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Home / News & Reviews / News Wire / CN scales back operations as volume falls, will idle section of former BC Rail NEWSWIRE

CN scales back operations as volume falls, will idle section of former BC Rail NEWSWIRE

By Bill Stephens | April 2, 2020

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MONTREAL – Canadian National continues to scale back its operations as traffic declines amid the coronavirus pandemic.

The railroad furloughed several hundred people in the past week, on top of the 1,400 who were furloughed in the past couple of weeks, CEO JJ Ruest said on an investor webcast Thursday.

CN’s traffic was down 13% last week on a carload basis, led by declines in automotive traffic, crude oil shipments, and frac sand. But CN continued to see strong volumes of Canadian grain, Canadian export coal, propane, and domestic intermodal.

And Ruest says CN’s network is running well as it reduces train starts in order to maintain train length and weight as volume slumps.

Ruest says the railroad expects overall volume to get progressively weaker in the coming weeks as factories shut down or curtail production and consumers cut back on spending. CN wants to be ready when volume eventually bounces back, but it’s unclear when that might happen due to uncertainty over the pandemic, Ruest says.

CN has had difficulty purchasing disinfecting products, Ruest says, so the railroad has begun making its own disinfectants in shops as well as having employees of its freight forwarding business in China buy disinfectants and send them to North America via air freight. This ensures that CN will continue to be able to disinfect locomotive cabs between crew changes, as well as sanitize things such as cranes, heavy equipment, tools, and company vehicles.

CN is preparing to open a sixth rail traffic control center to reduce the risk of COVID-19 having an impact on operations. CN previously opened two additional dispatch offices to separate rail traffic controllers who previously worked at operations centers in Edmonton, Alberta, and Chicago. Rail traffic controllers also work in Montreal.

The railroad has idled its yard in Battle Creek, Mich., as finished vehicle volume plummeted 50% last week due to major automakers shutting down plants to prevent the spread of coronavirus.

Separately, CN said it would idle a large section of its former BC Rail line due to the ongoing downturn in lumber production in British Columbia, where wildfires and a pine beetle infestation have reduced available timber. Effective on April 3, CN will suspend service between Squamish and Williams Lake, British Columbia.

Existing traffic north of Williams Lake will be routed to Vancouver via Prince George and Kamloops.

“This is not a decision taken lightly,” CN said in a statement. “We are sympathetic to the disruption of this change on the lives of our employees, particularly in the current environment, and they may have an opportunity to remain with CN in other locations. Based on collective bargaining agreements and depending on seniority, they may elect to work at other CN locations in BC and where there is a shortage of personnel.”

More than two dozen lumber mills in British Columbia shut down or curtailed production in 2019, according to the province.

CN is likely to scale back its capital spending this year, Chief Financial Officer Ghislain Houle says, but the railway will move forward with capacity expansion projects scheduled for its main lines to Vancouver and Prince Rupert, B.C., where intermodal and coal traffic are expected to rise.

Ruest and Houle spoke during a webcast with Citibank analyst Christian Wetherbee.

6 thoughts on “CN scales back operations as volume falls, will idle section of former BC Rail NEWSWIRE

  1. Maybe having dispatchers/rail traffic controllers in one central location is not a good idea after all.

  2. JEFFREY – Is having all DS in one place a great idea? Guess not. Remember when CSX couldn’t run trains in Michigan because there was a hurricane in Florida affecting DS at Jacksonville.

  3. Good Morning All
    What about the Rocky Mountaineer? Will they be able to continue north of Squamish if there is no freight traffic on the line?
    Until now they only canceled departures before July
    Regards Frank

  4. The PSR-infused executives must be crying over their Chardonnay or single malt Scotch about those out-of-the-money stock options they have generously granted themselves. Those excessive valuations with PE’s over 20 will not return anytime soon, if ever.

    The mass furloughs of employees will no doubt come to bite them in their rears, no doubt. The layoffs will last a VERY long time. Workers will be on unemployment paying a fraction of former earnings and will adjust to having less cash. The need to return to a very tough working environment to make $100K will become less attractive. The $50K pickup truck will be kept for 10 years instead of 3. People will simply move away or find other things to do.

    This provides a good laugh, too: “CN is preparing to open a sixth rail traffic control center to reduce the risk of COVID-19 having an impact on operations.” Think about Harrison’s consolidating all of CSX’s dispatching in Jacksonville now in pandemic mode and forever subject to hurricanes. Such executive visions — or was it really hallucinations?

    Truckers will have lost volume, too, and will be hungry and have a pricing advantage.

    The Scotch sipping Class 1 executives will make more cuts and keep running their 3 miles long land barges less frequently and customers will continue to abandon rail. Only captive shippers will remain.

  5. Interesting there is no comments of the passenger service Trains Magazine talked about on that portion of the line. What is happening to that.
    As well BC Rail had an extremely successful piggyback service to Prince George from North Vancouver. It had to go away before the sale of the service to CN Rail. Now we have retired truckers having to go back to work to help with the back log of freight to Prince George. It is so bad that one former trucker and transit operator has gone back just to help the cause. He is going to work hoping not to have to chain up on route as he does not know if he could handle the weight of carrying the chains and putting them on the wheels. Then there are the working conditions. No bathrooms to speak of and little in the way of food service. This would make a great story.

  6. I would be surprised to see the Squamish/Williams Lake section ever reopen. Just check the track profile.

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