Higher demand for energy, potash and other commodities sparked by the war in the Middle East works to the advantage of Canadian National Railway Co., executives say, even as rising fuel costs weigh on profits and growth projections stay flat.
The country’s largest railway enjoyed a four per cent year-over-year boost in petroleum and chemical revenue in its latest quarter. Grain and fertilizer revenue jumped 13 per cent to $1.05 billion — a first-quarter record — spurred by a bumper crop and soaring prices for Persian Gulf fertilizers due to the effective closure 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 rose 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 fertilizer (prices) have increased because of the Middle East disruption, we see a little bit more farmers switching to more potash applications.” The Gulf is a major producer of nitrogen fertilizers.
“Rising thermal coal prices driven by the Middle East conflict could support improved export demand for thermal coal,” she added.
Drysdale 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,” she said.
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 seven per cent year-over-year while forest product revenues saw a nine 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 drags on profits, though the railway applies a surcharge based on price fluctuations. Last quarter, fuel expenses actually fell by $10 million compared to the year before thanks to the elimination of federal carbon pricing in April 2025, six years after it came into effect.
Despite the shade cast by the Trump administration on North America’s trade pact, CN chief executive 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.”
At the same time, chief financial officer Ghislain Houle said in reference to the overall trade environment, “If anything, the uncertainty has heightened since our last January call.”
For 2026, CN expects cargo volume growth will remain “flattish” and adjusted diluted earnings per share will slightly exceed any boost in that freight traffic.
Robinson weighed in on a proposed merger between two big American railways, which plan to submit a revised application to U.S. regulators on Thursday as rivals watch warily amid fears an acquisition would hurt competition and drive up consumer costs.
“The merger proposal, to be accepted, needs to demonstrate it’s in the public interest and that it enhances rail competition,” the chief executive said.
“It’s a pretty high bar. And the first application in our view fell really far short of demonstrating that the merger would achieve this.”
Union Pacific Corp., the second-largest railway operator in the United States, announced in July it wants to buy Norfolk Southern Corp. — the third-largest — in a US$85-billion deal that would create that country’s first transcontinental railway, and potentially trigger a wave of rail mergers across North America.
On Wednesday, CN reported a first-quarter profit of $1.15 billion compared with $1.16 billion a year earlier.
On an adjusted basis, the Montreal-based company 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.
This report by The Canadian Press was first published April 29, 2026.
