CN Rail Posts Strong Q4 Gains but Warns of Flat Freight Volumes Ahead Amid Trade Uncertainty
Canadian National Railway (CN) closed out 2025 on a solid financial footing, reporting higher traffic, revenue, and operating income for the fourth quarter. The results, released Thursday before markets opened, were buoyed by operational discipline and a favorable comparison to a quarter last year hampered by Canadian port strikes.
The Montreal-based railroad posted Q4 revenue of $3.3 billion (USD), a 2% year-over-year increase. Operating income rose 6% to $1.28 billion, while net income jumped 9% to $920 million. A key efficiency metric, the operating ratio, improved by 1.4 points to 61.2%.
"Our teams maintained a relentless focus on productivity and commercial execution," said CEO Tracy Robinson. "These actions not only drove our 2025 performance through a challenging period but have positioned us for when broader industry volumes recover."
Operational metrics showed the railroad moved more freight efficiently. Gross ton-miles increased 5%, while terminal dwell time decreased and car velocity improved. Executives highlighted that these gains were achieved despite a full month of winter operations.
However, the earnings call was tempered by a guarded outlook. CN expects freight volumes to be largely flat in 2026, with earnings per share growth slightly outpacing volume. Chief Commercial Officer Janet Drysdale pointed to persistent headwinds, estimating that U.S. tariffs on goods like forest products, steel, and aluminum cost the company over $350 million in 2025.
The broader shadow over the forecast is the ongoing review of the United States-Mexico-Canada Agreement (USMCA). Robinson called uncertainty the "biggest risk," noting it is causing customers to delay investment decisions. "We are working with all our customers to understand the range of options they're considering," she said. "It's going to be a busy year from that perspective."
In light of this uncertainty, CN is scaling back its capital expenditures for 2026 to $2.07 billion, a reduction of approximately $370 million from the prior year. Robinson stated this reflects the completion of major capacity projects on key corridors like Vancouver and Prince Rupert, leaving the network "poised" for future demand.
The company also weighed in on the proposed merger of U.S. rivals Union Pacific and Norfolk Southern, which was recently rejected by regulators. Robinson expressed skepticism, stating the proposal has "a long way to go" to address concerns about competition and that required concessions would be "significant."
Analyst & Industry Reaction:
"The Q4 numbers are solid, no doubt," said Michael Thorne, a transportation analyst at Veritas Capital. "CN's operational execution is best-in-class. My concern is the guidance. 'Flattish' volumes in 2026 suggest the macro and trade environment is overriding even the best-run railroads' ability to grow. The USMCA review is the wildcard that could freeze capital flows across North America."
"This is a classic 'good quarter, bad outlook' report," commented Sarah Chen, a portfolio manager with a focus on industrials. "The market will reward the efficiency gains today but punish the lack of volume growth tomorrow. The capex cut is prudent, but it also signals management doesn't see a demand surge on the horizon."
"It's infuriating," said David Forsythe, a veteran rail engineer and outspoken industry blogger. "They're bragging about beating a quarter where ports were shut down? And now they're using 'uncertainty' as a blanket excuse for weak guidance. Meanwhile, they're pulling back on spending. This feels like a management team preparing for stagnation, not steering a growth company. What happened to ambition?"
"The operational improvements are real and commendable," noted Priya Sharma, a logistics consultant based in Toronto. "For shippers, a more efficient CN is beneficial. However, the tariff and trade uncertainty is a shared pain point with their customers. Robinson's comments highlight a critical issue: until the USMCA path is clear, the entire North American industrial supply chain is in a holding pattern."
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