A CN locomotive sits idle at the CN Stuart Yard west of West Harbour GO station in Hamilton.Peter Power/The Canadian Press
Executives at Canadian National Railway Co. CNR-T say higher demand for energy, potash and other commodities generated by the war in the Middle East work to the company’s advantage, even as rising fuel costs weigh on profits.
The country’s largest railway enjoyed a 4 per cent year-over-year boost in petroleum and chemical revenue in its latest quarter. Grain and fertilizer revenue jumped 13 per cent, spurred by a bumper crop and soaring prices for Persian Gulf fertilizers due to the effective closing of the Strait of Hormuz.
Janet Drysdale, CN’s chief commercial officer, said liquefied natural gas shipments have ramped up at the port in Prince Rupert, B.C., as global supply shrinks amid the waterway’s ongoing shutdown. Volumes for crude oil and refined products were up as well.
“We are seeing some near-term benefits across a number of segments related to the higher prices,” Drysdale told analysts on a conference call Wednesday.
“As nitrogen-based fertilizers have increased because of the Middle East disruption, we see a little bit more farmers switching to more potash applications.”
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She also stressed that the global ramifications of the conflict remain uncertain.
“I don’t have a crystal ball. I don’t know how long higher prices are going to last and what the broader impact may be on the macro. That’s why we’re remaining appropriately cautious.”
Other events set off by U.S. President Donald Trump continue to chip away at CN’s income statement.
The tariffs on steel, aluminum and lumber took a toll in the quarter ended March 31. Metals and minerals revenues dropped 7 per cent year-over-year while forest product revenues saw a 9-per-cent drop.
“Steel and aluminum continued to be affected by tariffs, but we were able to partly offset the impact with new long-haul shipments of steel intra-Canada and new moves of scrap steel,” said Drysdale.
The higher cost of diesel fuel sparked by the near-total halt to oil traffic in the Strait of Hormuz since late February also threatens to drag on profits, though the railway applies a surcharge based on price fluctuations.
Despite shade cast by the Trump administration on North America’s trade pact, CN CEO Tracy Robinson expressed optimism that the United States-Mexico-Canada Agreement, up for review in July, remains a key priority on both sides of the border.
“It’s impossible to predict where the whole discussions on the USMCA or the trade flows – even on the broader tariffs outlook – will land,” she said.
“In Canada and the United States, it is clear to me that in both administrations this agreement is important.”
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On Wednesday, CN reported that record first-quarter grain revenues topping a billion dollars offset declines in several freight segments to limit CN’s decreases in revenue and earnings to under 1 per cent year-over-year.
The Montreal-based company reported a first-quarter profit of $1.15 billion compared with $1.16-billion a year earlier.
On an adjusted basis, CN earned $1.80 per diluted share in its latest quarter, down from an adjusted profit of $1.85 per diluted share in the first quarter of 2025.
Revenue totalled $4.38-billion, down from $4.40-billion in the same quarter last year.
Revenue ton miles – a key metric gauging how many tons of freight are hauled in a mile – climbed three per cent.
CN’s operating ratio, its operating expenses as a percentage of revenues, ticked up to 64.6 per cent in its latest quarter compared with 63.4 per cent a year earlier.