Canada Calling
March 2000

by Bryce Lee

Competition on North America's rail network has become the central issue in the planned merger of Canadian National Railway Co. and Burlington Northern Santa Fe Corp. The combination, to be known as North American Railways Inc., would be the continent's largest rail carrier. "The proposed merger has ignited a fuse," Douglas Rockel, a railway analyst with ING Baring in New York. The main issue to be decided, is whether North America is heading for a rail duopoly, with two mega-carriers offering service throughout the United States, Canada and Mexico. Together, CN and BNSF would have revenues of US$12.6 billion US. If the proposed combination is approved, Union Pacific Corp., now the largest rail carrier with annual revenues of US$10.2 billion US, will likely seek its own alliance partners. A merger with Canadian Pacific Railway Co. could raise Union Pacific's revenues to US$12.5 billion. Rockel can envision further mergers between Union Pacific and major American lines, such as CSX Corp. and Norfolk Southern Corp., to give Union Pacific a rail network comparable to that of North American Railways. Union Pacific has expressed concerns that the proposed CN-BNSF combination could adversely affect competition. Those concerns have been heard by the Surface Transportation Board in Washington, the regulatory agency which rules on railway mergers. Union Pacific and other interested parties will be allowed to comment on the CN-BNSF transaction and to express their views on future mergers.

The future of the railway along the Gaspe Coast looks promising, despite the closure of the Gaspesia newsprint plant. Apparently both the federal and provincial governments were looking very favourably at requests for subsidizing the railway. Last fall, the Chaleur Bay company, which owns the Chandler to Matapedia section of the line, warned its customers, including VIA that it might cease operations as of February 1, 2000 if the Chandler Quebec mill did not reopen. The newsprint from Gaspesia accounted for about 60% of the freight being handled by Chemin de fer Baie des Chaleurs. Operating losses have been mounting since the Chandler facility was closed first due to a strike in 1998, and then due to overproduction since June, 1999. The railway company wants C$25,000 per month to cover its losses. Cancelling services from Chandler to Matapedia would also have brought to an end freight and passenger services right through to Gaspe, since the private railway company services and maintains the rails for the publicly owned Chemin de fer de la Gaspesie, which owns the rails from Chandler to Gaspe. The region's economic leadership arc concerned that the disappearance of the railway would destroy the area's potential for any meaningful industrial or manufacturing development. Besides the closure of Gaspesia, the abandonment of mining at Mines Gaspe has also had an impact on the railway, although that is mostly a question of future traffic. As of November, two freights per week have been leaving Gaspé instead of one. And four trains per week, mostly filled with linerboard and wood, travel between New Richmond and Matapedia. It's been fourteen years since action first had to be taken to protect train services. VIA initially announced closure of some of the region's train stations in 1985.

Transport 2000 Canada, a lobby group, is calling on Ford of Canada President Bobbie Gaunt to stop running ads that show a sport utility vehicle crossing rail tracks in front of a train. "There are kids who are going to take this ad more literally than Ford intends," said Harry Gow, President of Transport 2000 Canada. "We already have enough problems with level crossings. Ford should pull these ads. We don't need sport utility vehicles playing chicken with trains. Governments should find ways of taxing SUV owners at higher rates to compensate for their excessive consumption of fuel, the damage they do to the environment off the road and the harm they do to regular vehicles when they are involved in collisions." The ad is in the January 2000 edition of Saturday Night, a national magazine in Canada. Transport 2000 Canada is a transportation watchdog group with more than 1,000 members across the country. In addition Operation Lifesaver of Canada doesn't think the advertisement that depicts Ford's Excursion sport utility vehicle forcing a passenger train to stop in its tracks is a joke. Operation Lifesaver notes the advertisement is confusing and pokes fun at level crossing safety. According to Operation Lifesaver, at 37 Canadians were killed in rail crossing collisions last year and 61 died walking along tracks. Lauren Moore, marketing and sales communications manager at Ford Canada, said the ad was designed to reflect the personality of the Excursion 2000. The 4,200-kilogram (9200 pounds) truck is the biggest sport utility vehicle currently available in Canada.

Negotiators reached a tentative agreement on January 5 to end a labor dispute that had idled BC Rail for more than a week. Neither the government-owned company nor its seven unions released details of the three-year contract agreement, which was worked out in early hours with the help of a provincial labor mediator. The two sides had been at odds over BC Rail's demand for productivity improvements which would reduce operating costs and were believed to include changes such as a reduction in the size of crews operating trains. BC Rail, which operates 1,446 miles (2,328 kilometres) of track in British Columbia with a main line that runs from Vancouver to Fort Nelson, idled freight and passenger service December 27, 1999 when it locked out its workers. Work to restore service began January 5, although the agreement will have to be approved by BC Rail's more than 1,500 unionized employees and the company's directors. Negotiators from both side are recommending it be accepted. The agreement is retroactive to 1997, when the old contract expired, meaning negotiators will be back in the fall of 2000 to begin talks on a new agreement. The exact economic impact of the lockout is not known, but observers familiar with the dispute said it was reduced because it occurred during the holidays when many of BC Rail's largest customers were operating at limited capacity. BC Rail's core business is the hauling of forest products and coal exports, but shipments and revenues in both areas have fallen in recent years because of economic turmoil in Asia and U.S. trade restrictions on lumber imports. BC Rail has said it needs to reduce operating costs to remain competitive with trucks and other railways, but the company's unions complained the company's proposal would eliminate jobs and create safety risks.

