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Canadian National Railway

Compagnie des chemins de fer nationaux du Canada

CN Railway logo.svg

Canadian National System Map.PNG

System map

CN 8015, 5690 and 5517 Hinton - Jasper.jpg

CN EMD SD70M-2, SD75I and SD60F in Alberta, Canada

Overview

Reporting mark CN

Locale Canada, United States

Dates of operation 6 June 1919–present

Technical

Track gauge 1,435 mm (4 ft 8+1⁄2 in) standard gauge

Previous gauge 1,067 mm (3 ft 6 in)

Length 32,831 km (20,400 mi)

Other

Website www.cn.ca

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Canadian National Railway Company

Minimalist logo with a red uninterrupted smooth and thick line that spells the letters C and N

CN HQ 03.jpg

The headquarters of CN in Downtown Montreal

Native name

Canadian National Railway Company

Compagnie des Chemins de fer nationaux du Canada

Type Public

Traded as

TSX: CNR

NYSE: CNI

S&P/TSX 60 component (CNR)

Industry Transport

Predecessor Canadian Northern Railway

Founded 6 June 1919; 103 years ago

Headquarters Montreal, Canada

Key people

Robert Pace (Chairman)[1]

Tracy Robinson (President and CEO)

Margaret A. McKenzie (Founder and CFO)

Revenue CA$14.912 billion (2019)

Operating income CA$5.593 billion (2019)

Net income CA$4.216 billion (2019)

Owner

Bill Gates – through Cascade Investment (14.4%) and Bill & Melinda Gates Foundation (2.14%)

MFS Investment Management (4.8%)

Wellington Management Company (3.17%)

The Vanguard Group (2.77%)

BlackRock (2.4%)

Number of employees 24,000 (2018)

Website cn.ca

The Canadian National Railway Company (French: Compagnie des chemins de fer nationaux du Canada) (reporting mark CN) is a Canadian Class I freight railway headquartered in Montreal, Quebec, which serves Canada and the Midwestern and Southern United States.

CN is Canada's largest railway, in terms of both revenue and the physical size of its rail network, spanning Canada from the Atlantic coast in Nova Scotia to the Pacific coast in British Columbia across approximately 20,400 route miles (32,831 km) of track.[2] In the late 20th century, CN gained extensive capacity in the United States by taking over such railroads as the Illinois Central.

CN is a public company with 24,000 employees,[3] and as of July 2019 it has a market cap of approximately CA$90 billion.[4] CN was government-owned, having been a Canadian Crown corporation from its founding in 1919 until being privatized in 1995. As of 2019, Bill Gates is the largest single shareholder of CN stock, owning a 14.2% interest through Cascade Investment and his own Bill and Melinda Gates Foundation.[5]

From 1919 to 1960, the railway was referred to as "Canadian National Railways" (CNR).

