Running Trades - a Voice for Canadian Railway Labour

BRENT JANG

From Monday's Globe and Mail

After saying good riddance to 2009, Canada's two largest railways are hoping that a recent uptick in shipments portends a robust 2010.

In the final week of 2009 and the first week of 2010, bright spots at Canadian National Railway Co. and Canadian Pacific Railway Ltd. included increased shipments of coal, lumber, chemicals, metals and automobiles.

Last week, Raymond James Ltd. analyst Steven Hansen raised his 12-month target price on CP to $65 from $55 while maintaining his $64.50 target for CN. "Our latest review of a basket of leading economic indicators also suggests that positive freight momentum should continue in 2010," Mr. Hansen said in his report, titled Thankful for the Calendar Turn - Let the Growth Resume.

CN and CP moved 307,465 carloads of goods last month, up 6.4 per cent from December, 2008. Considering that the freight carriers suffered through slumps in most commodity categories for most of 2009, any sign of improvement is welcome.

Eleven of 19 major commodity groups enjoyed year-over-year gains in December carload shipments at CN and CP, according to the Association of American Railroads, members of which include major carriers in Canada, the United States and Mexico.

"Railroads are happy to have 2009 behind them," association senior vice-president John Gray said in a statement. In 2010, the rail industry will be looking for signs of a recovery, tracking broader economic data in the coming weeks on gross domestic product, industrial production, capacity utilization, consumer confidence, retail sales and housing starts.

In his first message to employees since becoming CN's chief executive officer on Jan. 1, Claude Mongeau sounded an optimistic note. While Mr. Mongeau cautioned analysts in December that any rebound will likely be gradual, his recent corporate message stressed that long-term prospects are solid.

"The future of our industry is bright, and, indeed, I believe the golden age of rail is ahead of us. We are an essential component of the transportation infrastructure serving our economy," Mr. Mongeau wrote.