Rail company forced to turn awaybusiness

“If we had done this in April, a good six months ahead of time, we could have deployed some of that capital before the winter set in and we would have been in much better shape to meet demand in the last six months.”

In addition to the $400-million investment in Western Canada, CN said it will lease 130 locomotives to increase capacity in Western Canada, acquire 350 box cars to meet demand from industrial customers, and hire hundreds of new conductors.

While it deals with the capacity issues, the railway has been forced to turn away some business. Ruest said the company reduced its crude-by-rail business in the last two quarters to reserve capacity largely for grain shipments. Crude-by-rail shipments decreased by 25 per cent in the three month period ending March 31 when compared to 2017.

Ruest expects to ramp up crude volume in the second half of the year once network capacity is replenished. When asked by a shareholder about the opportunity presented with crude by rail — which could potentially double over the next two years — Ruest stressed that “rail is not a substitution for a pipeline.”

On Monday CN lowered its forecast for adjusted diluted earnings per share in 2018 from its previous target of between $5.25 and $5.40 to between $5.10 and $5.25. The company saw its firstquarter net profit fall to $741 million from $884 million at the same time last year.

CN will also consider selling additional real estate to free up cash that can be plowed back into its network. Properties in Montreal and Calgary are among the assets that CN could divest in the coming months, interim Chief Executive Officer Ruest told Bloomberg. On Monday, CN saw its first-quarter net profit fall to $741 million from $884 million at the same time last year.