Contents

1 History

1.1 Creation of the company, 1918–1923

1.2 Canadian National's Acquisitions

1.2.1 Savage Alberta Railway

1.2.2 Mackenzie Northern Railway

1.2.3 Wisconsin Central Railroad

1.2.4 Duluth Missabe & Iron Range Railroad

1.2.5 Duluth Winnipeg & Pacific Railroad

1.2.6 Elgin Joliet & Eastern Railroad

1.2.7 Bessemer & Lake Erie Railroad

1.2.8 Grand Trunk Western Railroad

1.2.9 Central Vermont Railway

1.2.10 British Columbia Railway

1.2.11 Illinois Central Railroad

1.2.12 TransX Group of Companies

1.3 Pros and cons of nationalization

1.4 CNR as a social and economic tool

1.5 Deregulation and recapitalization

1.6 Cutbacks and refocusing

1.7 CN's U.S. subsidiaries prior to privatization

1.8 Privatization

1.9 Contraction and expansion since privatization

2 CN today

2.1 Projects

2.2 Controversies

2.2.1 Accidents

2.2.2 Derailments

2.2.3 Disputes

2.2.4 Other incidents

3 Non-rail subsidiaries

3.1 CN Telegraph

3.2 CNR Radio

3.3 CN Hotels

3.4 Canadian National Steamship Company

3.4.1 West Coast

3.4.1.1 Former Canadian Northern Pacific ships

3.4.1.2 Former Grand Trunk Pacific steamships

3.4.1.3 CN-built steamships for the West Coast

3.4.2 East Coast

3.4.3 Cargo ships

3.5 Aquatrain

4 Corporate governance

4.1 Heads of the corporation

5 Passenger trains

5.1 Early years

5.2 New services

5.3 Decline

5.4 Expansion and service cuts

6 Locomotives

6.1 Steam

6.2 Electric

6.3 Turbo

6.4 Diesel

7 Major facilities

7.1 Hump yards

7.2 Other major yards

7.3 Intermodal terminals

8 See also

9 References

10 Further reading

11 External links

History

Designer Allan Fleming and CN director of communications Charles Harris at the launch of the CN logo at Montreal in 1960. Fleming’s logo has since become an icon of graphic design.

The Canadian National Railways (CNR) was incorporated on June 6, 1919, comprising several railways that had become bankrupt and fallen into Government of Canada hands, along with some railways already owned by the government. Primarily a freight railway, CN also operated passenger services until 1978, when they were assumed by Via Rail. The only passenger services run by CN after 1978 were several mixed trains (freight and passenger) in Newfoundland, and several commuter trains both on CN's electrified routes and towards the South Shore in the Montreal area (the latter lasted without any public subsidy until 1986). The Newfoundland mixed trains lasted until 1988, while the Montreal commuter trains are now operated by Montreal's EXO.

Historical marker at site of Canadian Northern's "last spike" near Ashcroft, British Columbia

On November 17, 1995, the Government of Canada privatized CN. Over the next decade, the company expanded significantly into the United States, purchasing Illinois Central Railroad and Wisconsin Central Transportation, among others.

Creation of the company, 1918–1923

The excessive construction of railway lines in Canada led to significant financial difficulties striking many of them, in the years leading up to 1920:

In response to public concerns, the Government of Canada assumed majority ownership of the near bankrupt Canadian Northern Railway (CNoR) on September 6, 1918, and appointed a "Board of Management" to oversee the company. At the same time, CNoR was also directed to assume management of Canadian Government Railways (CGR), a system mainly comprising the Intercolonial Railway of Canada (IRC), National Transcontinental Railway (NTR), Prince Edward Island Railway (PEIR), and the Hudson Bay Railway (HBR).

On December 20, 1918, the Government of Canada created the Canadian National Railways (CNR) – a body with no corporate powers – through Order in Council as a means to simplify the funding and operation of the various railway companies.[6] The absorption of the Intercolonial Railway would see CNR adopt that system's slogan, The People's Railway.

Another Canadian railway, the Grand Trunk Pacific Railway (GTPR), encountered financial difficulty on March 7, 1919, when its parent company Grand Trunk Railway (GTR) defaulted on repayment of construction loans to the Government of Canada.

The Canadian National Railway Company then evolved through the following steps:

the "railways, works and undertakings of the Companies comprised in the Canadian Northern System" were vested in the newly incorporated Company in June 1919, with provision for the later inclusion of any of the Government Railways[7]

vesting of the Grand Trunk Pacific Railway System in the Minister of Railways and Canals, acting as Government Receiver, in March 1919[8]

acquisition of the Grand Trunk Railway System in November 1919, implemented in May 1920[9]

GTR management and shareholders opposed to nationalization took legal action, but after several years of arbitration,[10] the GTR was finally absorbed into the CNR on January 30, 1923.[11] Although several smaller independent railways would be added to the CNR in subsequent years as they went bankrupt or it became politically expedient to do so, the system was more or less finalized at that point. However, certain related lawsuits were not resolved until as late as 1936.[12]

Canadian National Railways was born out of both wartime and domestic urgency. Until the rise of the personal automobile and creation of taxpayer-funded all-weather highways, railways were the only viable long-distance land transportation available in Canada. As such, their operation consumed a great deal of public and political attention. Canada was one of many nations to engage in railway nationalization in order to safeguard critical transportation infrastructure during the First World War.

In the early 20th century, many governments were taking a more interventionist role in the economy, foreshadowing the influence of economists like John Maynard Keynes. This political trend, combined with broader geo-political events, made nationalization an appealing choice for Canada. The Winnipeg General Strike of 1919 and allied involvement in the Russian Revolution seemed to validate the continuing process. The need for a viable rail system was paramount in a time of civil unrest and foreign military action.