The deputy mayor of London Ontario, Anne-Marie DeCicco says the city should put pressure on the federal government to tighten restrictions for stopped trains that block road traffic. DeCicco's comments came in the wake of a fatal incident early in the new year in which a 54-year-old woman was killed as she tried to cross a freight train stopped on Richmond Street, south of Oxford in downtown London. Witnesses estimated that the delay had lasted about 20 minutes. Officials at CP says the data from the black box recorder on the train showed it had stopped for 12 minutes. The eastbound train had stopped to allow a crew to move a switch that couldn't be controlled electronically due to a build-up of snow.

On January 10 Transport Minister David Collenette responded to the Transportation Safety Board of Canada's (TSB) report concerning an accident involving a CPR train and a train operated by shortline Chemin de fer de Matapédia et du Golfe at Mont-Joli, Quebec, in September 1998. The TSB's final report contains two recommendations for Transport Canada. The first suggests that the department work with the Railway Association of Canada (RAC) to assess communication among federally regulated railways; the second involves the development of a process to co-ordinate the safety infrastructure of new federal railway companies. Under current federal requirements, railway companies are obligated to ensure that their operations are safe and that any other railway using their track is made aware of both the company's and the federal government's rules. The issue of communications among railways will be addressed as part of the ongoing consultations between the RAC and Transport Canada.

Police in Red Deer Alberta will not be charging a man who was stuck on a moving train in central Alberta. John Ebeling's truck slid into the middle of a train near Sylvan Lake on December 21, 1999. His crumpled vehicle became stuck on the train, forcing Ebeling to climb onto a moving freight car. In a bid to stop the train, he unhooked two railway cars and triggered an automatic stopping mechanism, which in turn derailed the train and ripped up several metres of track. Miraculously, Ebeling only escaped with minor scrapes and bruises. RCMP say slippery road conditions contributed to the collision and as such no charges will be laid.

Bombardier has won a contract from Docklands Light Railway in London England for 12 automatic rail cars. There is also an option for a further 12 vehicles. The Montreal company says the contract is worth at least C$41.7-million dollars C$75-million if the option is exercised. Docklands Light Railway system links the centre of London to the Docklands area and is the first public transport system in England that has been totally computerized and operates without drivers. The line is already equipped with 70 Bombardier vehicles supplied by the company's Belgian plant in the early 1990's. The newly ordered vehicles will also be built in Belgium, with initial deliveries set for 2001.

Luscar Ltd of Edmonton has reached agreement on a new three-year contract to deliver coal from its Bienfait mine in southern Saskatchewan to Ontario Power Generation's Atikokan and Thunder Bay generating stations. The commitment, which extends to December 31, 2002, is for a base contract of 1.4 million metric tonnes per year. Ontario Power Generation has the option to increase deliveries by 500,000 tones annually over the base contract. The Bienfait mine is one of Luscar's 11 mining operations in Western Canada. It produces lignite coal for power generation. CPR had the contract to haul coal from Bienfait for Ontario Hydro, but this went to CN some years ago. Atikokan is served only by CN which will means CN shall continue to haul coal for Ontario Power Generation (formerly known as Ontario Hydro). Also Luscar is the company that wanted to open a large open pit coal mine at Mountain Park Alberta, at the end of the CN Mountain Park Subdivision, the last couple of miles of which have not been used since 1950, nor has it been officially abandoned. The startup of this new mine has been put on hold due to the financial uncertainty in the Asian coal markets.

A developer is proposing to build a C$240-million commercial and residential project on surplus Canadian National lands in the heart of downtown Edmonton Alberta. The project calls for three or four high-rise towers, possibly a hotel, a minimum of 750 new housing units, a conference centre, retail and commercial space, and a two- or three-level underground parking area. Qualico Developments West Ltd is close to a C$4-million-plus deal with CN to buy the undeveloped former CN rail line, right of way and station lands between 97th Street and 101st Street south of 105th Avenue. The 3.7 hectare site is bordered on the south by the CN Tower and the post office. The lands under consideration are on the former eastern end of the CN (even more formerly Canadian Northern Railway) yards in downtown Edmonton. The west end of the loop from the CN main line past the CN tower was cut in about 1989 and Grant McEwan Community College was built on what used to be the western end of the yards. Until mid-1998, VIA trains backed in or out of the VIA station at the CN Tower but then this line also was torn up. Not far away to the south and west on the site of the former CP station and yards is a new mixed residential commercial development called "Railtown."

