Back to top

Analyst Blog

Zacks Equity Research

CNI Wins New Crude Shipment Deal


 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at or call 800-767-3771 ext.  9339.

Leading Canadian railroad Canadian National Railway Company (CNI - Analyst Report) has entered into a long-term contract to transport bitumen for Southern Pacific Resource Corp. Under the five-year arrangement, bitumen will be shipped from Canadian National intermodal terminal at Lynton in Alberta to another terminal in Natchez in Mississippi.

The shipments will then be carried in barges to refineries on the Gulf Coast. These shipments are expected to begin by the end of this year, starting at volumes of 12,000 carloads per year and more as production ramps up.

In transporting bitumen through Canadian National rail-based transportation, Southern Pacific expects to increase its cost efficiency by reducing diluent costs, and ultimately leading to higher netbacks. Further, Southern Pacific will be able to benefit from access to the Gulf Coast’s large crude oil market that currently trades at a premium to West Texas Intermediate (WTI)-based pricing.

With respect to Canadian National, the company expects to transport approximately 25,000 carloads of crude oil versus 5,000 carloads transported last year. As a result, the new agreement will remain accretive to Canadian National’s projected growth in petroleum products.

Canadian National expects strong demand across all its businesses with growth in wholesale and retail market supporting high business volumes for the company. As the main revenue contributor, pricing continues to rise at an average of 3 to 5% year over year growth.

Fuel surcharges have also risen substantially year-over-year. The management expects North American industrial production growth to be approximately 3.5%. We believe the projection remains accretive to the company’s estimated mid-single digit carload growth and accounts for approximately 10% earnings growth this year.

However, headwinds related to fuel cost, lower-utility coal shipments, poor U.S. grain export along with lower U.S. corn and soybean production and competition from peers like Canadian Pacific Railway Ltd. (CP - Analyst Report) remain near-term concerns.

We have a Neutral recommendation on Canadian National, supported by a Zacks #3 Rank (Hold).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%