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CN forecasts pickup in export lumber shipments

Canadian National Railway CEO Claude Mongeau


Canada's largest railway is optimistic that shipments of lumber exports will climb as demand picks up despite global economic uncertainty in the short term.

"Asian traffic has good growth potential. At the same time, we might just see the U.S. housing starts give some benefit and some boost to growth in parallel," said Claude Mongeau, chief executive officer at Canadian National Railway Co.

Canadian lumber producers are "intent on keeping and growing their share of Asian traffic."

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Mr. Mongeau made the comments on Wednesday after delivering a speech to the Vancouver Board of Trade on the importance of Canada's West Coast as a Pacific gateway to Asian trade.

"Lately, we've seen a bit of a soft patch after years of very fast growth" in exports of lumber to China, he said. But he emphasized that the longer-term trend is positive for Canada's forestry sector and its trade relationship with China.

Mr. Mongeau also noted that U.S. housing starts have increased in 2012, and it is a matter of when and not if lumber deliveries will rally.

"Whether it's going to be 2013 or 2014 remains to be seen, but we have scope to grow in the U.S., for sure," he said.

In his speech, Mr. Mongeau said it is best for the Canadian government to stick with a "commercial approach to rail service" instead of adding layers of regulations by legislating customer service pacts.

If Ottawa does go the route of legislation, the new rules should place the onus on the Canadian Transportation Agency to arbitrate disputes and not rely on a "roster of arbitrators."

Mr. Mongeau said there needs to be mutual trust between the railway industry and shippers, instead of acrimony such as when one spouse serves divorce papers and it "doesn't make for romantic encounters."

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Having new rules that could unfairly favour shippers will be "a recipe for a host of unintended consequences" that would distract CN from fulfilling its collaborative role as "a true backbone of the Canadian economy," Mr. Mongeau said.

CN has been enjoying strength across its business segments, including moving more grain and intermodal cargo such as consumer goods.

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