Canadian National Railway Aims to Sharply Cut Freight Backlog This Week

By Paul Vieira 

OTTAWA -- Canadian National Railway Co.'s chief executive said Tuesday the company would strive over the coming days to meaningfully reduce the backlog of freight caused by blockades that choked off key economic corridors last month.

Jean-Jacques Ruest said he anticipates a steep reduction in parked railcars loaded with freight in eastern Canada to around 1,500, from roughly 8,000, by the end of the week. "There will be a big progression, " Mr. Ruest said in an interview with The Wall Street Journal. "It is our turn to railroad very hard and get the network back in shape as soon as we can."

For some commodity groups, he said the return to normal "might take a month or two." Among the biggest challenges, Mr. Ruest said, was clearing a backlog of grain set for export. All told, it might take until April for Canada's supply-chain network to return to normal, the CEO said.

The Montreal-based railroad operator on Tuesday called back most of the 450 employees temporarily laid off last month because of train cancellations prompted by a blockade about 120 miles east in Toronto, near the town of Belleville, Ontario. "The CN network without Belleville does not function," Mr. Ruest said. The railroad eventually shut down its eastern network.

Tuesday marked the fourth-straight day Canadian National said it didn't encounter significant blockages on its tracks.

Canadian National is Canada's largest railroad, operating about 20,000 miles of tracks spanning across Canada and the U.S. Midwest. It handles over 250 billion Canadian dollars ($187.3 billion) a year in freight.

Protests obstructing rail lines across Canada started Feb. 6, after police began enforcing a court order to remove people who were trying to prevent construction of a natural-gas pipeline in British Columbia. Some blockades came down shortly afterward, such as in western Canada.

The blockade near Belleville lasted 18 days, before police moved late last month to dismantle the protest. Police acted days after Canadian Prime Minister Justin Trudeau called for blockades to end. The throttling of freight-rail traffic threatens to shave 0.1% to 0.3% from Canadian output in February, economists say.

Another blockade remains in place near Montreal in indigenous territory, on track owned by Canadian Pacific Railway.

Canadian port operators said Tuesday their work with Canadian National and other railroads to restore normalcy in the logistics network was paying off. "We're seeing significant forward progress in that regard," said Wendy Zatylny, president of the Association of Canadian Port Authorities.

Mr. Ruest said Canadian National received help from other railroad operators -- among them, Canadian Pacific -- to help move some products. Although the capacity offered was limited, Mr. Ruest said it did help the rail operator "manage some priorities to avoid things getting from bad to worse," citing the delivery of propane to farmers and households that rely on the fuel for heating.

"We can't allow what happened to happen," Mr. Ruest said. The blockades "cost a lot of money to Canadian National in lost revenue and higher costs," he said, adding they had the same impact for the railroad's customers.

Canadian National's share price was trading around C$127 on Toronto's main stock market when the blockades started on Feb. 6. The stock closed at C$113.96 on Tuesday.

Write to Paul Vieira at [e-mail]

(END) Dow Jones Newswires

March 03, 2020 17:38 ET (22:38 GMT)

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