Canadian National Railway in 2013 will continue to strengthen its intermodal connections to the ports of Prince Rupert and Metro Vancouver and build on its terminal network, as the railroad aims to give shippers faster and expanded access to U.S., Canadian and foreign markets.
The railroad’s investments appear to be paying off. CN this year grabbed business from an undisclosed shipping line historically attached to archrival Canadian Pacific Railway and “secured a large portion of a large U.S. retailer entering the Canadian marketplace sometime next year,” CEO and President Claude Mongeau told investors during an Oct. 22 conference call. The undisclosed shipper is likely Target, which plans to open 124 stores in Canada, beginning in March. CN intermodal traffic in the first three quarters increased 11 percent year-over-year, and revenue from the business grew about 13 percent in the same period.
“Intermodal will do very well for us this fourth quarter and next year, on the strength of our unique service definition, which more and more players in the marketplace are starting to understand what we are offering and what we're producing, as well as on our expanding selection of destinations sometime in 2013,” Mongeau said.
A major part of that expansion is tied to expanding capacity on its Edmonton, Alberta–Prince Rupert, British Columbia, corridor, said Jean-Jacques Ruest, CN executive vice president and chief marketing officer. CN will continue its construction of five extended sidings on the corridors in 2013; the largest Canadian railroad has extended or constructed sidings to handle 12,000-foot trains on the lane since 2004. The investments will also aid the shipment of export coal from existing and new mines through the Ridley Terminals at Prince Rupert.
The corridor is becoming increasingly important as the Port of Prince Rupert emerges as a major gateway for consumer goods imports and exports of natural resources, including forest products, soybeans, corn and dried distilled grains with solubles, better known as DDGS. Container traffic at the Northwest port in the first 10 months of 2012 grew 44 percent year-over-year to 50,720 20-foot-equivalent units, as imports soared 41 percent and exports skyrocketed 47 percent. Container traffic at Port Metro Vancouver in the same period expanded 8.3 percent to 1.2 million TEUs, as imports rose 11.2 percent and exports increased 5.1 percent.
CN in 2011 handled roughly 500,000 carloads and intermodal units on the corridor and said traffic on the lane could nearly double by 2015. The railroad will have spent more than $151 million on corridor by the end of 2012, with investments in siding, new signaling, tunnel and bridge clearances and a yard expansion at Smithers and Terrace, British Columbia. The railroad is also extending its line to a $42 million export terminal for wood pellets at the Port of Prince Rupert. Construction on the Pinnacle Renewable Energy terminal began in early November, and the facility could receive its first shipment by September, the company told The Northern View, a Canadian newspaper.
On the terminal side, CN plans to open its $220 million Calgary Logistics Park on Jan. 20, giving shippers access to a state-of-the-art intermodal terminal and more than 2 million square feet of warehouse capacity. The railroad will also open an automotive compound for regional vehicle distribution in 2013, and eventually add a liquid and dry bulk transload and distribution center to the park. CN will also expand existing intermodal terminals in Memphis, Tenn.; Toronto and Edmonton, Ontario, in 2013.
CN said it would likely announce plans for a new U.S. intermodal terminal in the third quarter. The new terminals and expansion of existing facilities come after the railroad opened an intermodal terminal in Chippewa Falls, Wis., in February. The facility gives Upper Midwest shippers more global access for their agriculture exports and makes distribution of imports to the region more cost effective. CN also recently gained intermodal business in the state through CP’s exit from the Milwaukee, Wis., market.
CN plans to increase service to Detroit in 2013 and build on its steel-wheel interchange with CSX Transportation, giving shippers more access to the Eastern U.S market, particularly in the Ohio Valley. Before the interchange was launched in the spring, CN and CSX exchanged container traffic via more costly drayage.
“As the shipping industry gets bigger ships, we need to give them a bigger market,” Ruest said. “Only so much cargo can go through Calgary and Edmonton. The focus in 2012 and 2013 is to give them more destination markets.”