Container Port Opening Big Boon for CN Rail

The grand opening of the new container port at Prince Rupert, B.C., will be held Wednesday with more than 500 delegates expected to be in attendance, including premier Gordon Campbell. The West Coast port is sure to be a big boon for Canadian National Railway Co. (CNI), which enjoys exclusive access with its rail lines.

The railway plans to transfer manufactured goods from Asia to distribution centers in Chicago and Memphis from the port, earning the CN line from Prince Rupert the moniker “The Midwest Express.”

“CNR's rail lines going east from Prince Rupert are currently vastly underused, so the new container traffic will be shipped on uncongested lines,” said Blackmont analyst Avi Dalfen in a note to clients Tuesday. “This is in contrast to other West Coast ports, where rail lines are overburdened.”

Mr. Dalfen notes that the country’s largest railway invested C$30-million upgrading tracks and facilities serving the port, and he expects the incremental impact to CN's split-adjusted earnings per share to be about C2¢ in 2007 and C9¢ in 2008 as the facility ramps up its shipments.

CNI 1-yr chart: