CN's Claude Mongeau says market-based innovation and supply chain collaboration are key to strengthening global trade through Canada's Asia-Pacific Gateway

Oct 29, 2010, 16:12 ET from CN

VANCOUVER, Oct. 29 /PRNewswire/ - Claude Mongeau, president and chief executive officer of CN (TSX: CNR) (NYSE: CNI), said today that market-based innovation and greater supply chain collaboration are the keys to making Canada the most productive and efficient Asian gateway on the Pacific coast.

Mongeau, speaking to the Pacific Gateway Forum 2010 at the Vancouver Board of Trade, said global trade is key to Canada's prosperity and that Port Metro Vancouver is of vital importance to the nation's international trade flows, handling commerce from more than 130 nations. In particular, the port is a critical player in the movement of Canada's significant stores of natural resources, including major volumes of coal, grain and potash, as well as two-way container traffic with Asia.

Canada's Asia-Pacific Gateway and Corridor Initiative has been an important factor in this success. CN has strongly supported the initiative through significant investments in infrastructure.

Mongeau said: "To date, CN has invested roughly C$600 million in projects that specifically relate to the Asia-Pacific Gateway Corridor - everything from terminals and equipment, to sidings and signals."

He noted, however, that investment is not enough. "We need innovation and collaboration throughout the supply chain. That is the journey CN is on."

Mongeau said CN's precision railroading model has been a key driver in the Company's pursuit of efficiency and its ability to serve the Pacific Gateway effectively. Now CN is taking that model to the next level by focusing on supply chain initiatives and service excellence in a way that will help its customers grow and flow greater volumes of traffic through the gateway.

CN recently introduced a new supply chain approach to managing the flow of coal from mines to ships at west coast terminals. This helps CN improve service to its coal customers and grow their volumes to Asian markets. An end-to-end view of the coal supply chain, along with a focus on closer customer collaboration, improves coal logistics, which in turn allows coal producers to maximize sale opportunities.

CN has also introduced a plan that has dramatically increased the reliability of its grain service. CN applied precision scheduling to grain car deliveries, setting up operating protocols so that cars arrive at specific elevators at scheduled times on scheduled days every week. This plan has resulted in a fundamental improvement in system reliability, which translates into predictable service to the grain industry. An increase in scheduled reliability means a better export program for Canadian farmers.

Mongeau said CN has also reached out to improve the flows of goods through all of Canada's major ports. Since April of this year, CN has signed a series of supply chain collaboration agreements with major east coast and west coast ports, as well as level of service agreements with some of their key terminal operators.

CN's supply chain collaboration agreement with Port Metro Vancouver, for example, sets the framework for the port, CN and port stakeholders to develop mechanisms to measure and monitor the performance of each participant at the port against established benchmarks. It also establishes processes to communicate proactively on service-related matters and to resolve any disputes between CN, the port and port supply chain participants on a commercial basis.

Mongeau cautioned that CN's customer-focused initiatives will only succeed in a commercial environment that drives market solutions, encourages innovation and builds increased supply chain collaboration.

"A robust rail regulatory regime already exists in Canada today. We believe that increased rail regulation would undermine the positive momentum of our supply chain collaboration initiatives, stifle innovation and hurt the rail industry's ability to invest in service and infrastructure improvements.

"Railways are crucial to the Canadian economy and its competitiveness in global markets. And that economy - and the Vancouver Pacific Gateway - cannot afford the risk of additional, unwarranted regulation."

Forward-Looking Statements

Certain information included in this news release constitutes "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws. CN cautions that, by their nature, these forward-looking statements involve risks, uncertainties and assumptions. The Company cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results of performance of the Company or the rail industry to be materially different from the outlook or any future results or performance implied by such statements. Important factors that could affect the above forward-looking statements include, but are not limited to, the effects of general economic and business conditions, industry competition, inflation, currency and interest rate fluctuations, changes in fuel prices, legislative and/or regulatory developments, compliance with environmental laws and regulations, actions by regulators, various events which could disrupt operations, including natural events such as severe weather, droughts, floods and earthquakes, labor negotiations and disruptions, environmental claims, uncertainties of investigations, proceedings or other types of claims and litigation, risks and liabilities arising from derailments, and other risks detailed from time to time in reports filed by CN with securities regulators in Canada and the United States. Reference should be made to "Management's Discussion and Analysis" in CN's annual and interim reports, Annual Information Form and Form 40-F filed with Canadian and U.S. securities regulators, available on CN's website, for a summary of major risks.

CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable Canadian securities laws. In the event CN does update any forward-looking statement, no inference should be made that CN will make additional updates with respect to that statement, related maters, or any other forward-looking statement.

CN - Canadian National Railway Company and its operating railway subsidiaries - spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the key metropolitan areas of Toronto, Buffalo, Chicago, Detroit, Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul, Memphis, St. Louis, and Jackson, Miss., with connections to all points in North America.

SOURCE CN