CN announces plan to acquire new freight cars and containers

Earlier this month, Class I railroad carrier CN rolled out plans to increase its assets by acquiring more than 2,200 new freight cars this year and 1,300 new containers. Company officials said the impetus for this is to support traffic growth and improve service.

Included in these asset acquisitions, said CN, are 600 premium 60-foot double-door box higher payload cars for forest products and metals traffic, which the carrier says augment customer loading efficiency.

Other 2012 fleet additions by CN are comprised of:
-1,300 containers for grocery and consumer goods;
-558 high-capacity modern covered hoppers for grain exports;
-317 multi-level cars for finished vehicles deliveries to major cities;
-300 gondolas for coal exports;
-232 new ore cars for pelletized iron ore produced in Minnesota to supply steel mills in the United States; and
-200 multi-purpose box cars for the North American freight car pool

“CN is acquiring new freight cars and containers for a range of markets, including forest products, metals, minerals, coal, iron ore, steel, consumer goods, finished vehicles, and grain,” said Jean-Jacques Ruest, CN executive vice-president and chief marketing officer, in a statement. “These fleet additions will help us grow in line with our customers’ demands and ensure CN has the right mix of modern, productive assets. “CN’s rolling stock acquisition strategy is responding to evolving market conditions and is intended to ensure reliable, predictable supply chains for our customers.”

This announcement comes at a time when all Class I carriers continue to reinvest their capital into equipment and rail and infrastructure improvements.

Earlier this year, the Association of American Railroads (AAR) said that the seven North America-based Class I freight railroads are on track to invest a record $13 billion in capital expenditures for 2012, with the capital going towards expanding, upgrading, and enhancing the North American freight rail network.

While this asset upgrade is significant for CN, a railroad equipment expert told LM that it is more contingent on car type, coupled with the fact that each Class I railroad carrier follows their own lead—in terms of equipment needs—regardless of what its competitors do.

“One thing about CN is that a lot of their traffic flows do not fit as easily into the TTX car supply model as it does for the US Class I’s,” said Richard J. Kloster, senior consultant for freight transportation consultancy FTR Associates. “So for some car types CN is forced to blaze their path.”

Regarding box cars, Kloster explained that the only real buyers of box cars over the last 5 years or more have been TTX and CN. The US Class I’s, he said, have pushed their new car needs to TTX while CN has been going it alone for strategic reasons.

“We see box car builds being a little higher that the last several years but nothing near the replacement rate,” he said. “The BNSF built some cars recently but not in any quantities that would move the needle or could be considered a trend. So, to me this is a CN-specific order.”