Canadian National Railway Morgan Stanley's 14th Annual Laguna Conference

Thanks, Ravi. Always good to be in Laguna, and always happy to come back and talk to you about what's going on in the rail space.

Sure. Listen, I'm really proud of the way the last year has unfolded, but what maybe I'll do before we get to your questions, Ravi, is I'll spend just a couple of minutes on where I'm focusing my time, and where we're all focusing our time, as we look forward as well. That being on some pretty interesting growth opportunities, combined with some disciplined operating execution and how that kind of combines to create some interesting shareholder value. On growth opportunities, first, I got to tell you, I am really happy to be sitting here this year with a network that now extends into Mexico. This agreement that we've reached with the Union Pacific to extend our network to Mexico to connect with the FXC through Memphis is a once-in-a-generation opportunity for us.

This is a market, the trade between Canada and Mexico is CAD 45 billion that grows across all commodities. We've got this tremendous origination network, so we're matching that in a really lean, fast route through Memphis down to FXC. We're connecting that with the largest railroad in Mexico, and the railroad, actually, that's growing faster than all of the railroads in North America this year. We're really excited about that opportunity. We've positioned ourself really well, and we've done it without straining our balance sheet in any way, which is important to us. That's meaningful, and I think you're going to be hearing a lot more from us on that as we go forward. Back on the base network, we continue to be bullish on energy and on ag.

If you look at what's happening in the energy space, we've got a network that sits right on top of the Western Canadian energy complex in the Montney Shale region, and all of the development that's going on in there on NGLs. It's interesting because it's multi-commodity, it's multi-market. It's driven by very strong demand for energy across North America, and increasingly globally.

It's underpinned by significant investments, long-term investments by our customers and partners in supply chains. Whether you look at on NGLs with AltaGas' investing in facilities in Rupert, if you look at the Keyera ACE Rail Terminal, which is a unit train loading facility to load NGLs in Alberta, if you look at the Strathcona crude facility that's ramping up, if you look at those byproducts go into the Dow Path to Zero facility that's under construction in Edmonton. If you move over to the bulk, you have Canpotex facility. We were all up there to celebrate its opening in Rupert two weeks ago. You've got the BHP potash mine in Jansen that's opening up next year. These are all structural, foundational, long-term growth opportunities that give us the benefit of that growth. Also, none of this growth is really tied to the North American macro.

Right. This is all very beneficial.

Of course, we have a much broader, diversified portfolio. Janet's driving growth this year in automotive, in metals, in domestic intermodal, and she's got this boots-on-the-ground program, and she's here with me today. She's got a boots-on-the-ground program that is out there not just on the big programs and projects, but also in driving and creating opportunities with small customers for smaller opportunities. Those are equally important to us. It's a challenging environment out there. It's challenging right now between Canada and the U.S.

Yep on the free trade front.

I think what we're learning is that if we focus on what we can control, we drive those foundational volume growths with key partners, then we will be less attached to the macro. We're excited about the path forward. 4.5% growth in RTM so far this year.

Yep. It'll moderate a little as we get into a much tougher compare in Q4, but we're feeling pretty good about it.

You match those growth opportunities with really disciplined execution. We launched, or relaunched I guess, scheduled railroading 4.5 years ago at CN, and we've continued to refine it since then through initiatives like Fast Track and asset utilization and locomotive productivity. Pat and team are delivering really strong results. The network is fluid, velocity is high, the customer service is very strong, and our productivity continues to improve. That productivity improvement is really broad based. It's about the workforce, where this year, 5% better productivity across our workforce. It's 13% if you look at the train crews. Our locomotives are working harder.

We are hitting records on fuel efficiency, and this is a drumbeat that we have out there around how we want to continue to drive productivity, getting more for our assets and our workforce every day. The question I'm often asked is, with all the growth opportunities, are you going to need to start putting more capital in again?