Analyst Note| Matthew Young, CFA |
Wide-moat rail Canadian National’s second-quarter revenue growth accelerated to 20% year over year, excluding foreign exchange, driven by solid recovery in carload volumes and core yield improvement. Total carload volume was up 13.5%, versus 7% in first quarter, which faced weather headwinds. Adjusting for foreign exchange, average revenue per carload rose 7%, due to solid same-store pricing (up 4%-plus) and (likely) improving mix in terms of recovering automotive, lumber, and propane shipments. Core pricing is benefiting from limited capacity across most transportation modes, which is lifting railroads’ pricing power.