Canadian National Railway: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Oct. 30, 2026, Canadian National Railway (NYSE:CNI) announced that adjusted diluted earnings per share grew 18% year over year. The railway operator is turning operating efficiency into cash flow growth. Lower capital intensity gives Canadian National Railway room to expand profitability as freight volume rises. Three things management said stand out.

1. Operational Efficiency Cuts Unit Costs as Freight Volumes Rise

Operational discipline allows the railway to handle higher freight volume without a matching increase in expenses. Improving workforce productivity directly reduces unit costs across the operating network.

Employee productivity improved 7%. This is the seventh consecutive quarter with year-over-year improvement. These are not simply operating statistics. They translate directly into the cost structure by allowing us to move more freight without a proportional increase in locomotives or employees.
-- Pat Whitehead, Chief Operations Officer

2. Strategic Partnership Expands Access to Mexico Manufacturing Corridor

A strategic agreement with Union Pacific Railroad extends Canadian National Railway's reach into Mexico. Connecting directly to high-growth manufacturing regions expands the addressable market across cross-border trade routes.

Our agreement with UP provides CN with direct access to Mexico's high-growth manufacturing corridor, complementing our existing access to central and southern Mexico via the CG Rail Ferry.
-- Janet Drysdale, Chief Commercial Officer

3. Normalized Capital Spending Unlocks Operating Leverage and Cash Flow

After completing major network capacity investments, capital spending has returned to industry-standard levels. Additional rail volume now generates expanding profit margins without requiring heavy new infrastructure investments.

To be clear, capital intensity is normalized to a range in line with our North American peers, and additional volume on the network will continue to drive operating leverage in our model.
-- Tracy Robinson, President and Chief Executive Officer

Looking Ahead

Available network capacity and direct port access give the railway a clear setup as resource projects expand across western Canada. Leadership remains focused on pricing discipline and continuous operational improvement.

We enter the fourth quarter in a solid position. The railroad is operating well. Service remains strong. We are staying closely connected to our customers, and we have capacity available across the network.
-- Ghislain Houle, Executive Vice-President and Chief Financial Officer

With major capital programs completed, incremental volume creates operating leverage that flows straight to earnings.

We are delivering on our commitments and have a network that is built to convert broad-based growth into earnings and free cash flow.
-- Tracy Robinson, President and Chief Executive Officer

The Motley Fool recommends Canadian National Railway and Union Pacific. The Motley Fool has a disclosure policy.