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AUG 30, 2023

Ready for Harvest – CN and the 2023 National Grain Car Council Meeting

Every August, the National Grain Car Council brings grain shippers, railway companies, and members of the U.S. Surface Transportation Board together to discuss market dynamics and railroads’ readiness for the upcoming harvest. This year’s meeting was held in Kansas City on August 15.

CN advised the Council it expects to deliver another year of strong execution in 2023. In 2022, CN set a new high-water mark for its Gulf bulk grain export program. Those results were driven by more than strong global and domestic supply and demand factors – CN had the resources and the operational plan in place to deliver for its agricultural customers. Further, the operational changes made under the leadership of CN’s CEO Tracy Robinson earlier in 2022 delivered the best network velocity on CN since 2016 and created capacity, allowing CN to build on the strong velocity results it delivered the previous fall.

CN’s Resources Heading into Fall 2023

Ready for Harvest – CN and the 2023 National Grain Car Council Meeting - Traction Locomotives

CN’s report to the National Grain Car Council included an update on our labour and fleet investments. Last summer, CN went into the U.S. grain harvest season well-resourced from a personnel perspective with a complement of Train & Engine (T&E) employees in line with pre-COVID levels. As of mid-June 2023, CN’s T&E employee count in the U.S. was 2,649 employees compared to 2,450 T&E employees in July 2022. CN’s operating crew base increased year-over-year across the Gulf, Central, and Midwest divisions. CN’s retention rate for fully trained and in-service T&E employees in the U.S. this year is 95.8% with a steady stream of trainees coming through CN’s Homewood training centre.

The CN locomotive fleet is also in good shape heading into harvest. CN had an inventory of roughly 1,900 high- and mid-horsepower locomotives as of early August 2023 compared to roughly 1,950 high- and mid-horsepower locomotives at the same time last year. CN will add 35 modernized AC-traction locomotives to the fleet between October and December 2023, with another 40 to be added through 2024.

As of early August 2023, the CN-owned and leased grain hopper car fleet stood at approximately 12,900 hopper cars, of which approximately 1,325 hopper cars are dedicated primarily to US grain service. These cars are made available for manifest and unit train service. As of early August 2023, CN’s active U.S. grain hopper car fleet stood at approximately 700 cars. The remainder of the U.S. hopper car fleet, approximately 625 cars, will be brought out of storage as required in preparation for the 2023 harvest.

Demand Forecasting is Key

CN depends on customer demand information to ensure the right level of resources are in place throughout the shipping season. Getting the right cars in the right place at the right time keeps U.S. grain moving. The supply chain can only perform to its full potential with accurate planning and data.

Grain customers are best positioned to provide accurate demand signals. In the absence of demand forecasts from customers, CN must use historical records and long-term trend data to decide when and where to place hopper cars. Historical data is a poor substitute for customer demand forecasts because local crop conditions and grain market dynamics change so much from year to year. For example, this year has seen massive South American corn and soybean crops enter export markets as well as continued market uncertainty given the conflict in Ukraine. To get ahead of market developments, good communication and close collaboration with our supply chain partners are critical to delivering strong, consistent operational performance.