Canadian National Railway Co. is spending about $600-million (U.S.) to buy 200 locomotives amid a surge in North American freight volumes.
Canada's largest rail carrier said on Friday the engines, made by General Electric in Fort Worth, Tex., will begin arriving in 2018, with the rest delivered in 2019 and 2020. It's the largest purchase by a major North American railway since 2014, CN and GE said in a joint statement.
The announcement comes as CN faces congestion and delays on its network that it attributes to a sharp rise in freight.
Luc Jobin, CN's chief executive officer, said the purchase is a show of confidence in the North American economy. "In the years ahead, these GE Transportation locomotives and their digital technology will support and enhance our operational efficiency," Mr. Jobin said in a statement.
"CN's steadfast commitment to serving the expanding needs of its customers across Canada and the United States is helping to turn around the North American locomotive market," said Rafael Santana, chief executive officer of GE Transportation.
CN's sales and carloads rose by 11 per cent in the first nine months of 2017, led by a 28-per-cent rise in metals and minerals and a 15-per-cent jump in containers.
This outperformed the gains of less than 5 per cent posted by Calgary-based Canadian Pacific Railway Ltd. and U.S. carriers.
CN said its frac sand business has posted a year-to-date increase of more than 100 per cent, while coal has risen by 41 per cent. Autos are up by 18 per cent, as measured by revenue per tonne-mile.
CN recently said it will hire about 5,500 people by next year to meet the new demand, which is strongest in the western Canadian ports and grain operations.
CN declined to say how much it is spending on the locomotives, but an industry source said they cost about $3-million (U.S.) each. The 195-tonne locomotives produce 4,500 horsepower and can pull a freight train at 110 kilometres an hour, GE says.
The engines produce 70-per-cent fewer emissions than the previous version and meet the U.S. Environmental Protection Agency's standards without any modifications, a costs savings for owners, GE says.
The new purchase comes on top of the 22 ordered earlier this year. In addition, CN is returning about 100 engines that had been in storage to service .
Before the deal, CN's locomotive fleet numbered 2,300. CN's 31,000-kilometre network reaches from coast to coast in Canada and the Gulf of Mexico. The company employs 23,000 people.