Conference Transcript - CNI 2026-09-16

Speaker 3

Good morning, everyone, and welcome back to Day 2 of the Laguna Conference. We had an exciting day yesterday and hoping for a lot more great content today. So very happy to kick off our Day 2 schedule with Canadian National Railroad and very happy to welcome back to Laguna CEO Tracy Robinson. Tracy, thank you for being here.

Tracy Robinson, CEO

Thanks, Ravi. Always good to be in Laguna and always happy to come back and talk to you about what's going on in the rail space.

Speaker 3

Great. That's awesome. I will let you open with some opening remarks, but before that, I have to say that for important disclosures, please see Morgan Stanley's Research Disclosure website at morganstony.com slash research disclosures, or please read our recent research. And with that, Tracy, do you want to just open up with a lay of the land?

Tracy Robinson, CEO

Listen, you know, I'm really proud of the way the last year has unfolded, but what maybe I'll do before we get to your questions, Ravi, is I'll spend just a couple minutes on where I'm focusing my time and where we're all focusing our time as we look forward as well. And that being, you know, on some pretty interesting growth opportunities combined with some disciplined operating execution and how that kind of combines to create some interesting shareholder value. So on growth opportunities, first, I got to tell you, I am really happy to be sitting here this year with a network that now extends into Mexico. This agreement that we've reached with the Union Pacific to extend our network to Mexico to connect with the FXC through Memphis is kind of a once-in-a-generation opportunity for us. This is a market. The trade between Canada and Mexico is $45 billion. It grows across all commodities. And we've got this tremendous origination network. So we're matching that in a really kind of lean fast route through Memphis down to FXE. We're connecting that with the largest railroad in Mexico and the railroad actually that's growing faster than all of the railroads in North America this year. So we're really excited about that opportunity. We've positioned ourselves really well, and we've done it without straining our balance sheet in any way, which is important to us. And so that's meaningful, and I think you're going to be hearing a lot more from us on that as we go forward. But back on the base network, we continue to be bullish on energy and on ag. If you look at what's happening in the energy space, we've got a network that sits right on top of the Western Canadian energy complex in the Montigny shale region and all of the development that's going on in there on NGLs. It's interesting because it's multi-commodity. It's multi-market. It's driven by very strong demand for energy across North America and increasingly globally. And it's underpinned by significant investments, long-term investments by our customers and partners in supply chains. So whether you look at on NGLs with AltaGas is investing in facilities in Rupert. If you look at the Kiara ACE terminal, which is a unit train loading facility to load NGLs in Alberta. If you look at the Strathcona crude facility that's ramping up if you look at those byproducts go into the dow path to zero facility that's under construction in edmonton if you move over to the bulk you have can export facility we were all up there to celebrate its opening in rupert two weeks ago you've got the bhp potash mine and jansen that's opening up next year these are all structural foundational long-term growth opportunities that give us the benefit of of that growth but also none of this growth is really tied to the North American macro. And so this is all very beneficial. And, of course, we have a much broader diversified portfolio. Janet's driving growth this year in automotive, in metals, in domestic intermodal, and, you know, she's got this boots-on-the-ground program, and she's here with me today. She's got a boots-on-the-ground program that is out there, not just on the big programs and projects, but also in driving and creating opportunities with small customers for smaller opportunities. Those are equally important to us. And so it's a challenging environment out there. It's challenging right now between Canada and the U.S. on the free trade front. But I think that, you know, what we're learning is that if we focus on what we can control, we drive those foundational kind of volume growths with key partners, then, you know, we will be less attached to the macro. So we're excited about the path forward. Four and a half percent growth in RTMs so far this year. They'll moderate a little as we get into a much tougher compare in Q4, but we're feeling pretty good about it. So you match those growth opportunities with really disciplined execution. You know, we launched or relaunched, I guess, scheduled railroading four and a half years ago at CN, and we've continued to refine it since then through, you know, initiatives like fast track and asset utilization and locomotive productivity, and patent team are delivering really strong results. So the network is fluid, velocity is high, the customer service is very strong, and our productivity continues to improve. And that productivity improvement is really broad-based. So it's about the workforce, where this year 5% better productivity across our workforce. It's 13% if you look at the train crews. Our locomotives are working harder. We are hitting records on fuel efficiency. And this is a drumbeat that we have out there around how we want to continue to drive productivity, getting more for our assets and our workforce every day. And so the question I'm often asked is, with all the growth opportunities, are you going to need to start putting more capital in again? And, you know, the short answer is no. We did the hard yards of investing in de-bottlenecking the system, adding 25% capacity in the West, modernizing our locomotive fleet. So we're continuing to do those things, but the heavy lift is behind us. So now it's around we've pre-invested, and now it's about filling that capacity and accommodating the growth opportunities. And so we're down to a much more normalized capital spend of, you know, between 15% and 17% of revenues as we go forward. And that includes some additional kind of deball necking and adding capacity on the network as we go. So that's great. So you bring those, you know, if you have an environment, if you look at it through the lens of a shareholder value, an environment of unique growth opportunities and really disciplined both operating and capital kind of execution, you create an environment where you have strong operating leverage, some underlying earnings growth, and some really good free cash flow generation. And so what we're looking to do now that we've got CapEx stabilized, that excess cash goes back to our shareholders. And we have a very strong balance sheet. We've increased our leverage from 2.5 to 2.7. And we think that we're executing on that. We're very kind of conscious of the macro environment that we're in. We're very careful about the commitments that we make, and we are meeting those commitments. We're delivering on those as we go, and we intend to continue to do that. So I'll leave it there, and we'll get to your questions.

