(CNI) Canadian National Railway Company Building New Logistics Park

The largest Canadian railroad, Canadian National Railway Company (CNI) announced that it will begin construction of the first Calgary Logistics Park. The new park is meant to facilitate intermodal transportation to and from Calgary.

The estimated cost of the project is C$200 million and time of completion is year-end 2012.

The new facility, located in northeast of Calgary, Alberta will connect Stoney Trail Northwest Alberta highway and other major roadways such as Trans Canada Highway, which is nearly 10 kilometers from Calgary International Airport.

The Logistics Park will be spread across 680 acres and feature the latest infrastructure with two million square feet of warehousing capacity. The park will include a transload and warehouse facility to move goods from truck to train.

Over the last five years, Canadian National spent almost C$8 billion on capital improvements. The company plans to spend C$1.7 billion this year on infrastructure and productivity initiatives.

The ambitious C$1.7 billion capital project will comprise investment of approximately C$1 billion toward improving track infrastructure such as the replacement of rail, ties, other track materials and bridge improvements, as well as rail line improvements for the Elgin, Joliet and Eastern Railway Company  property acquired in 2009.

The remaining C$0.7 billion will be dedicated toward growth and productivity initiatives including investments in Calgary logistics center, the Chicago network, positive train control systems as well as upgrade and overhaul of locomotives, railcar mix, IT/systems support and siding extensions.

We believe the investment will lead to increased profitability and improvement in the company’s route structure and network. It should also provide an edge over other railroads like Canadian Pacific Railway Limited (CP), which has almost similar network operations.

We are currently maintaining our long-term Neutral rating on Canadian National. For the short term, the company retains a Zacks #3 Rank (Hold).

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