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The next meeting of Division 295 will be held on July 11th at 19:00.

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Published: September 11th 2010
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Cargo News Asia reported that Canada’s two major railroad companies are seeing a steady pick up in freight volumes, reflecting growing demand for commodities, such as potash, iron ore, coal and copper, from fast growing economies such as China, India and Brazil.

Mr Robert Noorigan VP of investor relations at Canadian National Railway said that “We’re seeing a slow, steady recovery.”

Mr Noorigan said that CN, Canada’s largest rail hauler, and rival Canadian Pacific Railway offer a window into the economic health of Canada and its major trading partners. So far in the third quarter, CN volumes are up about 19%, while revenues per tonne mile, defined as the revenue earned on the movement of a tonne of freight over one mile, is up 11%. He added that “Montreal based CN is moving a lot of iron ore, while its international intermodal business, which involves more than one mode of transport, is doing quite well. If I look at the trend clearly, this is a lot more fun than it was in 2008.”

Ms Kathryn McQuade CFO of CP said that the freight volumes are up by 14% in 2010. Intermodal is up 45%, while export coal is up almost 30% and export potash is up 200% after the potash markets stalled in 2009.

She said that it’s too early to say what impact, if any, the possible breakup of Canpotex, the Canadian export potash cartel, will have on CP if Australian mining giant BHP Billiton succeeds in buying Potash Corporation of Saskatchewan Inc. BHP, which made a hostile bid for Potash last month, said that it would honor existing Canpotex contracts if its bid is successful, but that it eventually hopes to sell through its own channels.

Ms McQuade said that CP’s bullish on potash. She added that “You’re going to see more volumes being pushed through and that’s great for us. I don’t care if I take it to the ports in Washington or Vancouver as long as we get the haul.”

Canpotex, which typically handles more than a quarter of the world’s potash exports, wasn’t been able to secure a contract with China last year, and this year has only been able to get small, short term contracts.

Mr Jason Siedl transportation analyst at Dahlman Rose, who has a hold on the stock, said that “CP has potential. But, there’s some exposure on the potash side. I think they’ve done some good things at CP, but we’re waiting to get a better look at when some of the potash traffic is going to come to the network, or get a better entry point on the stock.”

According to the Association of American Railroads, carloads in Canada were up by 17.4% in August 2010 as compared to August 2009, and were higher in 14 of the 19 commodity groups. The biggest gains were in metallic ores, up 42% and chemicals, up by 16%. Canadian railroads averaged 51,206 intermodal units a week in August, the highest ever non seasonally adjusted weekly average. That’s up 23% from August 2009.

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