Canadian National's Acquisitions

Savage Alberta Railway

On December 1, 2006, CN announced that it had purchased Savage Alberta Railway for $25 million and that it had begun operating the railway the same day.[13]

Mackenzie Northern Railway

In 2006, CN acquired Mackenzie Northern Railway, previously purchased by RailAmerica. This purchase allowed CN to increase their network footprint and hold the northernmost trackage of the contiguous North American railway network. Since being purchased by CN in 2006, it has been officially known as the Meander River Subdivision.[14][15]

Wisconsin Central Railroad

In January 2001, CN acquired the WC for $800 million.

Duluth Missabe & Iron Range Railroad

The DM&IR was purchased by Great Lakes Transportation and in 2011 the DM&IR was merged into CN's Wisconsin Central Subsidiary. The DM&IR was acquired at the same time as the Bessemer & Lake Erie Railroad.

Duluth Winnipeg & Pacific Railroad

The DWP was nationalized with CN in 1918 and became a part of CN's Grand Trunk Corporation in 1971. In 2011 the DWP was merged into the larger Wisconsin Central Subsidiary of CN.

Elgin Joliet & Eastern Railroad

In 2007 CN acquired the EJ&E to assist with traffic congestion in Chicago and the surrounding area. In 2013 EJ&E was merged into the greater Wisconsin Central Subsidiary of CN.

Bessemer & Lake Erie Railroad

The B&LE was acquired with the purchase of Great Lakes Transportation and the DM&IR.

Grand Trunk Western Railroad

The GTW was merged with Central Vermont in 1971 with the creation of the Grand Trunk Corporation. In 1991 the GTW was merged with CN under the "North America" consolidation program. Many of GTWs locomotives and rolling stock would be repainted and the motive power would get the new CN scheme.

Central Vermont Railway

Central Vermont was nationalized in 1918 and consolidated into the Grand Trunk Western in 1971 with the creation of the Grand Trunk Corporation.

British Columbia Railway

In 2003, BCOL sold to Canadian National and leased the railroad to CN for 990 years.

Illinois Central Railroad

In 1998 IC was purchased by CN and CN also acquired the Chicago Central in the deal.

TransX Group of Companies

In 2018 CN acquired the Winnipeg-based TransX Group of Companies. Transx continues to operate independently.[16]

Pros and cons of nationalization

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CN 5588 Spirit of Windsor on display at the Windsor, Ontario, riverfront

Regardless of the political and economic importance of railway transportation in Canada, there were many critics of the Canadian government's policies in maintaining CNR as a Crown corporation from its inception in 1918 until its privatization in 1995. Some of the most scathing criticism came from the railway industry itself—namely the commercially successful Canadian Pacific Railway (CPR), which argued its taxes should not be used to fund a competitor.

As a result of history and geography, the CPR served larger population centres in the southern Prairies, while the CNR's merged system served as a de facto government colonization railway to serve remote and underdeveloped regions of Western Canada, northern Ontario and Quebec, and the Maritimes.

CN was also disadvantaged by being formed from a collection of insolvent rail systems that were not intrinsically viable, as they seldom had the shortest route between any major cities or industrial centres; to this day,[when?] CN has many division points far from significant industries or traffic sources. The only notable exception is the former Grand Trunk mainline between Montreal and Chicago.

The company was also used as an instrument of Government of Canada policy, from the operation of ferries in Atlantic Canada, to assuming the operation of the narrow-gauge Newfoundland Railway following that province's entry into Confederation, and the partnership with CPR in purchasing and operating the Northern Alberta Railways.

CNR as a social and economic tool

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CNR was considered competitive with CPR in several areas, notably in Central Canada, prior to the age of the automobile and the dense highway network that grew in Ontario and Quebec. The former GTR's superior track network in the Montreal–Chicago corridor has always been a more direct route with higher capacity than CPR's. CNR was also considered a railway industry leader throughout its time as a Crown corporation in terms of research and development into railway safety systems, logistics management, and in terms of its relationship with labour unions.

Deregulation and recapitalization

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From the creation of CNR in 1918 until its recapitalization in 1978, whenever the company posted a deficit, the Government of Canada would assume those costs in the government budget. The result of various governments using CNR as a vehicle for various social and economic policies was a subsidization running into billions of dollars over successive decades. Following its 1978 recapitalization and changes in management, CN (name changed to Canadian National Railway, using the shortened acronym CN in 1960) started to operate much more efficiently, by assuming its own debt, improving accounting practices to allow depreciation of assets and to access financial markets for further capital. Now operating as a for-profit Crown corporation, CN reported a profit in 11 of the 15 years from 1978 to 1992, paying CA$371 million in cash dividends (profit) to the Government of Canada in this time.