Speaker 3

No, that was a super comprehensive update. I think you hit all of my questions, so we can go to the beach now. No, a few follow-ups there, but that was a great start. Just on the growth, they said a couple of times that clearly a long runway of growth, but not necessarily tied to the macro. Are you guys able to unpack what is an idiosyncratic, organic level of growth that just the pipeline can generate and then what the macro can add on top of that?

Tracy Robinson, CEO

So if you think about the energy growth that we talked about, so it's multiple commodities and, as I said, multiple markets, and what we're feeling, particularly in Canada, is the push for the diversification in trading. And so there's a lot of focus on finding global markets for this and we have the capacity to do that. Government is focused. I was at the investment summit that Prime Minister Carney ran yesterday and he made some announcements on tax and a few other things to solidify Canada as a place to invest. And so we're seeing some increasing momentum in investment, not just in the energy space and the production. I mean, it's across all sectors of critical minerals, but also in the infrastructure and supply chains in order to get it to marketplace. So I would expect that we're going to see this kind of development not only continue but accelerate. So if you think about it from an energy perspective, NGLs, which for a long period of time was largely a North American market, we've seen over the last three years the NGL exports, just through Rupert, increase at a CAGR of about 8%. If we look at that just over the next three years, you know, that growth rate's going to double. And so, you know, we're seeing that kind of growth across the energy portfolio, and that isn't tied to the macro. It is tied to economic policy and some of what's going on, but it's not tied to the macro. And some of the growth, the crude growth that we're seeing, does go into the United States. The refined fuels goes out to, you know, we're in phase two of our Toronto fuel facility. So it's a very kind of diverse network. So some of that will be impacted by the macro and a stronger kind of economic growth. Some of it is just going to be through global demand. The same thing for the ag sector. The Mexico growth opportunity is unique. You know, we know that it is, you know, as I said, a $45 billion in trade. A lot of that moves. I mean, that's a very natural rail market given the distance that it goes. $3.5 billion truck market, right, that we're going to lean into. There's others leaning into that as well. We think that's very natural. And so there's a number of different phases of that. If you look at, we'll have the extension of our length of haul down to Memphis. That's an immediate benefit right out of the gate. We will have translation for rail volumes that are moving otherwise on rail, and then we have the truck market. So that's more structural. Some of that will be tied to the macro. Some of it is more just moving volumes that will always move onto a different mode. So it's a good combination. You know, we still have lumber. We still have automotive. We still have all of our consumer segment, and we like that business a lot. It's about the diversification. Got it.

Speaker 3

So CN has always been a long-term growth story, and clearly that's continuing with everything you've highlighted. But obviously there's unfortunately been another very noisy, chaotic year for the entire industry for the sixth year in a row. So maybe if we can unpack what some of the shorter-term trends look like. Obviously, earlier in the year, you had kind of very strong grain market, but then you had the whole USMCA deadline kind of be a little bit of a catalyst people are looking at. And then to your point, there's been trade headlines in recent weeks, $6 diesel. Obviously, you don't have as much domestic intramodal exposure, but where does all of this shake out as you look into the back half of 26?

