CN Rail to purchase 350 new lumber cars to service growing U.S. demand
A Canadian National locomotive is seen Monday, February 23, 2015 in Montreal. (Ryan Remiorz / The Canadian Press)
Ross Marowits, The Canadian Press
Published Wednesday, May 2, 2018 6:50AM EDT
Last Updated Wednesday, May 2, 2018 3:16PM EDT
CN Rail says it will purchase 350 lumber cars to meet growing demand for forest products despite lower segment revenues in the first quarter.
"CN needs to and will do better moving lumber to market," stated interim president and CEO Jean-Jacques Ruest.
The new cars will be manufactured by National Steel Car Ltd. at its assembly plant in Hamilton, Ont., with deliveries expected to begin in September.
CN said it is also looking at an option to purchase or lease an additional 300 cars, which have a maximum load capacity of 129,000 kilograms.
The head of North America's largest lumber producer welcomed CN's investment.
"West Fraser looks forward to continuing to work with partners who can provide an effective supply chain serving the solid U.S. housing market," said Ted Seraphim, president and chief executive officer of West Fraser Timber.
In addition to new rail cars, CN said it expects to take delivery of the first of 60 new GE locomotives next month, and recently said it would acquire 350 additional box cars to meet demand.
CN Rail is spending an extra $700 million this year, half of which will be used to upgrade its network, with the work to be completed by November.
It also announced earlier this year that it is hiring 2,000 workers, including hundreds of conductors.
"We are investing to move the economy as we put the rolling stock, infrastructure and people in place to serve the growing needs of our valued customers," said Ruest.
National Steel Car said the order for lumber cars will result in the hiring of more than 250 employees at its Hamilton assembly plant, which currently employs more than 1,500 people.
The Montreal-based railway also said Wednesday that it is temporarily parking about 1,200 hopper cars, which are used to transport loose bulk products such as coal, grain and ore, after moving all grain orders in Western Canada for the third straight week.
CN Rail said it is seeking additional export orders for grain after demand this week fell below 5,000 cars per week.
"The decisive action we took in March to deploy more crews and locomotives has led to dramatic improvements in the movement of Western Canadian grain," stated Doug MacDonald, vice president of bulk.
He said the country's largest railway has provided more than 5,500 hopper cars every week since early March.
It averaged more than 6,100 cars per week in April, up from just 4,129 cars weekly in February. Demand peaked at 6,424 cars in the final week of April.
CN said removing excess rail cars from its network will improve fluidity other commodities and customers.
Canadian National and Canadian Pacific have said they have faced challenges due to a larger-than-expected grain crop and extreme winter weather.
CN Rail in particular has been criticized for its poor performance, ultimately resulting in the replacement of its CEO.
The company has apologized for failing to keep grain shipments moving reliably by rail, and vowed to mobilize more train cars and workers to clear the backlog.