February 13, 2006
Railways – CN and CP on track

Canadian National Railway Co.

Thanks to a relentless focus on cutting costs and improving productivity, the country's largest railroad now holds the title of the
most-efficient railroad in North America in terms of operating ratio, which measures costs as a proportion of revenue.  CN has figured
prominently in the Asian trade boom through the Port of Vancouver and is poised to benefit further once new port facilities are built in
Prince Rupert, B.C.  Hunter Harrison, CN's chief executive, recently told the Financial Post he planned to double CN's $1-billion
Intermodal business by the end of the decade.

"We continue to admire this company because of its breadth of traffic and customers, its expansive route network that serves five
saltwater ports, its zealous approach to enhancing productivity, its attractive balance sheet, and its strong free cash flow," Ted Larkin,
an analyst at Orion Securities, wrote in a recent report.

Canadian Pacific Railway Ltd.

While there's little immediate chance of CP Rail overtaking its larger competitor, there is a lot of reason to be bullish on its
performance in 2006, which is likely why the company's shares have been soaring in recent weeks.  Canada's second-largest
railroad recently completed a $160-million expansion in Western Canada that will increase the number of trains carrying goods from
the Port of Vancouver.

Meanwhile, CP Rail has taken steps to cut costs and improve productivity. It recently confirmed it is cutting approximately 400 jobs
from its white-collar workforce and is decentralizing its management structure.

In the fourth quarter, CP Rail surprised analysts by announcing a three percentage point improvement in its operating ratio, which
signalled the company is making serious progress on its promise to improve efficiency.

"We are encouraged by the latest results, and we believe that further improvement in operating metrics and financial performance will
be seen over the next two years," Mr. Larkin said.

Source:  Chris Sorensen - Financial Post