Canadian National Railway: A $45 Billion Enterprise



Canadian National Railway’s overview

Canadian National Railway (CNI) is the only transcontinental freight railroad in North America. The company owns and operates a T-shaped 19,600-mile network that spans eight Canadian provinces and 16 US states.

With the triangular network, this railroad connects the Atlantic coast, the Pacific coast, and the Gulf of Mexico. Headquartered in Montreal, Canada, the company had 23,172 employees at the end of 2015.

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The Canadian National Railway was incorporated on June 6, 1919, consisting multiple of railways that later went bankrupt. The federal government consolidated these railways with some of its already-owned railroads to form today’s Canadian National. The government of Canada privatized Canadian National on November 17, 1995.

Growth through acquisitions

Since its privatization, CNI has made some major strategic acquisitions. The most groundbreaking acquisition was the Illinois Central Railway in 1998, which linked Canada to the Gulf of Mexico. With this, CNI became the fifth-largest railroad in North America based on revenues.

Buoyed by the success of Illinois Central, Canadian National added another feather to its cap in 2001 with the acquisition of Wisconsin Central. This acquisition provided a direct link from Western Canada into Chicago, Illinois.

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Then came the BC Rail in 2004, which helped CNI strengthen its Forest Products division. It extended Canadian National’s reach into northern British Columbia. In the same year, CNI purchased Great Lakes Transportation, which helped CNI to gain a foothold into commodities hauling for the US steel industry.

The company acquired the Elgin, Joliet, and Eastern Railway Company in 2009. This deal helped CNI to link its five rail lines entering Chicago from all directions into one seamless system around the city.

Investing in ETFs

Canadian National’s US peers alongside its territory include Norfolk Southern (NSC) and CSX Corporation (CSX), which operate in the eastern US. Major western US operators comprise BNSF Railway and Union Pacific (UNP). Kansas City Southern’s (KSU) lines run from the Midwest to Mexico.

Investors wishing to hold a diverse portfolio can consider the SPDR S&P 500 ETF (SPY), which invests in all the US class I railroads. However, if you wish to indirectly hold shares of Canadian National, the PowerShares International Dividend Achievers Portfolio ETF (PID) holds 0.59% in the company.

In the next part, we will assess Canadian National’s network in the US and Canada.


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