Eight global container terminal operators have filed expressions of interest in taking over the larger of two terminals at the Port of Halifax, according to the Halifax Port Authority (HPA). The HPA is sifting through responses from North America and abroad to replace Halterm Ltd., a 30-year fixture at the port. in Halifax Nova Scotia. The HPA in December solicited responses from interested parties as a precursor to detailed proposals after negotiations stalled over the renewal of Halterm's lease. The HPA and Halterm have engaged in a series of maneuvers in the courts, and the Canadian Transportation Association, the national regulatory body, must hold hearings demanded by Halterm. The first hearing of the agency will decide whether the regulatory body has jurisdiction to intervene in the dispute. The HPA argues that the agency does not. Halterm and the port authority have hit an impasse over terms of a new operating lease that would have begun on December 19, 1999. The HPA is worried that a prolonged dispute will leave it little choice but to renew Halterm's lease at the 70-acre terminal, which accounts for some 40% of the port's revenue.

The Greater Toronto Area needs to greatly expand its GO Transit services, forge new public transportation corridors and add rail routes if it hopes to ease congestion, noted a recent major new transportation plan. Titled Removing Roadblocks, the document, focuses on the Greater Toronto Area's growing feeder regions, recommending the expansion of GO Transit services leading out of Toronto and the creation of transit routes connecting suburban centres. The plan also calls for the creation of suburban transit corridors and the construction of key gateway centres, where drivers could park their vehicles and catch transit services. By expanding these corridors into rural areas marked for development, the hope is to encourage developers in the sprawling outer regions to shift from numerous car-dependent, single-family neighbourhoods to more-compact townhouse or condominium projects. All the initiatives set out in the plan would be contingent on support from the federal and provincial governments. The plan makes improvements to GO Transit's Union Station hub its first priority. These improvements would include expanded platforms, more track space, easier connections to the subway and a bus station. The plan also calls for the immediate upgrade of all GO train services across the GTA.

GO Transit then would begin all-day service on its Lakeshore line from Burlington through to Whitby and increase rush-hour services; add all-day service to its Milton line via Mississauga and increase rush-hour service to Milton; add all-day service to the Georgetown line between Toronto and Brampton, with expanded service to Georgetown and a new connection to Pearson International Airport; add all-day service on the Richmond Hill and Stouffville lines. The plan encourages the board to consider extending the Richmond Hill GO line to Vandorf, the Stouffville line to Uxbridge and the Lakeshore East line to Bowmanville. It also suggests a new, two-forked line in the east serving a potential Pickering airport, Pickering's planned Seaton community, east Markham, Scarborough-Malvern and Don Mills. The plan also calls for the creation of seven new suburban corridors where transit service could be increased in stages as 905 ridership grows. Using GO or regional buses, the corridors would offer high-occupancy vehicle lanes or dedicated bus lanes. The plan also calls for the development of transit gateways at the end of each TTC subway line and at points where those lines intersect with GO rail transit. These gateways would allow passengers easy transfers from cars to transit, or between two transit systems.

In a story in the Hamilton Spectator on January 26, 2000 it was noted that the end may be near for the former Canada Southern (ex NYC/Conrail) Railway which stretches from Welland to St.Thomas to Windsor just north of Lake Erie in the province of Ontario. The line is jointly owned by the CPR and the CNR. Efforts are being made to sell the line to a short-line interests however CN is doubtful that will happen. The current plan is to retain a 20-kilometre section between Welland and Attercliffe Station to tie in with a CP Rail line between Attercliffe and Port Maitland. The line west of St. Thomas still sees some service. There is no substantial on-line industry which would contribute to the maintenance of the line; the railway is basically a shortcut between New York State on the east and Michigan on the west. Without income the line is more likely to be scrapped. The rail is Dudley flatbottom 127 pound rail, a type exclusive to the New York Central and unlikely to be reusable. Further evidence of the demise of the line is operation by CN of a few trains east of Tillsonburg Ontario, about mid-point on the line during the first few weeks of 2000 in order to remove old ties from adjacent properties; using one or two locomotives and high-sided cars to load the scrap material.

Now that winter is upon us why not start sorting out your colour slides for the Forest City Railway Society's annual spring Slide Trade and Sale Day on Saturday April 8th from 11am to 4pm in Room B1071 at Fanshawe College, 1460 Oxford Street East, London Ontario Canada. For more information contact Ian Platt at: platti@claven.fanshawec.on.ca.