Cutbacks and refocusing

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The CN ferry Hopedale off the outport of La Poile Bay, Newfoundland, in 1971

CN's rise to profitability was assisted when the company started to remove itself from non-core freight rail transportation starting in 1977 when subsidiary Air Canada (created in 1937 as Trans-Canada Air Lines) became a separate federal Crown corporation. That same year saw CN move its ferry operations into a separate Crown corporation named CN Marine, followed similarly by the grouping of passenger rail services (for marketing purposes) under the name Via-CN. The following year (1978), the Government of Canada decided to create Via Rail as a separate Crown corporation to take over passenger services previously offered by both CN and CPR, including CN's flagship transcontinental train the Super Continental and its eastern counterpart the Ocean. CN Marine was renamed Marine Atlantic in 1986 to remove any references to its former parent organization. CN also grouped its money-losing Newfoundland operations into a separate subsidiary called Terra Transport so federal subsidies for this service would be more visible in company statements.

CN also divested itself in the late 1970s and throughout the 1980s of several non-rail transportation activities such as trucking subsidiaries, a hotel chain (sold to CPR), real estate, and telecommunications companies. The biggest telecommunications property was a company co-owned by CN and CP (CNCP Telecommunications) that originated from a joint venture involving the railways' respective telegraph services. On its sale in the 1980s, it was successively renamed Unitel (United Telecommunications), AT&T Canada, and Allstream as it went through various owners and branding agreements. CN sold Terra Nova Tel to Newfoundland Telephone in 1988. Another telecommunications property wholly owned and built by CN was the CN Tower in Toronto, which still keeps its original name but was divested by the railway company in the mid-1990s. All proceeds from such sales were used to pay down CN's accumulated debt. At the time of their divestitures, all of these subsidiaries required considerable subsidies, which partly explained CN's financial problems prior to recapitalization.

CN also was given free rein by the Government of Canada following deregulation of the railway industry in the 1970s, as well as in 1987, when railway companies began to make tough business decisions by removing themselves from operating money-losing branch lines. In CN's case, some of these branch lines were those it had been forced to absorb through Government of Canada policies and outright patronage, while others were from the heady expansion era of rural branch lines in the 1920s and early 1930s and were considered obsolete following the development of local road networks.

In the period starting in the late 1970s and throughout the 1980s and early 1990s, thousands of kilometres of railway lines were abandoned, including the complete track networks on Newfoundland (CN subsidiary Terra Transport, the former Newfoundland Railway ended railway freight operations and mixed freight-passenger trains in 1988. Mainline Passenger rail service in Newfoundland ended in 1969.) and Prince Edward Island (the former PEIR), as well as numerous branch lines in Nova Scotia, New Brunswick, Southern Ontario, throughout the Prairie provinces, in the British Columbia interior, and on Vancouver Island. Virtually every rural area served by CN in some form was affected, creating resentment for the company and the Government of Canada. Many of these now-abandoned rights-of-way were divested by CN and the Government of Canada and have since been converted into recreational trails by local municipalities and provincial governments.

CN's U.S. subsidiaries prior to privatization

CN's railway network in the late 1980s consisted of the company's Canadian trackage, along with the following U.S. subsidiary lines: Grand Trunk Western Railroad (GTW) operating in Michigan, Indiana, and Illinois; Duluth, Winnipeg and Pacific Railway (DWP) operating in Minnesota; Central Vermont Railway (CV) operating down the Connecticut River valley from Quebec to Long Island Sound; and the Berlin subdivision to Portland, Maine, known informally as the Grand Trunk Eastern, sold to a short-line operator in 1989.[17]

Privatization

In 1992, a new management team led by ex-federal government bureaucrats, Paul Tellier and Michael Sabia, started preparing CN for privatization by emphasizing increased productivity. This was achieved largely through aggressive cuts to the company's management structure, widescale layoffs in its workforce and continued abandonment or sale of its branch lines. In 1993 and 1994, the company experimented with a rebranding that saw the names CN, Grand Trunk Western, and Duluth, Winnipeg, and Pacific replaced under a collective CN North America moniker. In this time, CPR and CN entered into negotiations regarding a possible merger of the two companies. This was later rejected by the Government of Canada, whereupon CPR offered to purchase outright all of CN's lines from Ontario to Nova Scotia, while an unidentified U.S. railroad (rumoured to have been Burlington Northern Railroad) would purchase CN's lines in western Canada. This too was rejected. In 1995, the entire company including its U.S. subsidiaries reverted to using CN exclusively.

