Summary of Canadian National Railway Company (CNI) Conference Call Company Overview - **Company**: Canadian National Railway Company (NYSE:CNI) - **Date**: March 17, 2026 - **Speakers**: Patrick Whitehead (COO), Ghislain Houle (CFO) Key Points Industry and Operational Performance - The railroad network is performing at its best in over a decade, with significant improvements in operational metrics: - Car velocity increased by nearly 10% year-to-date compared to the previous year [5] - Network train speed improved by 6% [5] - Terminal dwell time decreased by 6% [5] - Record fuel efficiency achieved in February 2026 [5] - Volumes based on Revenue Ton-Miles (RTMs) are up 3% year-to-date, slightly exceeding expectations [5] - The network's fluidity is a key enabler of performance, although winter weather conditions have caused fluctuations in volumes: - January volumes down 3% due to harsh conditions, February volumes up 15%, and March volumes down 4% due to returning winter [6] Grain and Commodity Movement - Canadian grain movement remains strong, with record volumes delivered in early 2026: - Achieved second-best January and record February grain movement [7] - Improved car cycle times by 15% compared to last year, allowing for more productive movement with a lower asset base [7] Capital Expenditure and Growth Strategy - The company reduced its capital envelope for 2026, not due to constraints but because major work has been completed [9] - The locomotive fleet is in excellent condition, with units in storage, and the network has capacity for growth [10] - The company is well-positioned to leverage opportunities in agriculture and energy sectors, supported by a strong port network [10] Financial Considerations - Currency exchange rates are a headwind, with the Canadian dollar hovering around 73-74 cents against the US dollar, impacting EPS by about five cents annually for every cent of appreciation [11] - Fuel prices have increased due to geopolitical tensions, expected to create a headwind of $0.03-$0.04 in the first quarter [12] - Tariffs, particularly on forest products and metals, are impacting operations, with a significant financial impact of around CAD 350 million in 2025 [53] Staffing and Labor Productivity - Approximately 800 train and engine employees are currently furloughed, but there is a high return rate of over 90% when volumes increase [29][30] - Labor productivity has improved significantly, with a 12% increase in GTMs per train and engine headcount [33] Integration and Market Challenges - The company is less impacted by potential mergers in the industry, with 85% of traffic originating on its lines [60] - Concerns exist regarding the integration challenges of large rail networks, particularly around IT systems and operational plans [63] - The company aims to protect its franchise and ensure competition remains intact [61] Partnership Opportunities - The company is focused on converting truck traffic to rail, with partnerships such as the Falcon service from Mexico to Toronto [70] - Operationalizing partnerships has been a key focus, with successful examples leading to improved service and efficiency [74] Market Outlook - The company is monitoring energy price volatility and its potential impact on various markets, particularly housing starts and automobile sales [82] - The network has been built to accommodate growth, with significant improvements in double-tracking and capacity [88] Additional Insights - The company emphasizes the importance of operational discipline and agility in responding to market demands [8] - Continuous efforts are being made to enhance efficiency and reduce costs in the face of external challenges [24][55] This summary encapsulates the key insights and operational highlights from the Canadian National Railway Company's conference call, reflecting its current performance, strategic direction, and market challenges.