The long-awaited publication "Constructed in Kingston, a History of the Canadian Locomotive Companies, 1854-1968" will be available in March 2000. This is the story of Canada's longest surviving railway locomotive builder, which pioneered, innovated and mass-produced more than 3,000 steam, electric and diesel locomotives over the 118 years of its existence. This hard cover book, with an attractive dust jacket, will have 348 pages and contain more than 350 photographs. Prepublication orders are being accepted until March 21, 2000. To order in Canada (except NS, NB & NF) C$66.00 + C$5.11 GST + C$7.00 shipping and handling; To NB, NS and NF $66.00 + $10.95 HST + $7.00 shipping & handling; To addresses in the USA US$58.00, postpaid; all other addresses C$90.00, postpaid (C$105.00 airmail). After March 21, 2000 the prices will be based on a price C$76.00 plus all taxes plus shipping and handling. Send orders for books with enclosed cheque or (international) money order payable to Canadian Railroad Historical Association, Kingston Division, P.O. Box 1714, Kingston, Ontario, K7L 5V6 Canada. Please include your name, full mailing address, phone/fax/e-mail numbers.

The apparent cause of a major accident east of Montreal on December 30, 1999 was a broken rail; in actual fact the head or top portion of the stock rail at the switch just west of the of the crossing broke away from the vertical portion of the rail. Initially post-accident, trains were consolidated to operate operate between Montreal and Joffre on the Quebec Railway detour route, Operating detours westward on the CN Joliette-Latuque subs and eastward on the Quebec Gatineau railway were also instituted. The Federal Transportation Safety Board says investigators are now trying to determine exactly what caused the fracture. It may have been caused by another train up to two days before the fatal accident. CN locomotive engineer Yvan Theriault and conductor Paul Davis were killed instantly in the accident in Mont-St-Hilaire, east of Montreal, Quebec.

Canadian National Railway Co. and Burlington Northern Santa Fe Corp. rejected claims by four competitors that the two railways' planned union will trigger another round of disruptive mergers in the North American rail industry. "The concerns four major railroads voiced in an open letter to shippers about the proposed BNSF-CN combination are self-serving and not in the best interests of shippers," CN and BNSF said in a joint statement. The two companies, which announced December 20 that they had agreed to merge in a C$28 billion (US$19 billion) deal creating North America's largest railroad, were referring to an open letter from Canadian Pacific Railway, CSX Corp., Norfolk Southern Corp. and Union Pacific Corp. published Tuesday January 11 in the Wall Street Journal, Washington Post and Journal of Commerce. The letter urged shippers to write to the U.S. Surface Transportation Board (STB), a regulatory agency, about their concerns that the CN-BNSF deal will affect railroad customers by provoking another round of network consolidations. In a terse reply to the open letter, CN and Fort Worth, Texas-based Burlington Northern said their combination, which they are loath to call a merger because of Canadian government restrictions on the ownership of CN, differed from other recent railroad combinations. Analysts have said that U.S. regulatory approval and support from shippers and labor unions are the biggest hurdles facing CN and Burlington Northern in their merger. CN expects to complete the union by mid-2001, including regulatory approval.

A major US railway union is opposing the proposed merger of Canadian National and Burlington Northern Santa Fe railroads. The United Transportation Union is the first labour group to oppose the railway alliance. Union spokesman David Eden says BNSF has the worst labour relations record of any carrier. He says the union is fighting a company policy that would require workers to be available 30 days a month if need be. Four other railways, including Canadian Pacific, have also voiced their concerns about the proposed deal. They have placed full-page ads in The Wall Street Journal and other newspapers raising their concerns.

Some members of the federal Liberal Party, including Foreign Affairs Lloyd Axworthy, are wary about the proposed CN merger with BNSF and want the deal to be closely scrutinized. The Winnipeg Member of Parliament says he's worried about a diminishing role for CN's western routes if more freight shipments from Central Canada go along BNSF's U.S. rails. A lesser role for the western route would hurt farmers and Canadian ports, he said. The proposed C$28-billion merger which has to be approved by U.S. authorities and Canada's Competition Bureau would allow the two companies to operate separately but share lines and have its headquarters in Montreal.

The federal government of Canada is expected to introduce legislation this spring that would give it the power to control or even prevent the proposed merger of two railway giants, CN and Burlington Northern Santa Fe Corp. The legislation would also give the federal government wide-ranging new powers to oversee and regulate railways once the merger has been completed. The proposed railway legislation would be included in the Canadian Transportation Act, which is due for its five-year revision this summer. Many of the amendments will be aimed specifically at the proposed merger of CN/BNSF, which has raised concern among railway shippers, union leaders and manufacturers. The government is expected to raise so many issues that BNSF may rethink the merger, or perhaps cancel it. The proposed merger has raised concerns among Canada`s shippers because it would create the largest railway in North America, with 80,000 kilometres of track, 67,000 staff and revenue of C$28 billion a year. The new company, North American Railways, will have a head office in Montreal. But many shippers are worried that decision making and even the head office will eventually be moved to BNSF's current head office in Dallas once CN`s chief executive officer Paul Tellier retires, in about four years. Other groups worry that CN will cut jobs in Canada, particularly in Montreal, and move them to the United States. The proposed merger has raised serious concerns because under current legislation the federal government has very little power to supervise or amend railway mergers.

