Canada National Railways:A Review of 2018

Canada National Railways:a Look Back at  2018

2018 was a strong year of building for CN with many accomplishments and milestones for the CN team, our investors, our partners and our customers to be proud of as we invested for the long haul. We’ve compiled a list of some of these momentous achievements below in this year-in-review.

Even though we are celebrating the end of another great year, know that the clock does not stop for a leading transportation and logistics company and here at CN, from our offices to our rail yards, we are all poised and focused on making 2019 a year of excellence.

Our sincere thanks go out to our CN family, partners, and customers who’s ongoing commitment and collaboration is key to our success. Together we will make 2019 another year to truly be proud of.


These Are Some of Our Highlights From 2018:

Investing for the Long Haul

In 2018, CN announced a record breaking $3.5B in Capital investments.

Across its network, CN invested in trade-enabling infrastructure and equipment. Undertaking the largest number of infrastructure projects in CN history, the CN team was able to put into service 26 special capital projects across our network including: 59.8 miles of effective double track, 11 siding projects, and 7-yard projects.

CN also invested in equipment including plans to acquire 350 new boxcars to serve forest product and metals customers, 350 new centrebeam cars to move lumber, and 1,000 new generation high-cube grain hoppers. We also expanded our order for 200 GE Tier 4 Evolution™ Series locomotives to 260, receiving the first 60 new locomotives into service in 2018.

The New Executive Team

JJ Ruest was appointed CN Railways President and CEO in July if 2018, after having served as Interim President and CEO since March 2018. JJ Ruest’s strategic direction, implementation of CN’s capital investment projects, and leadership of CN’s One Team of railroaders earned him the Railway Age Railroader of the Year award in 2018. This is the fourth time this award has been presented to a CN railroader.

Doug MacDonald was appointed to Senior Vice-President, Rail Centric Supply Chain Growth. CN’s Keith Reardon were appointed to Senior Vice-President, Consumer Product Supply Chain Growth. Together they head up CN’s sales and marketing initiatives and all non-rail supply chain operations, such as intermodal container terminals and transload facilities, to produce solid supply chain services that compete across all markets. John Orr, an experienced operator across CN’s three regions, was named Senior Vice-President and Chief Transportation Officer responsible for CN’s day-to-day rail operations, to push network velocity, drive cost leadership, and increase production in gross ton miles (GTMs).

Commitment to Safety Culture

Safety first and always continues to be our operating philosophy at CN. Not only did we continue our annual Rail Safety Week campaigns to educate communities about rail safety, but also this year marked the first ever combined Rail Safety Week for both Canada and the United States.

Our CN Campuses welcomed and trained over 10,700 students (including CN railroaders, new hires, and 148 customers) over the course of 2018. We also continued our successful “Looking Out for Each other” program to ensure the safety of our CN team members.

Outside of CN’s corporate investments into safety the safety of our own rail operations, CN also invested into the safety of the railroading industry as a whole with a donation of $500,000 to the University of Alberta’s Canadian Rail Research Laboratory to study track and railway equipment performance in order to advance railway safety and efficiency.

CN also continued our own research and development for a safer railway industry and 2018 saw the culmination of ten years of research into draft energy management systems that resulted in a new centrebeam arrangement that will reduce undesired train separations by 67%. Despite holding the patent for this new arrangement, CN has made it openly available for use, exemplifying CN’s commitment to improving safety for the entire rail industry.

Supply Chain Partnerships

As always our unparalleled supply chain focus and partnerships continue to be a major factor in our success as a trade and supply chain enabler and CN remains committed to furthering and fostering these partnerships in order to better service our customers.

Together with our port partners, we continue to grow, expand, and meet new challenges head on. As our partners grow we grow and as we grow our partners grow.

In 2018, our partners at the Port of Prince Rupert and DP World Canada reached a historic milestone of hitting 1 million TEUs for the first time in a calendar year at the recently expanded Fairview Container Terminal. The Port of Prince Rupert and DP World also unveiled the next phase of the Prince Rupert Fairview Terminal expansion, which will increase throughput capacity to 1.8 million.

CN partners at the Port of Montreal also continue to expand and grow as the Montreal Port Authority has made some major headway in 2018 for the Contrecœur expansion project, scheduled to start in 2020 and which will feature the possibility of 2 berths and a capacity of 1.15 million TEU.

In 2018, CN partner Parrish and Heimbecker announced the expansion of their fertilizer facilities in Watrous, SK. CN will be supporting their growth on our network by increasing the siding at the facility in order to accommodate a 150 car spot.

Parrish and Heimbecker alongside GrainsConnect Canada will also be undertaking construction of the Fraser Grain Terminal at the Port of Vancouver as a 50-50 joint ventures. This facility will be served by CN and will have the capacity to rapidly handle and discharge 120 railcars.

2018 also saw CN’s strategic acquisition of long term supply chain partner TransX in order to CN continue to strengthen and expand our intermodal supply chain services.

