Strong year predicted for railways
Despite rocky start, outlook bright for 2014
MONTREAL — The outlook for Canada’s two largest railways remains bright for 2014 even though the year got off to a rocky start due to winter weather woes and a fiery derailment.
Total volumes shipped in the first week of the year decreased 4.4 per cent as bonechilling cold swept much of the continent.
Canadian National Railway’s carloads declined 4.4 per cent for the week ended Jan. 4 as an 8.8 per cent decrease in bulk shipments was partially offset by 2.9 per cent growth in intermodal, according to the Association of American Railroads.
Total carloads shipped by Calgary-based Canadian Pacific Railway slipped 4.5 per cent as bulk shipments decreased 4.8 per cent and intermodal volumes were down 4.2 per cent.
Canadian National says the entire North American rail industry was effected by extreme weather in the first two weeks of the year.
“CN was no exception, with extremely cold weather affecting operations across Canada, as well as its northern U.S. network,” spokesman Mark Hallman wrote in an email.
CP spokesman Ed Greenberg said the extreme weather affected the entire transportation industry and caused temporary slowdowns.
“Now, as conditions improve, we are returning to strong performance levels,” he said.
CN’s year also got off to a rocky start when one of its freight trains derailed Jan. 7 near Plaster Rock, N.B., and caught fire.
About 150 people were evacuated when the 122-car train derailed, with 19 cars and one locomotive leaving the tracks. Five of the derailed tanker cars were carrying Western crude oil to an Irving Oil refinery in Saint John, N.B., while four tankers carried liquefied petroleum gas.
The suspected cause is a cracked wheel, but Hallman said there’s no indication weather was a factor.
While Canadian railways suffered decreases in shipments, U.S. rail companies increased theirs by 3.2 per cent compared with the first week of last year.
Meanwhile, North American railways ended 2013 on a high note as total volume growth increased by a record 3.8 per cent as a result of higher shipments of crude oil by rail, a recovery in U.S. grain, a record Canadian crop and intermodal growth.
Analysts say weather will put pressure on Canadian rail results when CN and CP report later this month.
Walter Spracklin of RBC Capital Markets wrote he expects both railways will underperform U.S. carriers, citing the extreme cold temperatures, shortened train lengths and increased labour costs.
Turan Quettawala of Scotiabank said the impact from cold weather should “cascade” through CN’s income statement.
The two analysts reduced their fourth-quarter estimates for Montreal-based CN.