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Canadian National locomotives are seen in Montreal, Que., on Feb. 23, 2015.Ryan Remiorz/The Canadian Press

Canada’s two major railways posted a collective 4-per-cent rise in freight traffic in 2018, led by a 23-per-cent boost in shipments of oil and other petroleum products.

Carloads of chemicals and coal were the next-biggest gainers, at 5 per cent each, according to year-end data released on Thursday by the Association of American Railroads, which includes the U.S. operations of Canadian National Railway Co. and Canadian Pacific Railway Ltd.

The amount of oil moving by rail to U.S. markets from Alberta has exceeded the peaks of 2013 and 2014 as producers boosting output from new projects seek to reach U.S. refineries as new pipeline projects face delays.

In the final week of 2018, CN and CP together hauled more than 10,000 oil-tank cars, a 55-per-cent increase from the same period a year ago, AAR said. Volumes have been driven higher by a persistent shortage of available pipeline capacity and a discount on Western Canadian Select oil that has made rail transport a profitable option for shippers.

By August, 2018, the oil shipments by rail to the United States almost matched the volume moved for all of the previous year, according to Canada’s National Energy Board.

Coal demand and production have risen in response to higher prices for natural gas, a rival fuel source.

Shipments of intermodal containers, which move by ship, rail and truck and hold everything from T-shirts to auto parts and crops, rose by 4 per cent for the year. Grain cars increased by 3 per cent, while forest products fell by almost 2 per cent, the AAR said.

Fadi Chamoun, a stock analyst at Bank of Montreal, said the strength in rail shipments is attributable to the strong economy in the United States, and a tight trucking market beset by a driver shortage. He noted all major North American railways met or exceeded his annual growth forecasts for 2018.

CN’s share price fell by 2 per cent in 2018 as CP’s rose by 2 per cent. The broader S&P/TSX Composite Index, meanwhile, fell by 12 per cent amid increasing trade tensions between the United States and China and doubts over global economic growth.

Analysts at Rabobank see no shortage of risks to the economy in 2019, and say the odds are good at least some of them will materialize. These include North Korea’s warnings to the United States, Brexit, political unrest in parts of Europe and weaker economic data in Asia.

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