CN reported that revenue for the third quarter were $C 3.41bn ($US 2.59bn), falling $C 421m ($US 319m), or 11%, compared with the same period in 2019.

The railway says that the decrease in revenue was “mainly due to lower volumes across most commodity groups caused by the continuing effects of the Covid-19 pandemic and lower applicable fuel surcharge rates, partly offset by freight rate increases as well as increased shipments of Canadian grain.”

CN experienced a 7% decline in revenue tonne-km (RTK) compared with the third quarter of 2019. Freight revenue per RTK also fell by 3%.

Operating expenses fell by 8% to $C 2.04bn ($US 1.55bn), which CN says was mainly driven by lower fuel and labour costs, and decreased purchased services and material expense.

“The decrease in the first nine months was partly offset by a loss on assets held for sale in the second quarter, resulting from the company’s decision to market for sale for ongoing rail operations certain non-core lines,” CN says.

Third quarter demand

However, CN says that demand for its freight services has begun to return to pre-Covid levels following a severe weakening in demand from late March onwards.

“During the third quarter of 2020, demand partially recovered, with sequential improvements in volumes relative to the second quarter of 2020, but overall demand remained below 2019 levels,” CN says.

CN says that by the end of the third quarter, demand for certain commodities had recovered to 2019 levels. This includes intermodal freight, driven by increased online consumer spending on imported goods as well as consumer staples, particularly the grocery sector, as well as strong demand for lumber and panels used in home renovations and construction of new houses, as a result of accumulated demand during the lockdown in the second quarter.

The demand for less economically-sensitive products, such as export grain and fertilisers continued to remain positive compared with last year.

However, CN reports that demand for other commodities remains below pre-pandemic levels due to ongoing economic uncertainty, including for finished vehicles, industrial products used or produced by manufacturing, fossil fuels and chemical products.

“As we look at the fourth quarter and beyond, we continue to see sequential improvements and momentum leading us to have a cautious optimism about the future,” says Mr Jean-Jacques Ruest, president and CEO of CN. “We remain confident in our ability to continue delivering long-term shareholder value.”