CN to acquire 65 new, 96 second-hand high-horsepower locomotives from GE Transportation, Electro-Motive Diesel, respectively, to accommodate anticipated traffic growth, improve operational efficiency

Kendall Sinclair

MONTREAL , March 23, 2012 (press release) – CN (TSX: CNR.TO - News) (NYSE: CNI - News) announced today a major locomotive acquisition program to accommodate anticipated traffic growth and to improve operational efficiency, enabling the railway to better serve its customers.

CN will acquire 65 new high-horsepower locomotives as well as 96 second-hand high-horsepower locomotives that will be upgraded.

Keith Creel, executive vice-president and chief operating officer, said: "CN's locomotive acquisition program represents a balanced, capital-effective approach to handle expected volume growth over the next two to five years and to meet the locomotive requirements resulting from customer focused service plans.

"The new and used motive power will enhance operational efficiency and reduce fuel consumption by permitting the retirement of older, high-maintenance locomotives and the cascading of less fuel-efficient main-line units into less-demanding yard and local switching operations, while providing additional locomotives to accommodate increased traffic."

CN will take delivery in 2013-14 of 35 new ES44AC locomotives from GE Transportation (GE), and 30 new SD70ACe locomotives from Electro-Motive Diesel (EMD). The GE units have 4,400 and the SD70ACe units 4,300 horsepower.

Creel added: "The program includes the acquisition of alternating-current locomotives (AC), which will represent a first for CN. Our current fleet of approximately 1,900 locomotives employs direct-current (DC) traction technology, which has served us well because of the overall favourable grades of our network.

"We will harness the key advantage of AC traction - much higher adhesion or train-pulling ability at low speeds -- in assigning the new AC units to heavy-haul coal service in northern British Columbia and Alberta, where steep grades and sharp rail curvature make heavy demands on our locomotives."

CN will purchase this year 42 second-hand GE Dash 8-40C locomotives, 11 leased GE Dash 8-40C locomotives, and 43 second-hand EMD SD60 locomotives. The Dash 8 units have 4,000 and the SD60s 3,800 horsepower. These direct-current technology locomotives will be upgraded to CN specifications.

The new locomotives CN is purchasing are equipped with distributed power technology (DP), a GE product, which improves train handling and fuel efficiency. The company expects that 50 per cent of its high-horsepower locomotive fleet will have DP by the end of 2013.

DP technology permits remote control of a locomotive or locomotives throughout a train from the lead control unit. DP provides faster, smoother train starts, improved braking and lower pulling forces at the head-end and within a train, contributing significantly to improved safety. With more optimum matching of motive power to train weight, DP locomotives also allow CN to reduce fuel consumption and reduce emissions.

Creel said: "A robust, fuel-efficient locomotive fleet is critical to CN's plan to take advantage of the traffic growth we expect in the years ahead and to ensure we have the motive-power assets to improve the supply chains of our customers and enhance their competitiveness in domestic and global markets."

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, and Jackson, Miss., with connections to all points in North America. For more information on CN, visit the company's website at www.cn.ca.

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