The CN Commercialization Act[18] was enacted into law on July 13, 1995, and by November 28, 1995, the Government of Canada had completed an initial public offering (IPO) and transferred all of its shares to private investors. Two key prohibitions in this legislation include, 1) that no individual or corporate shareholder may own more than 15% of CN, and 2) that the company's headquarters must remain in Montreal, thus maintaining CN as a Canadian corporation.

Contraction and expansion since privatization

Following the successful IPO, CN has recorded impressive gains in its stock price, largely through an aggressive network rationalization and purchase of newer more fuel-efficient locomotives. Numerous branch lines were shed in the late 1990s across Canada, resulting in dozens of independent short line railway companies being established to operate former CN track that had been considered marginal. This network rationalization resulted in a core east–west freight railway stretching from Halifax to Chicago and Toronto to Vancouver and Prince Rupert. The railway also operated trains from Winnipeg to Chicago using trackage rights for part of the route south of Duluth.

In addition to the rationalization in Canada, the company also expanded in a strategic north–south direction in the central United States. In 1998, in an era of mergers in the U.S. rail industry, CN bought the Illinois Central Railroad (IC), which connected the already existing lines from Vancouver, British Columbia to Halifax, Nova Scotia with a line running from Chicago, Illinois to New Orleans, Louisiana. This single purchase of IC transformed CN's entire corporate focus from being an east–west uniting presence within Canada (sometimes to the detriment of logical business models) into a north–south NAFTA railway (in reference to the North American Free Trade Agreement). CN is now feeding Canadian raw material exports into the U.S. heartland and beyond to Mexico through a strategic alliance with Kansas City Southern Railway (KCS).

Properties of the CN in the United States serve, in many instances, as routes for Amtrak. Pictured is the Amtrak station in Hammond, Louisiana, refurbished with a modern passenger platform. This segment of the CN was built in 1854 to form part of the New Orleans, Jackson and Great Northern railway, which later became part of Illinois Central.[citation needed]

In 1999, CN and BNSF Railway, the second largest rail system in the U.S., announced their intent to merge, forming a new corporate entity North American Railways, headquartered in Montreal to conform to the CN Commercialization Act of 1995. The merger announcement by CN's Paul Tellier and BNSF's Robert Krebs was greeted with skepticism by the U.S. government's Surface Transportation Board (STB), and protested by other major North American rail companies, namely CPR and Union Pacific Railroad (UP). Rail customers[who?] also denounced the proposed merger, following the confusion and poor service sustained in southeastern Texas in 1998 following UP's purchase of Southern Pacific Railroad two years earlier. In response to the rail industry, shippers, and political pressure, the STB placed a 15-month moratorium on all rail-industry mergers, effectively scuttling CN-BNSF plans. Both companies dropped their merger applications and have never refiled.

CN EMD SD60F sits in Toledo, Ohio.

After the STB moratorium expired, CN purchased Wisconsin Central (WC) in 2001, which allowed the company's rail network to encircle Lake Michigan and Lake Superior, permitting more efficient connections from Chicago to western Canada. The deal also included Canadian WC subsidiary Algoma Central Railway (ACR), giving access to Sault Ste. Marie and Michigan's Upper Peninsula. The purchase of Wisconsin Central also made CN the owner of EWS, the principal freight train operator in the United Kingdom.

On May 13, 2003, the provincial government of British Columbia announced the provincial Crown corporation, BC Rail (BCR), would be sold with the winning bidder receiving BCR's surface operating assets (locomotives, cars, and service facilities). The provincial government is retaining ownership of the tracks and right-of-way. On November 25, 2003, it was announced CN's bid of CA$1 billion would be accepted over those of CPR and several U.S. companies. The transaction was closed effective July 15, 2004. Many opponents – including CPR – accused the government and CN of rigging the bidding process, though this has been denied by the government. Documents relating to the case are under court seal, as they are connected to a parallel marijuana grow-op investigation connected with two senior government aides also involved in the sale of BC Rail.