Problems at some of the world’s oceanic shipping chokepoints for energy supplies, especially the Suez Canal, may translate into higher traffic for North American railroads in 2024, according to Canadian National Railway.
During the company’s fourth quarter earnings call on Jan. 23, Canadian National Railway executives said they are hearing from potential customers who are experiencing difficulties getting materials through the world’s primary canal passages and the Red Sea. Railroads can offer partial solutions.
“We are seeing, obviously, some capacity come out of the vessel market with (shippers) having to go around Africa now,” said Doug MacDonald, CNI executive vice president and chief marketing officer.
MacDonald was answering a question about several companies currently avoiding the Suez Canal because of attacks happening in the area.
“We're starting to hear, with problems at both the Panama and the Suez Canal, that the West Coast is looking like a more viable option moving forward,” he said.
The country of Panama has cut canal transit traffic by 36%, the Associated Press reported. A drought in the area has decreased the water available for the transit.
CN Railway expects the troubles at the two transit points will eventually bring more traffic to its continent-crossing lines, but said that extra loads haven’t appeared yet.
“We haven't seen those volumes come in yet, but we're expecting them to gradually ramp up if they do come forward,” MacDonald said.
For 2023, the company reported earnings per share dropped 2% overall from 2022. Revenues for the year came in at CA$16.83 billion (US$12.48 billion), a decrease of CA$243 million (US$176.13 million).
CN Railway executives said the decrease came primarily because of a decline in cargo, including crude oil. The company’s revenues from shipping petroleum and chemicals dropped by 1% from 2022 to 2023.
However, the company did see an uptick in petroleum shipments in the last quarter, with an 8% gain in revenue, from CA$794 million (US$575 million) to CA$861 million (US$624 million). The company reported a surge in propane shipments to end the year.
“Petroleum and chemical volumes were up 12% in the quarter, with the exception of crude oil, all segments were up on a year-over-year basis,” said MacDonald. “We are handling record propane exports.”
Canadian National is the only rail carrier that serves three major petrochemical centers in North America: Alberta, Southwestern Ontario and the U.S. Gulf Coast.
Recommended Reading
Exxon Versus Chevron: The Fight for Hess’ 30% Guyana Interest
2024-03-04 - Chevron's plan to buy Hess Corp. and assume a 30% foothold in Guyana has been complicated by Exxon Mobil and CNOOC's claims that they have the right of first refusal for the interest.
Seatrium Awarded Contract for FPSO Bound for Guyana’s Stabroek
2024-05-17 - The topsides fabrication and integration contract will be for the FPSO Jaguar, bound for the Whiptail Field in the Stabroek block offshore Guyana for Exxon Mobil.
Exxon Mobil Green-lights $12.7B Whiptail Project Offshore Guyana
2024-04-12 - Exxon Mobil’s sixth development in the Stabroek Block will add 250,000 bbl/d capacity when it starts production in 2027.
Third Suriname Find for Petronas, Exxon Could Support 100,000 bbl/d FPSO
2024-05-17 - A recent find offshore Suriname in Block 52 by Petronas and Exxon Mobil could support a 100,000 bbl/d FPSO development, according to Wood Mackenzie.
Exxon Ups Mammoth Offshore Guyana Production by Another 100,000 bbl/d
2024-04-15 - Exxon Mobil, which took a final investment decision on its Whiptail development on April 12, now estimates its six offshore Guyana projects will average gross production of 1.3 MMbbl/d by 2027.