February 24, 2006
Railway accident rates up sharply in 2005
carriers' accident rates climbed sharply over seven years, according to the Transportation Safety Board of Canada.

The board, which released its preliminary safety report on February 21, 2006 on Canada's transportation sector, said Canadian
National Railway Co. had 103 domestic main-track derailments last year, up from 76 in 2004 and 56 in 1999.  Canadian Pacific
Railway Ltd. had 66 derailments on main lines last year, compared with 63 in 2004 and 37 in 1999.

The share prices of Montreal-based CN and Calgary-based CPR have surged over the past two years as demand grows swiftly for
rail services to move goods amid booming Asian trade.

CN's rate of main-track derailments rose to 2.65 per million train miles (MTMs) travelled last year, up from 1.55 per MTMs in 1999.

CPR's derailment rate increased to 1.98 from 1.28 over the same period, the board reports.

The safety regulator was still refining its "transportation occurrence statistics" yesterday, but raw data show that there were 1,249
railway accidents last year, including derailments and collisions on main and other tracks, up nearly 10 per cent from 2004.

With an estimated 95.8 MTMs travelled last year, the Canadian industry's accident rate works out to 13.04 per MTMs, up from 12.29 in
2004 and a five-year average from 2000 to 2004 of 11.67.

There were 195 main-track derailments in total last year, up from 152 in 2004, with Ontario, British Columbia, Alberta, Quebec and
Saskatchewan topping the list of provinces with the most accidents, raw data indicate.

CN spokesman Mark Hallman said Canada's largest railway is awaiting the board's statistics today, but is already "aggressively
addressing its accident performance through data and trend analysis.  We're doing increased track and equipment monitoring, and
we're also focusing on employee behaviour, rules compliance and management supervision."

In the first seven weeks of this year, CN has had five main-track derailments, compared with 21 for the comparable period of 2005,
Mr. Hallman said.

CN's capital spending of $1.5-billion this year is up 9 per cent from 2005, and of that new budget, about $800-million will go toward
replacing rail, ties and other track material, as well as upgrading bridges and signalling systems, he added.

CN suffered a series of widely publicized derailments last year, including one at Lake Wabamun in Alberta and others on former BC
Rail tracks north of Vancouver.  So far, investors have shrugged off the accidents.  CN shares, which underwent a two-for-one split,
slipped 17 cents to finish at $53.98 yesterday on the Toronto Stock Exchange.  CN stock had reached a record intraday post-split high
of $54.75 in the morning.  CPR shares rose $1.25 to a record-high close yesterday of $57.70 on the TSX.

"We take this report from the TSB very seriously and we'll review the findings," CPR spokesman Ed Greenberg said yesterday.

"But these statistics should be placed against the fact that there has been increased rail traffic over the same period of time.  CPR
has not lost sight that safety is our priority."

He noted that many of the CPR accidents were minor, including one or two rail cars slipping off the tracks but remaining upright.

Many analysts are trumpeting a "rail renaissance" because the carriers are busy exporting Canadian resources to Asia and importing
consumer goods from countries such as China.

Fadi Chamoun, an analyst at UBS Securities Canada Inc., sees a fundamental shift upward in financial fortunes for Canada's two
largest railways, forecasting that CN shares could hit $80 and CPR shares touch $90 by 2010.

Meanwhile, the safety board's raw data show that there were 258 Canadian-registered aircraft accidents last year, up from 252 in
2004 but down from the five-year average of 287.
Source:  Brent Jang - Globe & Mail

Source:  Brent Jang - Globe & Mail

Click here to see statistics released by the Transportation Safety Board on railway accidents and occurrences for the year 2005