Canadian National President and Chief Executive Officer Paul M. Tellier welcomed the late January 2000 decision of the United States Surface Transportation Board (STB) to hold a public hearing on the subject of major railroad consolidations and the present and future structure of the North American rail industry. "The STB hearing will permit a disciplined public evaluation of the concerns expressed about the present and future structure of the North American rail industry since the announcement of our combination with BNSF on December 20, 1999. CN will be an active participant in the hearing and will respond to all the questions the STB is addressing to participants" said Tellier. The hearing will be held in Washington, D.C., at the offices of the STB. The STB said that, in announcing the hearing, it does not intend any prejudgment of CN/BNSF application, which the agency will review separate from the March 8 hearing. The agency said it wishes the hearing to act as a forum for the discussion of broader matters that have been raised since the CN/BNSF combination was announced.

The Chemical Manufacturers Association (CMA) said January 20 it would oppose the proposed merger between Burlington Northern Santa Fe Corp. and Canadian National Railway Co. The chemical industry lobby group said that, if U.S. regulators do approve the merger, they should only do so while attaching a condition allowing captive shippers, those with no alternative railroad, to seek service from a competing railroad. The U.S. Surface Transportation Board Chairman Linda Morgan has already expressed concern that the merger could touch off a new round of industry consolidation at a time when the rail industry is still adjusting to previous mega-mergers.

Canadian National Railway Company announced January 26 that its board of directors has authorized a normal course issuer bid to purchase certain of its outstanding common shares. The share buy-back program starting January 31, 2000, and ending no later than January 30, 2001 will be conducted through the facilities of The Toronto Stock Exchange and New York Stock Exchange and conform to the exchanges' regulations. The number of common shares that CN plans to purchase will not exceed 13 million, or approximately 6.4 per cent of the 201,931,835 outstanding common shares of the Company not held by its insiders on January 24, 2000. The price that CN will pay for any common shares will be the market price at the time of acquisition, plus brokerage fees.

CN's board of directors also declared a first-quarter 2000 dividend on the Company's outstanding common shares. A quarterly dividend of seventeen and one half cents (C$0.175) per share will be paid on March 27, 2000, to shareholders of record at the close of business on March 6, 2000. The previous quarterly dividend was fifteen cents (Cdn$0.15) per share.

Train movements continued to be hampered by signal problems on the recently upgraded CN Strathroy Subdivision from Komoka to Sarnia Ontario. On January 28/2000 CN train 385 with Dash 9- 44CWL 2591, SD75I 5633, GP40-2L(W) 9455) went west from Komoka via the Chatham Subdivision and Windsor; due to ongoing congestion on the Strathroy subdivision in the morning.

Newly-built CSXT 755 and BNSF 8965 went west on CN #277 on January 28/2000 with (CN SD40-2 5256 GP40-2L(W) 9601); left London around 11:30. Both new locomotives were destined Chicago with CSXT 755 further destined to the FRA test facility at Pueblo Colorado.

Canadian Pacific Railway Company (CPR) announced January 24, 2000 record results in the company's fourth quarter. Operating income was C$254 million, an increase of C$39 million over the same period in 1998. The operating ratio for the quarter was 73.6 per cent, an improvement of 2.6 percentage points. Net income was C$121 million, an increase of C$8 million over 1998. Income growth in the fourth quarter was fuelled by freight revenue increases of C$48 million over the same period last year. Despite continued softness in bulk commodities, freight revenues reached $899 million. CPR used its strong service capabilities to capitalize on market opportunities that were in part driven by a strong economy. While top line growth drove workload up 11 per cent and fuel prices added C$15 million to costs, operating expenses, excluding unusuals, were up only 3 per cent to C$706 million. The expense performance was achieved by a new lower cost method of operations which is evidenced by a 12 per cent increase in train weights, repair shop efficiencies and administrative overhead reductions.

Canadian Pacific Limited, the Calgary-based conglomerate and parent of the CPR earned C$307-million in the three months ending December 31st. Company officials say fourth-quarter results were lifted by stellar operating results at many of its divisions, including CPR and CP Hotels. However, a big financial charge to cover the cost of layoffs dragged down year-end profits to C$594-million compared to more than C$800-million in 1998. Last July, the CPR announced it was cutting nearly 2000 jobs as part of a drive to boost profits.

Canadian Pacific Limited says it's considering all the implications to its rail service of the proposed merger between CN and BNSF. CP President David O'Brien said that before the CN/BNSF connection was announced, CP was already talking to US railways about closer service links. CP operates rail service, ships and owns hotels. When asked if CP's main line across Western Canada might not end up being squeezed between CN to the north and BN to the south, O'Brien said that with a possible CP-Union Pacific alliance, BNSF might find itself squeezed between CP and UP.

