CN Reports May Grain Movement

• CN reported a new monthly record for grain movement in May 2026, transporting 2.96 million metric tonnes (MMT) from Western Canada, surpassing the previous May record of 2.54 MMT set in 2025.
• The record is part of a sustained operational trend, with CN achieving seven new monthly records in the last eight months of the current crop year, driven by strong export demand, ample supply, and efficient network execution.
• On May 28, 2026, the Surface Transportation Board (STB) froze the review of the proposed Union Pacific (UP) and Norfolk Southern (NS) merger, ordering substantial additional information. CN commended the decision, stating the applicants failed to meet public interest standards and left critical competitive gaps unaddressed.
• CN announced a $100 million CAD, ten-year commitment to homelessness prevention through its "Railroaders for Change" initiative, with inaugural grants distributed in Montreal and Winnipeg.
• A strategic partnership was announced with Keyera and AltaGas to build the Alberta Corridor Export (ACE) Rail Terminal, a $240 million project expected to add 45,000 barrels per day of propane/butane capacity by mid-2028.
• CN expanded its Certified Rail-Ready Sites program, adding five new and re-certifying six existing industrial locations to accelerate freight development.
• On May 7, 2026, CN closed a $750 million public debt offering, consisting of 4.350% notes due 2029 and 4.950% notes due 2036, with proceeds allocated to general corporate purposes and commercial paper repayment.

• The May grain movement record is operationally positive but routine. It confirms strong agricultural demand and validates CN's winter operations plan, but such monthly records are expected given the established crop year trajectory and do not represent a fundamental shift in valuation drivers.
• The STB's freeze on the UP-NS merger is a material competitive tailwind. CN has publicly opposed the merger for months, citing a 40% market concentration risk. The regulatory halt preserves CN's competitive positioning and reduces the threat of rate pressure or service degradation from a consolidated U.S. rival. While positive, this outcome aligns with CN's long-standing public stance and anticipated regulatory hurdles, making it a follow-up to existing market expectations rather than a surprise catalyst.
• The $750 million debt offering is a standard refinancing and liquidity management action. It extends maturities and replaces commercial paper, but the higher coupon on the 2036 tranche (4.950%) reflects the current interest rate environment, slightly increasing long-term interest expense.
• The ACE terminal partnership and CSR initiatives are incremental strategic and reputational updates. They support long-term network utilization and community relations but lack immediate financial impact.

• Canadian National Railway is a Class I freight railroad operating a nearly 20,000-mile network across Canada, the U.S., and Mexico.
• Flagship Project/Segment: Grain and agricultural transportation remains the core revenue driver, leveraging a dominant Western Canada to West Coast and Great Lakes export corridor. The company has consistently broken monthly grain movement records, demonstrating superior network fluidity and customer collaboration.
• Secondary Strengths: Intermodal growth, automotive logistics, and energy/chemicals transport. CN's cross-border integration and port partnerships (Vancouver, Prince Rupert, Montreal) provide a structural advantage in North American supply chains.
• Strategic Initiatives: Expansion of certified rail-ready industrial sites, intermodal service extensions (e.g., Nashville route with CSX), and energy export infrastructure partnerships (ACE terminal).