Analyst Note| Matthew Young, CFA |
Wide-moat rail Canadian National’s third-quarter top line grew 9% year over year, excluding foreign exchange, driven by core yield improvement, higher intermodal ancillary fees, and rising fuel surcharges. Revenue growth was mostly in line with our expected run rate as higher-than-expected average revenue per carload offset softer intermodal loads. Total carload volume swung to a 1% year-over-year decline, versus the 14% rise posted in the second quarter, but adjusting for foreign exchange, average revenue per carload jumped 10% (it was up 7% last quarter). Improvement stems in part from solid same store pricing and higher fuel surcharges. Core pricing continues to benefit from limited capacity across most transportation modes, including the rails, and should persist.