CPR is borrowing four GE Dash 8-40C locomotives numbered 9144, 9151, 9162, and 9215 from the Union Pacific Railroad in late January. CP intends to evaluate the performance and condition of these locomotives, as consideration is being given to purchasing some of the locomotives from UP. These locomotives were to be delivered to St. Paul, Minnesota, and then worked in the trailing position to Calgary Alberta. Two of the locomotives were to be modified so that they can operate as CPR lead locomotives in Canada and the USA. Train crews were encouraged to provide feedback regarding the overall condition of these locomotives to road managers.

Canadian Pacific Limited announced January 18, 2000 that it has increased the number of shares that it intends to purchase for cancellation under its normal course issuer bid from ten million of its Common Shares, representing approximately 3% of the 325,663,387 issued and outstanding common shares to sixteen million of its Common Shares, representing approximately 5% of the 325,663,387 issued and outstanding Common Shares. The purchases under the current bid commenced on August 19, 1999 and will terminate on August 18, 2000, or on such earlier date as Canadian Pacific may complete its purchases pursuant to the notice of intention filed with the Toronto Stock Exchange. Purchases may also be made through the facilities of The New York Stock Exchange. The price to be paid will be the market price at the time of acquisition. As of January 17, 2000, Canadian Pacific had purchased for cancellation 7,240,200 Common Shares within the past 5 months at an average price of C$33.34 per share. Canadian Pacific believes that the market price of its Common Shares may be such that their purchase would be an attractive and appropriate use for corporate funds in light of potential benefits to remaining shareholders.

On January 22, 2000 CPR train 306 had a derailment at mile 68.1 of the White River Subdivision in Northern Ontario. Location was station name sign Lochalsh which is between Franz and Missanabie. Thirty-nine cars of grain derailed mid-train in a deep single track rock cut. The area has poor accessibility and combined with bitterly cold temperatures it was expected that removal of the damaged equipment would take time. Motive power on the train was SD40-2s 5993, 5946, 6027. Twenty-four hours later 30 trains were being held in places as far away as Smiths Falls and Windsor Ontario. The line was reopened in the early morning hours of January 26, four days after the accident.

Effective with the introduction of a new timetable as of January 16, 2000 VIA is now offering a new overnight train service between Toronto and Montreal entitled Enterprise. Some sample one-way prices, before taxes: for a single bedroom, C$195; double bedroom, C$173 per person; berth (lower bed), C$156; berth (upper bed), C$133; economy class (no bed), C$95 or less. Seniors, students and children get discounts. The new service aboard the Enterprise runs seven nights a week. In addition to the new overnight service, VIA has also extended the Montreal-Toronto corridor to Oakville and added a new early morning express train between Montreal and Toronto. In another innovative move to capitalize on the productivity and comfort of rail travel, VIA has launched PRIVA, a new meeting, convention, and private car service designed specifically for corporate meetings and conventions, incentive groups and professional associations. Departing at 23:30, VIA's overnight train #50 from Toronto, #51 from Montreal, provides two choices: Overnight Economy Class with pillow and blanket service or the Overnight Sleeping Car Class which includes full sleeping accommodations, turn-down service and shower facilities. A full continental breakfast will be served in the sleeping compartment or in the dome car from 05:30 with newspaper delivery to every bedroom by 06:00. The Enterprise will arrive in Montreal at 08:00 and in Toronto at 08:20. Both trains will stop just east of Kingston, Ontario, at a siding named Queens (mile 174.9 Kingston Subdivision). No. 50's westward counterpart, no. 51, does the same. The reason for all this is to have reasonable departure and arrival times in Montreal and Toronto. The pre-1990 overnight train just ran slowly for the entire distance, but the new no. 51 is also serving the market for commuters from towns east of Toronto, so it has to operate at a reasonable speed from Kingston to Toronto. Until 1965 there were at least two overnight trains between Montreal and Toronto, nos. 16 and 17 on Canadian National Railways, and nos. 21 and 22 on the Canadian Pacific Railway. These had been pool trains since 1933, operated jointly by the two railways. The pool agreement was terminated in October 1965, the CPR night train was terminated, and only the CNR (later VIA) ran a night train from 1965 to 1990.

Recognizing the particular needs of the business traveller living west of the Greater Toronto area, VIA now offers Oakville direct service to Ottawa and Montreal once every morning, with direct return service once every evening. The elimination of the need to change trains in Toronto means significant time-saving for Oakville-area residents. Other schedule changes include a rapid early morning train from Montreal to Toronto, as well as the re-introduction of five weekday frequencies to Ottawa from Toronto as well as five daily trains to Ottawa to Montreal.

