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November 12 2018

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36 The Journal of Commerce | November 12 2018 www.joc.com Government THE TWO LARGEST Canadian freight railroads are positioning to capital- ize on tighter truck capacity when new regulation — much like the electronic logging device (ELD) rule imposed in the United States last year — takes effect late 2019 Canadian Pacific Railway expects trucking pressure to build through 2019 and into 2020. The second half of 2019, in particular, will provide "road to rail opportunities," said John Brooks, chief marketing officer, liken- ing it to the impact on the US market, which experienced double-digit price increases in spot and contract truckload markets. During CP's third-quarter earnings call in October, Brooks said the railroad was seeing an increase in domestic intermodal traffic, with total intermodal volume, including ocean containers, up 14 percent year over year in the third quarter, to 262,300 units. The volume jump drove inter- modal revenue up 19 percent to C$406 million (US$309 million) in the same period. The company's net profit in the third quarter surged 22 percent to C$622 million, as revenue rose 19 percent to nearly C$1.9 billion. While it focused on domestic intermodal pricing this year, sug- gesting a more measured approach to attracting volume, Canadian Na- tional Railway said it's revving up for 2019. During a second-quarter earnings call on Oct. 23, CN Presi- dent and CEO Jean-Jacques Ruest said the largest Canadian railroad is adding new restackers, container, and chassis capacity "to compete more head-to-head with long-haul trucking." CN's intermodal volume in the third quarter inched up 2 percent year over year, to 685,000 units. Reflecting its focus on pricing, CN intermodal revenue increased 6 percent in the same period to C$1.3 million. The company's net income jumped 18 per- cent to C$1.13 billion on a 14 percent revenue expansion, to nearly C$3.7 billion. The ELD rule imposed in the US in December has already affected Canadian trucking, both cross-bor- der and domestic services. Shippers dependent on cross-border trade with the United States experienced significant disruption starting Dec. 18, when the rule requiring truckers to use electronic logging devices (ELDs) rather than paper logbooks took effect. The ELD man- date is a US regulation, but its reach extends across the US border. Cross-border freight is such a large part of Canada's core transpor- tation business that many trucking companies already are ELD-compli- ant. Their drivers must have ELDs as soon as they cross the Ambassador Bridge or any of the 78 other Cana- da-US truck crossing points. The question now is how much domestic and drayage capacity, considering regional hauls will be impacted if they are 160 kilometers (99 miles) away from the port, will be taken out of the market already struggling to add skilled drivers. JOC Canada's turn Yet-to-be-implemented ELD mandate to further tighten Canadian trucking capacity JOC Staff CP reports an increase in domestic intermodal traffic, with total intermodal volume, including ocean containers, up 14 percent year over year in the third quarter. Shutterstock.com Canadian National Railway is adding new restackers, container, and chassis capacity "to compete more head-to- head with long-haul trucking." International | Washington | Customs | Security | Regulation

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