CN Rail Profits Increase at What Expense?

Canadian National Railway has recently said it expects higher earnings for 2012 after boosting its second quarter net profit to $631 million and increasing revenues by 13% (Financial Post).

Some railway analysts are wondering at what expense do CN Rail’s increasing profits come? What are some of the changes that have taken place since CN was privatized in 1995 (see this article)?

Across North America, two of the ways CN has been reducing its operating expenses are running too-long-trains and stacking its containers. Both of these cost-cutting measures cause increased stress on the rail infrastructure and result in increasing numbers of derailments. As well, residents and businesses located within earshot of CN’s lines are subjected to increasing levels of noise and vibration for longer periods of time as CN’s loads get longer and heavier and move slower.

In the United States, communities have been raising concerns about CN breaking promises to spend money to mitigate additional noise and reduce railway crossing blockages. Emergency response times have been increasing as ambulances and fire trucks are blocked at CN Railway crossings. In some cases, resident groups and other bodies have successfully sued CN in this regard.

Other cost-cutting measures by CN include neglecting many of its lines that have been falling under major disrepair. Rail ties are rotting, rail welds are not being properly maintained, spikes holding rails on the ties are popping out, and gravel railway beds are unstable because they aren’t being properly maintained. Many CN employees are well aware of this growing “infrastructure debt” on the part of CN.

An ever-increasing number of CN derailments across North America is evidence of CN’s crumbling infrastructure. CN’s trains are derailing at its rail yards, at switches, and at curves in rail lines where weight on the outside rail causes increased stress. Freight cars are derailing and damaging millions of dollars of freight; and tanker cars are derailing and spilling hazardous chemicals and other materials endangering the environment, including killing fish. The Transportation Safety Board of Canada, the U.S. National Transportation Safety Board and other agencies have criticized CN over its operating practices, safety record and negative impacts on the environment. In some cases, fines have been levied against CN.

As well as neglecting maintenance and repair of some of its lines, CN is not spending money keeping its rights-of-way clear. CN rights-of-way are becoming unsightly as rotten and discarded railway ties are strewn along the lines. These discarded rail ties are a fire hazard as they are extremely flammable. For example,  a wildfire caused by CN on May 17, 2011 along its Camrose mainline near Edmonton resulted in many piles of railway ties catching fire. In this particular case, the fire burned several acres of an adjacent wildlife conservation area. CN has yet to compensate the landowner for this damage. This is one of many examples of CN not compensating for damage done to private or public land from wildfires it has started or derailments that have damaged property and the environment.

So…CN profits increase, but at what expense to hundreds of thousands of residents and businesses located within earshot of CN’s rail lines and increasing noise levels; at what expense to neighbouring residents’ health due to increasing locomotive diesel pollution and sleep disturbance; at what expense to private and public properties damaged by CN derailments and CN-caused wildfires; and at what expense to the environment when hazardous materials are spilled and when wildlife habitat is burned?

Read more on this subject in other Railroaded blogs and “Latest News” coverage.

~ by railroaded on July 30, 2012.