Canadian National Railway (CN) freight train near Jasper, Alta. CN Photo
In Canadian National Railway Co.'s expansion strategy, it's good to be Alberta bound.
The country's largest railway, which will release its second-quarter financial results on Monday, is counting on Alberta to help propel its long-term growth.
By late summer, Montreal-based CN plans to start construction of a sprawling terminal northeast of Calgary, budgeting $200-million for the "logistics park."
The mandate of the 275-hectare site in Rocky View County, 10 kilometres from Calgary International Airport, is to handle "intermodal freight," or goods transported inside standardized metal containers that are readily transferred between trains and trucks. There will also be plenty of room for warehouse distribution centres.
Terminal construction is slated for completion by the end of next year and set to open in early 2013, with Calgary serving as an important hub for consumer and industrial products going in and out of southern Alberta, said CN spokesman Mark Hallman.
For CN, it's the latest in a series of projects in Alberta. The freight carrier bought four short-line railways in 2006-07 for $76-million. Since then, CN has spent $260-million on upgrading its northern Alberta network and is allocating a further $45-million for improvements in 2011.
There are also other investments in the resource-rich province such as double-tracking segments of the busy CN line east of Edmonton.
CN has been supporting petroleum and chemicals customers with efficient transportation, as well as speeding up grain and coal shipments in Alberta, Mr. Hallman said.
Salman Partners analyst Jayson Moss noted that among major North American railways, CN enjoyed the fastest growth in freight traffic in the second quarter - a 4.4-per-cent improvement in volume year-over-year, measured in carloads.
In the second quarter, "growth was seen across all commodity groups, with particular strength in metals and minerals, forest products and intermodal," Mr. Moss said in a research report. "Intermodal volume growth can be attributed to strong domestic traffic, as well as higher international traffic through the ports of Prince Rupert, Vancouver, and Montreal."
He added that "CN continues to operate soundly, posting steady growth in carload volumes and strong operational performance metrics."
Calgary-based Canadian Pacific Railway Ltd., which issues its second-quarter results on Wednesday, has been hurt by spring flooding in Saskatchewan, Manitoba and North Dakota.
Despite the challenges, especially CP's flood-related delays last month, "we continue to believe the long-term outlook for the Canadian railroads looks bright," Raymond James Ltd. analyst Steve Hansen said in a research note. "Economic growth in key emerging markets such as China also remains robust, which supports solid export activity."
Brent Jang