CN Rail CFO sees no need for railway price wars

Wed Sep 24, 2008 6:41pm EDT
 
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VANCOUVER, British Columbia (Reuters) - North America's railroads are unlikely to turn to predatory pricing to maintain revenue growth, Canadian National Railway Co's chief financial officer said on Wednesday.

Railways have been winning business from trucks because of high fuel prices, and the increased demand means there is not a lot of excess capacity in the track networks," Claude Mongeau told a CIBC World Markets conference in Montreal.

Mongeau was asked if the slowing U.S. economy and lower shipping volumes in sectors such as forest products would cause railroads to use predatory pricing to maintain the revenue growth they've seen in recent years.

"I don't see things changing. They might be slowing a little bit in a tougher economic environment, but I don't see things going back to the old days," Mongeau told a CIBC World Markets conference in Montreal.

"We have years in front of us in which railroads should hopefully be able to price in line with inflation and then some, to the extent that they add value to the supply chain of their customers," he said.

Canadian National's forest products hauling business has been hard hit by the U.S. housing slowdown, but Mongeau said the carrier -- which operates in both Canada and the United States -- has been able to take over some paper and finished product shipments that had been transported by trucks.

"It doesn't make for breaking out a bottle of champagne, but we're doing right in a tough environment," Mongeau said.

(Reporting Allan Dowd, editing by Rob Wilson)