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March 6, 2014

CN targets C$2.1 billion in 2014 capital investments to raise network safety and efficiency, improve service, grow business

MONTREAL--CN recently revealed a 2014 plan to invest approximately C$2.1 billion to continue to raise network safety and efficiency, improve service and grow the business.

Claude Mongeau, president and chief executive officer, said: “CN is committed to making continued improvements in its safety performance – infrastructure investments are critical to this, as well as to driving improvements in customer service and taking advantage of freight opportunities to grow the business at low incremental cost.

“Investments in our network and distribution capability, the acquisition of new locomotives and equipment and the enhancement of information systems and technology will help support our agenda of operational and service excellence. They will help us achieve our goal of becoming a true supply chain enabler and help our customers compete better in their markets. They will also position us to take advantage of business opportunities in intermodal, energy and other resource and manufacturing markets.”

CN is targeting to spend more than C$1.2 billion in 2014 on track infrastructure and to improve the safety, productivity and fluidity of the network. This investment will include the replacement of rail, ties and other track materials, bridge improvements, as well as various branch-line upgrades. This envelope will also include funds for strategic initiatives and additional improvements to track infrastructure in western and eastern Canada as well as in the United States. In 2013, CN invested approximately C$100 million in the Edmonton-Winnipeg corridor to increase rail capacity and to support the movement of strong volumes of grain and other commodities.

CN’s equipment capital expenditures in 2014 are targeted to reach approximately C$300 million, allowing the company to tap growth opportunities and improve the quality of the fleet. To accommodate increased traffic and improve operational efficiency, CN in 2013 took delivery of 44 new and 37 second-hand high-horsepower locomotives. In 2014, CN will acquire an additional 45 new high-horsepower locomotives.

By the end of 2014, CN will have acquired 763 high-horsepower locomotives over a 10-year period – these units will represent more than one-half of CN’s high-horsepower mainline fleet. Of these acquisitions, 114 units will have alternate-current electrical (AC) traction systems. AC traction motors are more robust than direct-current ones in extreme winter conditions and improve locomotive fleet reliability.

CN also expects to spend approximately C$600 million in 2014 on facilities to grow the business, including transloading terminals, distribution centers and the completion of its Calgary Logistics Park project. This envelope also includes capital for information technology to improve service and operating efficiency, and for other projects to increase the productivity of operations.

Across all of the envelopes are capital projects that will have a major impact on safety. In addition to capital expenditures to ensure the integrity of CN’s rail infrastructure, the company is allocating funds to enhance its system-wide flaw detection capabilities. CN will also complete the construction in 2014 of two state-of-the-art training facilities – one in Winnipeg, the other in suburban Chicago – that will help strengthen CN’s safety culture and prepare a new generation of safety-conscious railroaders.

In 2013, CN’s capital investment program totalled approximately C$2.0 billion.



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