Tracy Robinson, CEO

Well, one of the big learnings from all of this is the need to be nimble and the ability to move quickly, right? And so we've looked back over the last year and a half since the trade and tariff discussion started. I mean, the first shocks were twofold. One was everyone sat on the sidelines waiting for some certainty in what was going to happen. We've all learned that there's unlikely to be a lot of certainty anywhere. So we are seeing most of our customers, our industry, come off the sidelines, and they're taking positions, whether it be an inventory or their supply chain or getting into new markets. And so that's been very positive. And in a lot of ways, it's an opportunity. So where we have, you know, the automotive, we have great Michigan franchise in automotive. We also have the Canadian franchise in automotive. But as we sit here now, Janet's driven an increase in our automotive volumes. And a lot of that's coming in through Halifax and through Vancouver. So it's imports. But we have the capacity and the ability to be able to respond to that. And so, you know, as we look forward, that's what it's going to be. is our ability to be very close with our customers, be sitting with them, to be able to find the different markets. Steel is another one that's been under a lot of pressure in Canada, and our steel volumes are roughly what they were. But it's volumes that are now, instead of moving across the border, they're moving within Canada and within the United States. We've got a new scrap movement that's moving on unit train. So it's about going out there and making your own opportunities. And then there are the underlined... We had a record grain crop this year, right? and it was a privilege to move it. And we moved, we did a great job, we gained share, and we hope that it returns next year. I think it'll be a strong crop next year, whether it will be as strong is a question mark, and we're ready for that. We've got the capacity in place. Our cycle times on those grain cars were significant. If you look at the Western Corridor, it outperformed for us this year. So we did put the asset, you know, we did put the capacity in place, But the volumes were up between grain and energy, and yet, despite volumes being up, our car velocity was up 6%, our dwell was down 5%, our locomotive utilization was up 7%. So that, it's moving, and we've got the capacity to do more of that. So I think there's going to be a combination of those fundamental structural flows that we'll invest in and having the ability to respond to mitigate the impact but also respond to the opportunities of the short-term flows. And I'm a believer that we'll get through this, what we're in right now, and a more stable environment will emerge, but we may be better off for it. There's new opportunities that are emerging because of it.

Speaker 3

That is. That's great to hear. I don't know how you see it from your perspective, but I think there is some optimism on a USMCA resolution. Do you feel like that is something that's going to open the floodgates and kind of unlock a bunch of volume, or how do you see that kind of potentially being a catalyst?

Tracy Robinson, CEO

Yeah, I think it's industry by industry. I think it will depend on what the agreement is. We had a near-miss recently, and that created some optimism. And I think, as I understand it, I think the tone is getting better, as we sit here today. So I think it will depend on what the deal is. I think we're all resigning ourselves. It's more of a global phenomenon than just Canada, U.S., Mexico, that trade will look a little bit different, and trade incentives, the economic policy, will look a little bit different. And so as we look broadly at the future, we see opportunity in that, both cross-border and the ability to be responsive to what our customers need and what those industries are thinking. But we also see tremendous opportunity in our northern franchise, sitting on top of the natural resource base of the continent, with the kind of port access that we have through Rupert, through Vancouver, through Halifax and St. John and Montreal, to play a meaningful role in that development of global markets.

Speaker 3

Got it. I know it's not as big a deal for you, but it's sort of the theme of the conference, so I have to ask you anyway. $6 diesel, what does that mean for you potentially in terms of volume tailwinds as well as potentially kind of cost headwinds in the very short term?

Tracy Robinson, CEO

Listen, we've spent, over the last number of years, we've developed a really strong domestic intermodal franchise, and it's largely on the backs of really strong service. You've got to be competitive on price, but really strong service. And the nature of our network on the Canadian side of our business is such long haul that we've got great penetration. Now, there's always, we're focused on continuing to build that business, And certainly anything that happens in the trucking industry around, you know, fuel costs, around labor availability, it kind of makes, kind of confirms rail as a realistic opportunity and alternative. And so we'll make small gains there. But, you know, if you think about Mexico and that $3.5 billion truck opportunity, it could be very meaningful for us. And that is going to drive the opportunities for conversion from truck to rail, I think, in that marketplace. And so we're watching it very closely.

Speaker 3

Got it. Obviously, with all of this volume opportunity, there's opportunity for price as well. How are you thinking about that volume versus price dynamic, and what is the opportunity on price, do you think, in the medium term?

