(The following story by Brent Jang appeared on the Globe and Mail website on September 21.)
TORONTO — Canadian National Railway Co. is patiently shopping for small acquisitions, content for now to be in a club of six major carriers that have carved up three regional duopolies.
Montreal-based CN will bide its time in pondering the right fit, perhaps a “tuck-in acquisition” that would help expand its network, CN chief financial officer Claude Mongeau said yesterday.
“CN is always on the lookout. It’s not like there are many out there, and they tend to be small. But when we see them, we act on them,” he said during RBC Dominion Securities Inc.’s transportation webcast.
The Big Six maintain strongholds along geographical lines.
“It’s really three natural duopolies,” Mr. Mongeau said, referring to CN and Canadian Pacific Railway Ltd. in Canada, Union Pacific Corp. and Burlington Northern Santa Fe Corp. in the western half of the United States, and CSX Corp. and Norfolk Southern Corp. in the eastern U.S. half.
One investor said CN has been criticized for not doing more on the safety front as it makes productivity gains. Mr. Mongeau responded that “our overall safety statistics are improving.”
He dismissed the criticisms, saying “there’s absolutely no way CN can make more money by skimping on safety. Every accident is highly disruptive to our network … Our challenge is to keep the trains on the rails and to hopefully continue with a good track record, so that the media attention naturally dies away over time.”
CPR CFO Michael Lambert took the opportunity to praise the Calgary-based carrier’s pending purchase of Dakota Minnesota & Eastern Railroad Corp.
Both CN and CPR are cautioning about clouds on the horizon, including a potential economic slowdown that would crimp demand for rail services.