(Bloomberg News circulated the following article by John Hughes on March 28.)
WASHINGTON — Canadian National Railway Co. and Norfolk Southern Corp. agreed to changes in routing traffic between their rail networks to avoid bottlenecks as Asian imports and economic growth increase cargo demand.
The actions include making Memphis, Tennessee, rather than Chicago the connection point for trains between western Canada and the south-central U.S., the companies said in a statement. Canadian National is the largest Canadian railroad and Norfolk Southern is fourth biggest in the U.S.
Canadian National announced similar agreement in November with Union Pacific Corp. and in January with Burlington Northern Santa Fe Corp. Railroads’ traffic and rates have increased as they benefit from economic growth and rising Asian imports. Sales rose 13 percent last year at Norfolk, Virginia-based Norfolk Southern and 11 percent at Montreal-based Canadian National.
“With demand for freight rail service increasing at historic levels throughout North America, this is a creative way of expanding network capacity and enhancing the service options available to our joint customers,” Donald Seale, Norfolk Southern executive vice president of sales and marketing, said in the statement.
The two railroads also said traffic between the Gulf of Mexico in Louisiana and the northeastern U.S. will change tracks in New Orleans or Memphis to create a more direct route. They plan to expand use of a November agreement that funnels trains through Rouses Point, New York, to streamline service between eastern Canada and the eastern U.S.