The town of Ingersoll Ontario near London may face legal action resulting from a fatal car-train collision on December 25, 1999. The family of two sisters killed in the crash have notified the mayor of Ingersoll that it intends to sue. Twenty-year-old Shannon Brownscombe and 14-year-old Danielle Martin were killed in the accident. The family of the third crash victim, Steven Turek, have yet to decide on legal action. The three died when a VIA train collided with their car at a level crossing. Both families have expressed concern that the crossing has no gates or flashing lights. They feel signals could have prevented the accident.

Blowing snow, and frigid temperatures caused problems at Komoka ten miles west of London, Ontario on December 29, 1999. Improperly lined crossover switches on the south track of the Strathroy Subdivision resulted in eastbound VIA train 78 derailing the rear truck of F40PH 6419. The lack of communication to passengers and to VIA's own personnel compounded the problem. Passengers were transferred to VIA 88 on the north track and arrived in London some three hours after the incident. Buses sent to Komoka to collect the stranded passengers were then diverted or cancelled by VIA which compounded delays. Westbound VIA 79 with F40PH 6426 to Windsor terminated at London; and then went west the following morning to Windsor at 08:00 and then returned as VIA train 72.

VIA is promising to improve its track record in Northern Manitoba. The passenger rail carrier is changing its schedule and railway officials are promising to keep the trains running on time. VIA trains have a reputation for running late. Out of Churchill it's almost always an hour or two behind schedule. Via officials blame it on the track. The rails cross land riddled with muskeg and permafrost. Tracks buckle and heave forcing trains to slow down. Local politicians say VIA is catering to the tourists and ignoring the needs of passengers living in isolated communities who've come to rely on the service.

At least two passengers received minor injuries January 23 when the rear car of VIA Train 88 derailed. The train was enroute to Toronto, with 168 passengers, was travelling on the Goderich-Exeter Railway's Guelph Subdivision. The train consisted of Amtrak 516, and 34074, 34010, 34030 35011. The rear truck of the last car derailed. Two people complained of minor injuries, and were taken to hospital in Georgetown Ontario. Passengers were bused to their destinations after the accident. Apparently the rear car struck a device known as a centre of car cushion Cars with cushion drawbars have two end of car cushion units and one centre of car cushion unit, and this centre one had fallen off a car on a westbound freight, unbeknownst to anyone. The following morning returning westbound VIA 85 had AMTK P32-8WH 518, VIA F40PH 6417, and the three 34000-series coaches.

VIA #72 (VIA 6427 + 6 LRC cars) broke down at Longwood (27 miles west of London) on January 28, 2000; was pushed by CN #223 (CN Dash 8-40 CM 2443, Dash-9 44CWL 2540) from there to the station in London; went by Komoka about 10 minutes ahead of #76; as a result of this delay #73 appears to have been terminated in London. Apparently the 6427 and train were involved in an accident at a level crossing east of Glencoe and the locomotives' fuel tank was punctured.

VIA train 14 heading to Moncton at about 10:00 Atlantic Standard Time, January 30 slammed into two stationary box cars in Miramichi New Brunswick. Officials at the scene said three passengers were in critical condition and 26 others had been taken to hospital. A Via spokesperson said there were about 127 passengers on board the train from Montreal to Halifax. The collision occurred about a half kilometre from the Via depot in Miramichi, which is about an hour and a half north of Moncton. Rescuers were having a difficult time reaching the site because the one dirt road leading to the site was covered in snow. Snowmobiles were being used to ferry people to emergency vehicles. The train had F40PH 6450, 6432, coaches 8618, 8140, 8143, 8511, 8417, 8221, 8220, 8226., 8216, 8703

The task of revitalizing Canada's passenger train service is best left to the private sector, not something to be achieved by throwing more government money at Via Rail, said Peter Armstrong, creator of the successful Rocky Mountaineer tourist train in the West. "We've created an award-winning profitable tourist service between Calgary and Vancouver, renovating old equipment and investing more than C$5-million on brand new cars, and all without subsidy. We want to make that a year-round service and prove how the private sector could provide the rail passenger system Canadians need." Mr. Armstrong speculated that David Collenette, the Transport Minister, may have been sending up a trial balloon when his office told the reporters the fedral government will add C$75-million a year for 10 years to Via's existing annual subsidy of C$170-million to enable it to buy equipment and grow. He said Great Canadian replied to Mr. Collenette's request for proposals to the private sector last spring, suggesting it should take over Via's Transcontinental, which runs from Toronto via Jasper to Vancouver, and develop its full potential. "The idea of dividing up Via into three franchise sectors and asking for private-sector bids was moving in the right direction and I'm not sure he's given that up," said Mr. Armstrong. "But a Bombardier led consortium that finances, builds, maintains, and manages the equipment for Via could also be a viable form of public-private partnership."

