Tuesday, February 20, 2018

CN facing heat from customers, suppliers and investors over service delays

Winter delays along the CN main line
between Prince Rupert and the prairies
have given industry observers to 
take note of service delays
(photo from CN website)
It's been a challenging few months for CN Rail, which has seen weather issues load on to existing service concerns to provide for delays for shipments across the continent, a growing problem that has started to catch the attention of not only customers, but investors as well.

The CN issues have become a bit of theme for the financial news sites over the last few weeks, as logistics professionals take note of the backlogs that have formed and the diversion of cargo to different facilities and shipping lines.

Many of the issues for CN have been weather related as extreme winter weather has had an impact on operations, particularly across Western Canada.

That is something that they are not alone in facing, as competitor CP Rail also has had its share of challenges to deal with this winter, though as CN's issues continued through this month, some logistics observers have noted some migration over to the nation's other rail line.

CN has also had staffing issues and the need to add to their stock of equipment become exacerbated by the additional strains on their service of this winter.

As opposed to the weather, which even a railroad has no control over, CN has taken steps to increase recruiting efforts for railway workers and has plans for a significant increase on investment in equipment over the next few years.

Those were two areas the railway highlighted in a financial report that CN issued last month, a review that provided for dividend increases for shareholders and details of planned investment for the year ahead.

The Northwest has not been without its trouble spots for the railway in the fall and winter period, over the course of the last few months CN has had to deal with two derailments in the Bulkley Valley area, as well as the closure of the railway along the Skeena in recent weeks due to avalanche risks.

The impact of those incidents has also felt at the Port of Prince Rupert, as the volume of containers to and from the Fairview facility, as well as other Port terminals, stops or has been delayed with each railway shut down.

Port facilities in Prince Rupert have seen increases in volume with the expansion of existing terminals in the last year, however with that expansion has come some hiccups as CN, which provides the only rail service through the Northwest, works to address the increased strain on their service delivery across Northern British Columbia.

The rail concerns, along with congestion issues at Fairview, have at times seen container ships diverted to Vancouver in the wake of increased dwell times in Prince Rupert, as shipping lines look to find the quickest route ashore and to their destinations.

Some of the notes on the current issues facing the railway can be found below:

Analyst says shippers switching to CP Rail as CN Rail service deteriorates
Haliburton says profit being hurt by CN service delays
Winter weather creating specific challenges for railway operations
Prairie grain movement not perfect, but not in crisis

For more items of interest related to CN in the Northwest see our archive page here.

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