Sustainability

CN was recognized as leader for corporate environmental action on the Supplier A List by CDP. CN was also made the Dow Jones Sustainability World Index for the seventh consecutive year and the DJSI North American Index for the tenth consecutive year.

CN was also able to celebrate the sustainability accomplishments of our customers by recognizing 40 customers for sustainability leadership under our EcoConnexions Partnership Program.

The Food Supply Chain

CN is proud to be an important part of the food supply chain and continues to invest in food security, temperature-controlled shipping, and bringing grain to market.

In the 2017-2018 crop year, CN moved 25.5 million metric tonnes of grain for Canadian growers with approximately 90% of CN’s car supply being secured in advance by commercial agreements. This was the 2nd highest volume shipped in CN’s history and represented 3% more tonnage than the prior three-year average.

The 2018-2019 crop year is underway and moving strong. CN’s grain movement is currently 13% higher than last year and 9% higher than the prior three year average. The month of November 2018 was the best month for grain tonnage moved in the history of CN.

Our extensive investments in moving Western Canadian grain included infrastructure investments in key corridors in Western Canada, extensive hiring and training of train crews, and ordering 1000 new generation high-cube grain hopper cars.

In 2018, the following CN partners opened up new grain elevators on CN’s network: GrainsConnect (Reford, SK), G3 (Brewer, SK and Saskatoon West, SK), and Viterra (Vegreville, AB and Wadena, SK).


Technology

In 2018, CN made strong headway with CN’s innovative and environmentally-secure way of transporting bitumen as a solid, dry, and non-hazardous pellet that floats and does not burn, leak, or dissolve. In November, CN signed a Letter of Intent agreement with Calgary Advantage Petroleum Corporation to move the CanaPux™ concept forward. CN also presented the CanaPux™ concept to North American news outlets as well as to partners in Asia as a safe and environmentally secure way to import Canadian bitumen as a dry bulk solid.

2018 also saw CN making some major technological advances for inspecting trains and track. CN’s new Automated Railcar Inspection Portals feature ultra high definition panoramic cameras and infrared lighting that captures a full 360° view of the train and undercarriage as it travels at up to 60mph through the portal for a real time inspection. These inspection portals can then automatically bad order a rail car for repair. The first Automated Railcar Inspection Portal is already operational in Winnipeg, with more being installed in Toronto, Memphis and beyond in 2019.

In 2018, CN also utilized our two Track Evaluation Systems (TEST) Cars to test the safety of our infrastructure and enable reliable train operations. Utilizing these cars to test approximately 77,000 miles of track during the course of the year gathered important data, and allowed for any defects, once located, to be immediately addressed. CN’s TEST cars also feature an innovative joint bar inspection technology that inspects rail joint bars and identifies missing bolts and cracked joint bars.

CN also reached a milestone in the implementation of positive train control (PTC) on our US network ahead of the year-end deadline. To date, CN has installed all planned 1,662 radio towers, trained all 5,614 employees required, completed PTC hardware installation on all 586 required locomotives and 35 required track segments, as well as installed PTC on approximately 3,100 route mile in the US.

This year CN also introduced a mobile app in partnership with GE called ModalPass to increase the speed and efficiency with which truck drivers access CN terminals. The app has currently launched at two CN terminals in Calgary and Edmonton.

CN in the Community

In 2018 CN continued its commitment to the communities that we serve through corporate giving, educational initiatives and through collaboration. 2018 also saw the establishment of the first CN Community Board in Edmonton. A key focus of the community boards will be supporting local, grassroots organizations with smaller grant funding requests. By putting funding decisions into the hand of local community members who know their community best, CN aims to make a positive impact in Edmonton.

CN’s community giving and sponsorships have continued to make a difference in the lives of our community members and to empower young people in the communities that we serve. Notably for the fourth year, CN has partnered with 4-H Canada to recognize four outstanding young people with the L.E.A.D Leadership Excellence Awards of Distinction scholarship. Each scholarship winner received a $20,000 scholarship for higher education and was also paired with a mentor.

CN also continues to be dedicated to fostering positive relationship with all of the communities that our expansive network touches, including communities belonging to first nations and indigenous peoples. In 2018, CN received the Progressive Aboriginal Bronze certification from the Canadian Council for Aboriginal Business recognizing CN as a good business partner committed to the prosperity of Aboriginal communities.

Summary

As we enter 2019 and celebrate our 100th year of connecting people and markets, the CN team is poised to continue building the CN growth story and meeting the evolving needs of our customers and our stakeholders.

With our strategic agenda, unique talent, technological advancements, and core value of safety, CN has developed our foundation for long-term profitable growth, a foundation that we are calling Precision Scheduled Railroading 2.0. Taking the industry-changing operational model that CN pioneered 15 years ago and evolving it into a growth model that will enable CN to move the growing North American economy in 2019 and beyond.

We look forward to continued collaboration with partners, customers, communities, and employees across our network to make 2019 the best year yet!

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