MONTREAL — Canadian National experienced a series of shocks to the system last year, and the fourth quarter was no exception: Profits and revenue declined as disruptive port work stoppages and a cold snap put a lid on traffic volumes.
“Now, 2024 was clearly not what we expected and certainly not what we planned,” CEO Tracy Robinson told investors and analysts on the railway’s Thursday afternoon earnings call. “We are happy to have it behind us. We experienced a number of one-off challenges that had some outsized impacts on our results.”
Among them: Robinson says the Canadian government turned a “normal labor dispute” between CN and the Teamsters Canada Rail Conference into three months of uncertainty over the summer, which prompted shippers to divert U.S.-bound cargo away from Canadian ports and CN’s international intermodal trains. There was a brief work stoppage that shut down CN’s Canadian network in August, followed in the fall by labor disputes that closed ports in British Columbia and Quebec.
“Long story short, we were resourced for more volumes than we handled and we didn’t deliver growth to the bottom line. We’re not happy with that,” Robinson says.
But she says CN was resilient and finished the year with the railway’s second-best safety performance. “The team’s agility in managing through the year was solid. Execution was very strong. Our operation recovered from each shock quickly and effectively,” Robinson says.
Says Derek Taylor, chief field operating officer: “It was a hell of a dynamic year with lots of things thrown at this railway, which proved the resiliency of this network and this team.”
The fourth quarter, Taylor says, was a tale of two halves.
“During the first half of the quarter, we had ideal operating conditions in terms of weather. The team handled strong demand very efficiently. We kept pace with customer orders and did not have any backlogs,” he says. “Unfortunately, we began November with two weeks of port labor disruptions both on the West Coast affecting Vancouver and Prince Rupert as well as in eastern Canada at Montreal. This was impactful to our intermodal network due to the staging of trains and balancing of equipment, but the rest of the railway continued to run well. Now during the second half of the quarter, just as we started to see volumes ramp up after the port labor stoppage, we started a long stretch of really cold weather across much of the western region.”
The 28 days of extreme cold in Western Canada forced CN to restrict train lengths, which reduced capacity, slowed the network, and led to traffic backlogs in the railway’s busiest region. Operations have since recovered, Taylor says, and CN is fluid and current with freight demand.
CN expects growth to resume this year, despite uncertainty surrounding the Trump administration’s threat to impose 25% tariffs on goods imported from Canada and Mexico, and Canada’s plans for retaliatory tariffs.
“Now clearly, we can’t predict how this will unfold, but we can control how we respond and how we partner with customers to adjust. And we’ve considered a full range of options and have a plan for various scenarios,” Robinson says.
CN’s 2025 outlook is built on a forecast of modest economic growth and includes a low to mid-single-digit increase in revenue ton-miles — with more than half the growth driven by CN-specific growth projects and a third of it reliant on a return to normal international intermodal volume levels through Canadian ports. CN also projects earnings growth of 10% to 15% this year.
The railway plans to spend $3.4 billion on capital programs. “Later this year we’re looking forward to completing two additional sections of double track on the Edson Sub west of Edmonton, increasing capacity by 25% through this critical link supporting our growth to the West Coast,” says Patrick Whitehead, chief network operating officer.
To date, CN has received 160 modernized locomotives as part of its ongoing DC-to-AC conversion program. “This enhances fleet reliability, fuel efficiency, and improves availability with fewer failures,” Whitehead says, noting that two AC units equal the pulling power of three DC locomotives.
For the fourth quarter, volume was down 3% when measured by revenue ton-miles, CN’s preferred metric, or 5% on the basis of carloads and containers. For the year, CN’s RTMs increased 1%, while carloads and containers were down 1%.
Fourth-quarter operating income declined 10%, to Ca$1.6 billion, as revenue declined 3%, to $4.3 billion. Earnings per share, adjusted for the impact of one-time items, decreased 10%, to $1.82. The operating ratio increased 3.3 points, to 62.6%.
For the full year, operating income fell 5%, to $6.2 billion, as revenue increased 1%, to $17 billion. Adjusted earnings per share decreased by 2%. CN’s operating ratio increased 2.6 points, to 63.4%.
