Canadian National Supports Mississippi Shortline Railroad, Delta Economy With US$2.4 Million for Rail Infrastructure Upgrades.

Business Editors

INDIANOLA, Miss.--(BUSINESS WIRE)--Oct. 18, 2000

Canadian National Railway (CN) (TSE:CNR.) (NYSE:CNI), the Columbus and Greenville Railway (C & G), and Delta Western Feed Mill, Inc. jointly announced today that CN has agreed to finance US$2.4 million in track improvements to enable the C & G to handle loaded railcars weighing up to 286,000 pounds.

As part of the agreement, Delta Western, an affiliate and largest customer of the C & G, has committed to route via CN for the next 10 years a substantial portion of the inbound grain moving to its catfish feed production plant on the C & G mainline west of Indianola.

Railcars with a maximum gross weight of 286,000 pounds have become standard in the railroad industry, improving efficiencies but posing a problem for smaller railroads such as the Columbus and Greenville, whose infrastructure was designed to handle lighter loads. Cars with a 286,000-pound capacity can carry 400 more bushels of grain than cars operating at the previous weight limit of 263,000 pounds, a more than 10 per cent gain in carrying capacity.

"The financial support we are providing to improve rail service to Delta Western, as well as other C & G shippers, demonstrates our commitment to Mississippi and to the Delta region in particular," said Paul M. Tellier, President and CEO of Canadian National. "We consider the Columbus and Greenville one of our key partners in providing competitive, customer-focused rail service to a state that we or our predecessor companies have served for almost 150 years. The better the service we can provide shippers, the better for the region's economy overall. As Mississippi grows, we grow."

Tellier announced CN's financial support of the C & G upgrade at a ceremony marking the 25th anniversary of the establishment of the C & G under its current management. U.S. Surface Transportation Board Vice-Chairman Wayne Burkes was among the attendees at the ceremony.

The improvements to the C & G that CN will fund will also allow Delta Western and other C & G shippers to take advantage of CN's "Efficiency Trains," grain trains of 75 or 100 cars that cycle between origin and destination points. Efficiency trains operate with incentives for the shipper, the railroad and receiver to load, move and unload grain within time limits in order to maximize equipment utilization. C & G's participation in the handling of Efficiency Trains will mark the first time CN has entrusted the demanding and time-sensitive movement of Efficiency Trains to a carrier with whom it interchanges traffic.

"The opportunity to receive CN Efficiency Trains on the C & G in combination with the increase to 286,000-pound capability will significantly reduce our transportation costs and lower the overall cost of our fish feed by as much as four dollars per ton," said Lester Myers, President of Delta Western. "Demand for catfish products is spurring vibrant growth in the catfish industry. We want to stay - and we want to help keep the Mississippi Delta - in the forefront of that growth. Being able to receive 286,000 pound-cars of grain in CN Efficiency Trains at our Indianola production plant will make us both more efficient and better able to keep pace with the growing demand for our product."

"We look forward to a long-term partnership with Canadian National," concluded Myers.

"This agreement benefits all involved: the C & G, CN, and Delta Western, as well as the people, businesses and farmers of the central Mississippi Delta," said Roger Bell, President and CEO of the Columbus and Greenville Railway. "Not only does this agreement secure long-term rail business for the C & G, it will enable us to provide better freight service to all shippers on our line."

The upgrade of C & G track between its interchange with CN at Greenwood, Miss., and the Delta Western plant to handle heavier cars will complement a program that C & G began earlier this year to replace 38 miles of lightweight, jointed rail with heavier, continuous welded rail (CWR). CWR improves safety, provides greater train efficiency, and reduces maintenance costs for both track and equipment. The upgrade to 286,000 capacity will itself include replacement of 20,000 crossties, the ballasting, surfacing, and lining of track, and installation of an additional two and one-half miles of heavier rail. The project also calls for rebuilding or strengthening 11 bridges and rebuilding 20 rail-highway grade crossings. The work will take place over the next year with completion scheduled for the fourth quarter of 2001.

CN and C & G expect to move 1,500 carloads of grain to Delta Western in the first year after completion of the track upgrade and 2,000 carloads annually in subsequent years.

Tellier emphasized that shortlines such as C & G play a critical role in North America's rail system and illustrated how important shortlines are to CN.

More than 20 per cent of CN's business either originates or terminates on shortlines," said Tellier. "When that much of our business relies upon partnership with shortlines, we know we need to work together."

Tellier explained that the financial assistance package made possible by the effort of CN, C & G, and Delta Western set "a new standard of cooperation between a Class I railroad and the shortline industry."

CN, he said, fully supports the joint initiative of shortlines and the larger Class I railroad to seek a congressional solution of the challenge shortlines face in upgrading to handle 286,000-pound cars. That initiative would lead to 80-percent federal funding of upgrades with a 20-percent match from railroads or other non-federal sources.

"But we're not waiting for Congress to act," said Tellier. "We're moving ahead where our financial support for 286,000-pound capability is economically justified."

Delta Western is the largest producer of catfish feed in the world. In business since 1965, Delta Western sells and delivers directly to catfish producers throughout Mississippi, as well as in Arkansas and Alabama. Delta Western, which employs 85 people and is headquartered here, has recently doubled its capacity and anticipates making further plant improvements in 2001.

Columbus and Greenville Railway, with 65 employees, provides rail transportation services to local communities and dozens of shippers across North Central Mississippi and the heart of the farm-rich Mississippi Delta. The C & G, which traces its historical roots to the 1878 founding of the Greenville, Columbus and Birmingham Railroad, began operations with its current corporate structure on October 30, 1975.

The Canadian National Railway Company spans mid-America and Canada, from the Gulf of Mexico to the Atlantic and Pacific Coasts of Canada, serving the ports of New Orleans, Mobile, Ala., Vancouver, Montreal and Halifax, N.S., and the principal cities of Chicago, Detroit, Jackson, Miss., Memphis, St. Louis, Buffalo and Toronto, with connections to all points in North America.