Canadian National Railway Company

CN serves thousands of shippers across seven commodity groups, with essential goods providing a volume floor and revenue remaining within a 2% band over FY2023-FY2025. However, volumes are fundamentally transactional rather than contracted, and tariff-driven demand softness contributed to a 1% revenue decline in Q1 2026.

CN's seven commodity groups include intermodal (22% of revenues in FY2024), petroleum and chemicals, grain and fertilizers, forest products, metals and minerals, coal, and automotive, with no single group exceeding 25% of revenue. The groups are exposed to different economic cycles - grain is weather and agricultural-cycle driven, intermodal tracks consumer spending, and coal follows power generation demand - providing genuine revenue diversification.

Revenue geographic mix in FY2024 was approximately 35% overseas traffic, 32% transborder Canada-US, 17% Canadian domestic, and 16% US domestic; however, CN's physical rail network is limited to Canada and parts of the US. The overseas share reflects cargo moving to and from international ports on CN rails, not operations in other countries, leaving CN's revenue sensitive to Canada-US trade dynamics.

CN's fixed rail infrastructure of approximately 19,500 route miles enables incremental traffic to flow at higher margins, and the adjusted operating ratio of 61.7% in FY2025 reflects meaningful scale economics relative to less efficient carriers. Sustained capital requirements (C$3.4 billion capex in FY2025) and unionized labor costs that move roughly with volumes limit operating leverage compared to asset-light businesses.

A substantial portion of CN's traffic consists of essential, non-discretionary freight: Western Canadian grain (subject to statutory rate setting), petroleum products that lack economical alternative routing for long hauls, and intermodal cargo tied to durable consumer supply chains. The captive nature of shipper relationships on single-line CN corridors elevates revenue quality above a purely transactional freight carrier.