurred despite extreme weather conditions that stymied rail shipments in February and March, as well as restrictions on Canadian canola exports to China, the railway said. The records were also set during the peak grain demand season, according to Allen Foster, vice president of bulk for CN.
“This year was a banner year for grain movement. Grain customers have also focused on locating the majority of brand new high throughput elevators in western Canada on CN – we saw seven open between June 2018 and July 2019, another four announced during the 2018-19 crop year, and two more will open shortly,” Foster said.
The record totals are also the fruit of significant investments in CN’s rail network in western Canada. The C$7.4 billion in overall capital investments within the past two years have enabled CN to move over 7,000 hopper cars of grain movement per week for seven individual weeks throughout the crop year, as well as move approximately 1 mmt of grain in containers.
“Despite a late start to the harvest, record cold temperatures in February, and rainy weather at export terminals restricting ship loading, our dedicated ONE TEAM of railroaders moved more grain than ever before,” said JJ Ruest, CN president and chief executive officer. This was in large part due to strategic investments in people, equipment and capacity. With more locomotives, more crews, and a renewed fleet of rail cars, we are determined to enable the growth of natural resources export supply chains via West Coast ports.”
As it looks toward the 2019-2020 crop year, CN said it assumes that the grain crop in Canada will be in line with the three-year average, while the grain crop in the U.S. will be below the three-year average.
“We are optimistic about the upcoming harvest,” Foster said.
The company said during its second quarter earnings call on July 23 that grain will be one of the commodities, alongside crude oil, coal and intermodal, that could support CN’s revenue per ton mile in the second half of the year. However, there is some volatility for grain in part because of uncertainty over whether China will continue to restrict canola shipments from Canada.
“We have the capacity to move more grain products than there is current demand. Uncertainty around the ban of canola exports in China will push a larger-than-expected grain carryover into the new crop year,” said James Cairns, CN’s senior vice president for the rail-centric supply chain, during the July 23 earnings call. “New export facilities on the West Coast combined with new builds and new track elevators in the country will help us continue to move record volumes into the new crop year.”