UPDATE 1-CN Rail to phase out fleet of older oil tank cars in four years

Tue Mar 25, 2014 2:37pm EDT
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(Adds details on CN's safety system, quote from CEO, higher rates for older tank cars)

By Susan Taylor

TORONTO, March 25 (Reuters) - Canadian National Railway Co will phase out its fleet of 183 older tank rail cars used to transport diesel fuel over the next four years, as it works to improve safety following a string of industry accidents involving the puncture-prone cars.

The company, Canada's largest rail operator, said on Tuesday it will spend C$7 million ($6.26 million) to replace the 40 legacy DOT-111 tank cars that it owns with new cars that meet the latest regulatory standards, by the end of this year.

Its remaining 143 leased DOT-111 cars will be replaced gradually as the leases mature over the next four years, the Montreal-based company said.

DOT-111 tank cars have a long history of puncturing in accidents, an issue that came into public focus after a runaway crude train crashed last summer in Lac-Megantic, Quebec, killing 47 people.

"For CN, tank car design is one of the most important systemic issues arising from the Lac-Megantic accident," CN Chief Executive Officer Claude Mongeau said in a statement.

The development comes after CN and smaller rival Canadian Pacific Railway Ltd increased rates for the older variety of DOT-111 tank cars earlier this year. CP said it was concerned about the cars' use in transporting crude.

Mongeau told Reuters last week that CN was increasingly moving western Canadian crude, with the vast majority transported in coiled CPC 1232 tank cars.   Continued...