A group of communities in Saskatchewan planning on purchasing a railway is disappointed with a ruling from the national regulator. The Canadian Transportation Agency says railways do not have to subtract federal grants from the price. Louis Kolla is reeve of the rural municipality of Hoodoo. His community, and six others, are buying 74-kilometres of track south of Prince Albert. The buyers asked the national regulator to subtract the cost of improvements paid for two decades ago by the federal government. They claimed those repairs belong to the taxpayers. But the Canadian Transportation Agency says they belong to the railways. The CTA ruled that railways may include federally funded rail line improvements in the net salvage value of branch lines. Under the law, buyers can not back out once they've agreed to purchase a branch line. The province of Saskatchewan is concerned that the CTA decision could end many efforts to purchase branch lines up for abandonment. The improvements were paid for through the Federal Rail Line Rehabilitation Program conducted between 1977 and 1990.

The Guelph Historical Railway Association has once again asked the City of Guelph, Ontario (west of Toronto) for permission to operate two excursions in 2000. These excursions will utilize Waterloo St.Jacobs diesels and coaches. Tentative dates for the excursions in 2000 are April 14, 15 and 16 and September 29, 30 and October 1/2000.

Former LI FA1 cab car 616 was interchanged from the CPR to CDAC on January 21/2000 and arrived in Farnham Quebec at 1405. This locomotive is ex. BN 4108, originally SP&S 860, serial number 77675 and was retired by BN in 1972. The control cab is destined to the Express Marco operation utilizing a portion of the former Quebec Central lines.

The operations of the Okanagan and Lumby Subdivisions will be taken over by the Kelowna Railway Co. Ltd. (no mention of the word Pacific now), a joint venture of Trillium Railway Co. and Knighthawk Rail Ltd., at 0001 January 30th, 2000. The mileages are as follows: Okanagan Sub. mile 14.4 to mile 70.8, and mile 85.5 to mile 118.9, Lumby Sub. mile 0.0 to mile 14.4. Of the five former CN M420Ws on this operation three are operational and are expected to be joined by two leased SD-38's from CN.

Canadian National:

The following GP40-2(W) locomotives are on short-term leases to Quebec Gatineau 9602, 9615, 9668; to the Indiana & Ohio Railway: 9421, 9424, 9531, 9624; to Southern Ontario Railway 9584; to St.Lawrence & Quebec 9454, 9547, 9676.

The following CN units were retired January 5/2000: SD40 5038, SD75(I) 5753, scrapped on site of the 12/30/99 accident Mont- St.Hilaire Quebec; GP40-2W's 9436, 9475, 9495.

The following CN unit have been sold: GP40-2W's 9428, 9562, 9595, 9621, 9633, 9635-to Alstom, December 1999. The units have all moved to Alstom; Taylor Marine has purchased GMD1m's 1153, 1167, 1170, 1172, (of note, 1172 is ex-NAR 311 and is short nose lead); To National Railway Equipment: GP40-2's 9422, 9436, 9475, 9495.

Upgraded Illinois Central SD40-2's 6263 and 6264, ex. IC 6150 and 6147, have entered service and are the fifth and sixth IC units to be painted in the CN colour scheme.

Twenty KCS 6600-series SD40u's have been received by CN for their seasonal Canadian service. These units were outshopped from Alstom in 1998. Units operating on CN this year are as follows: 6600, 6602, 6603, 6605, 6606, 6608, 6609, 6610, 6611, 6617, 6619; 6621, 6625, 6626, 6631, 6632, 6633, 6635, 6636, 6637.

Shortlines:

Quebec-Gatineau has sold retired RS18u 1816 to New Brunswick East Coast. The unit arrived in Campbellton on December 24 and is expected to be returned to service. QGRY also sold many usable parts from retired RS18u 1848 (broken frame, Trois Rivieres, 1996) to NBEC.

New Brunswick East Coast C424m's 4238 and 4243 are for sale and have been put into running condition by the NBEC shop in Cambellton.

Railamerica has leased the following six units for use on the former RaiLink Mackenzie-Northern Railway: LLPX GP40 191, ex. MKT 191; LLPX GP38u's 2228, 2229, and 2230, all former Belt Railway of Chicago and HLCX SD40u's 6314 and 6316, all former CPR.

Boise Locomotive's MP1500D 1504 was moved to Houston, Texas, following one month of testing at Novacor Chemical, Joffre, Alta.

Thanks to the following for this issue of Canada Calling covering news which happened during January, 2000. John Allen, Rainer Auer, Will Baird, Christian Base, Danny Boehr, Robert Boudreau, Gerry Burridge, Bruce Chapman, Tim Green, Paul Hammond, Jayphred, Peter Jobe, Ken Jones, Joe Kazmar, Dave Lisabeth, Don McQueen, Ian Platt, Erick Pelletier, Mike Salfi, Thomas Sajnovic, Jim Sandilands, Rob Sterne, Len Turple, and numerous others.

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