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Canadian National Railway Makes Rare Move Into Trucking With Deal For Trans X

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Canadian National Railway Makes Rare Move Into Trucking With Deal For Trans X
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Canada's largest railroad boosts intermodal and refrigerated service offering with acquisition of major trucking company.

Canadian National Railway (Nyse: CNI) is doubling down on its intermodal and refrigerated business with the acquisition of Winnipeg-based carrier Trans X Ltd. 

One of Canada's largest and oldest carriers, Trans X's business lines span truckload, LTL, intermodal, warehousing and freight forwarding. Terms of the acquisition were not disclosed.

Trans X will remain based in Winnipeg. The acquisition is subject to regulatory review from the country's Competition Bureau and the Ministry of Transportation.

Trans X has 1,500 trucks and 4,000 trailers. It also has a fleet of more than 1,000 intermodal containers and dedicated chassis pools, along with 12 terminals spanning western and eastern Canada, along with sites in Chicago and Eagan, Minnesota.a

"This brings us the ability to enhance our intermodal service offering for consumer goods, especially in the fast-growing temperature controlled market," said CN spokesman Patrick Waldron.

CN's own refrigerated transport service, Cargo Cool, covers the west coast, mid-continent and U.S. Gulf Coast. It touches 23 intermodal terminals and five logistics parks in Canada and the U.S.  

Keith Reardon, CN's vice-president of consumer products, said the railway has "worked alongside Trans X for many years as a supply chain partner and we know the emphasis they place on the customer's experience and on their commitment to safety.

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Intermodal accounted for $2.57 billion Canadian ($1.96 billion) of CN's revenue through the third quarter, about one-quarter of its total business and up 8 percent from the same period a year earlier. The company credited growing volumes of overseas traffic coming through Canada's principal ports of Prince Rupert and Montreal.

Revenue per intermodal carload increased 3 percent this year to $1,309. Revenue ton miles are up 1 percent to 44,883 million.

CN chief executive Jean-Jacques Ruest said on the company's last conference call that the lackluster growth of intermodal stemmed largely from capital projects and track maintenance that CN undertook this year that limited available capacity.

But with the projects largely completed, Ruest says CN could see better volumes in its intermodal service. And he remains positive on the overall health of consumer spending and more shippers transitioning to rail.

"Next year, with the capacity that we are adding currently as we speak in some of the newer re-stackers, containers and chassis coming into service in the fourth quarter, when it comes to 2019, we will have the ability to go back in the marketplace to compete more head-to-head with long haul trucking," said Ruest.

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The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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