CN Plans Nearly C$1 Billion In Capital Projects - Canadian National Railway (NYSE:CNI)

Canadian National Railway (NYSE:CNI) is investing C$985 million (US$720.1 million) in capital improvement projects in the provinces of Alberta, British Columbia and Quebec in 2020.

The capital projects come as CN has laid out its long-term intentions to bolster its eastern operations while also expanding network capacity in western Canada to handle greater export volumes. CN's overall capital budget for 2020 is $2.9 billion, and executives have said that CN will use the lower-volume environment of 2020 to conduct track maintenance to ensure the network's health.

The lower-volume environment enables CN "to further strengthen our railroad in terms of having the additional time available out there on the track," said Rob Reilly, CN"s chief operating officer during the company's first-quarter earnings call on April 27.

Earlier this month, CN touted its expanding propane export capabilities at Prince Rupert in British Columbia. And in February, the Canadian government laid out plans to invest $15 million in rail-related infrastructure in energy-producing Alberta.

Capital Projects In British Columbia

CN expects to spend approximately $445 million this year in expansion projects and maintenance in British Columbia. The railway has invested more than $1.3 billion in the province in the last five years.

Projects that CN says will expand capacity include the construction of 3.5 miles of double track between Vancouver and Edmonton; new sidings in the rail corridor between Edmonton and Prince Rupert; and continued support of multi-year infrastructure projects at the ports of Vancouver and Prince Rupert that are being done in collaboration with the Canadian government and the port authorities of Vancouver and Prince Rupert.

Maintenance projects include the replacement of more than 100 miles of rail, the installation of over 209,000 new railroad ties and over 46,000 concrete ties, the rebuild of 22 road crossing surfaces and maintenance work on bridges, culverts, signal systems and other track infrastructure, CN said. CN has 2,814 route miles in the province.

CN's British Columbia facilities include coal, grain and intermodal terminals at the Port of Vancouver, as well as a major rail classification yard and multiple distribution centers for forest products, metals and automotive products in the greater Vancouver area. CN also has CargoFlo bulk handling facilities in Vancouver and Ashcroft and an intermodal terminal at Prince George.

Capital Projects In Quebec

About $235 million will be for capital projects in Quebec, including projects to advance information technology and positive train control, the replacement of rail and ties, and the maintenance of track infrastructure. The railway said it has spent more than $1.8 billion in the province in the last five years.

Maintenance improvements include replacing more than 20 miles of rail, installing approximately 140,000 new railroad ties, rebuilding 47 road crossing surfaces and maintenance work on bridges, culverts, signal systems, and other track infrastructure, CN said. CN has 2,041 route miles in the province.

Facilities in Montreal include a major rail classification yard and repair shops and CN's headquarters. They also include an intermodal terminal, logistics park, automotive and metals distribution centers, and a CargoFlo bulk handling facility, in addition to service to the Port of Montreal.

In Quebec City, CN has a large classification yard as well as access to a deep-water port and metals, automotive, and forest products distribution centers.

CN has also been partnering with Hutchison Ports and the Port of Quebec to construct a new intermodal container terminal that will have a capacity of 700,000 twenty-foot equivalent units (TEUs). CN expects the container terminal to be open in spring 2024.

Capital Projects In Alberta

CN is also spending approximately $305 million on capital projects in Alberta. Projects include the construction of five miles of double track between Vancouver and Edmonton near Hinton, the replacement of rail ties and maintenance work on level crossings, bridges, culverts, signal systems, and other track infrastructure. The railway has spent more than $1.4 billion in the last five years on capital projects in the province.

CN's maintenance projects in Alberta include the replacement of approximately 71 miles of rail track, the installation of over 210,000 new railroad ties, and the rebuilding of 28 road crossing surfaces. CN has 2,522 route miles in Alberta.

CN's facilities in Alberta support the province's agricultural and energy sectors, as well as intermodal business at Calgary and Edmonton. Calgary facilities include a logistics park, an automotive distribution facility, a forest products distribution center, and a CN CargoFlo bulk handling facility. CN's footprint in Edmonton includes automotive distribution and CargoFlo bulk handling facilities, and metals and forest products distribution centers.

CN also has rail classification yards in Edmonton and Calgary, as well as railcar and locomotive repair shops at Edmonton's Walker Yard.

Click here for more FreightWaves articles by Joanna Marsh.

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