Tracy Robinson, CEO

Well, when we go to market, you know, we're playing with a lot of levers. So if you think about where our network is, where it can benefit our customers, where we can get them from and to. If you think about, we think very carefully about our capacity, about the nature of the opportunity, you know, around the commodity and where they're trying to get and the sustainability of the opportunity, asset velocity, we think about all that. And then, of course, we price based on that. And so there's different, we think it differently in different opportunities across our network. And so, you know, our objective is always to get maximum value for the capacity that we have. It's our scarcest resource. And so Janet does a great job in pricing. At the end of the day, what we ask her to do is always to come in above our real cost inflation. And she does a great job of that, but there's a lot of moving pieces within it. What we're looking for is to drive not just growth. Certainly we want growth, and we want to use our capacity well, but we want to drive profitable growth. And so Pat and Janet work together very closely on where that capacity is, how we should be using it, and price as a mechanism in a manner of how we use it.

Speaker 3

Understood. Maybe let's shift gears a little bit and kind of talk about again, the topic du jour in the rail industry for the last eight months.

Tracy Robinson, CEO

There are a topic du jour?

Speaker 3

There's a few of them. It's a long day. What can I say? But obviously, the merger, you guys were somewhat on the sidelines, somewhat critical, and then you reached an agreement with UP that you say kind of helps with a lot of the considerations on the merger. Can you just help unpack that a little bit? What was the genesis for that, and what does CN gain from the bargain?

Tracy Robinson, CEO

So we, you know, as you know, we have a great origination franchise at CN, probably, definitely, more than any other railroad. Eighty-five percent of our business originates on our network. And, you know, for the North American business, we push this down into North America, and we work with every one of the Class I and a number of the other non-Class I partners in order to get that into marketplaces. And, well, UP is one of them. And we worked very closely with Jim and his team on all kinds of efforts to jointly build the business. And as we contemplated the merger, I think it's clear we would have been probably and will be the least impacted by the merger, given our north-south orientation and our strong origination franchise. But we also made a case quite publicly that we thought that it's a very high bar to meet from a kind of, you know, you have to need to enhance competition. We thought our network could be useful in doing that. And ultimately, in our discussions with Jim, we came to an agreement where we think that that's the case. And, you know, so we will kind of provide a competitive option into Kansas City if the merger goes forward. We will provide the competitive options for the 2-to-1s and the 3-to-2s, and then we'll participate in what some of the gateway provisions, you know, will ultimately look like. So the STB has got a broader question to answer, and I'll know they'll do that with all of the full rigor, but we believe that what we said is true. Our network is being used to introduce more competition, which is good for the system. It's good for our customers and our customer base and the potential that we can offer them. And we believe that for us, it mitigated much of the harm that the merger kind of would have presented for us. So as we think about it now, we're no longer in opposition to the merger. It's a big question that I think the STB has to answer, but we're no longer in opposition for it.

Speaker 3

Do you have a sense of just how active you're going to be through the process?

Tracy Robinson, CEO

Well, we will certainly be active to the extent that we will be putting forward the agreement that we made with Union Pacific and supporting it. And we'll have a voice in the issues around that.

Speaker 3

Just going back to the Mexico agreement, I mean, clearly very exciting for you guys, and you started out with the opportunity there. Can you just unpack that a little bit more, kind of how near-term or immediate is the customer reaction to that? Are they saying, you know, hey, we now have this pathway into Mexico we didn't have before. Let's get going. Again, you said that's not necessarily macro-dependent, but when do we start to see that show up in the volume numbers?

Tracy Robinson, CEO

So we've been spending some time with our friends at the FXC on where we both view the specific opportunities, near-term, medium-term, and long-term, and we're getting organized on that. But the way that we think about this as we came to the deal is that there really are three tranches of opportunities. One is this allows us, most of our business that we did with UP to get into Mexico with FXC was routed through Chicago. This business will now be routed through Memphis. So there's an opportunity immediately for us to start working on that traffic and have it routed through Memphis. And that's a lift for us from a revenue perspective. The second one is there's rail volumes that are already moving between Mexico and Canada. And if we look at the trade between those two countries, the $45 billion, 80% of that is between Mexico and eastern Canada. And we will have a three- to four-day transit advantage into eastern Canada. So we will be targeting some of that business, certainly. We are at par on transit for Western Canada. And so there's some important business out there that we feel that we are the appropriate carrier to move on that. And then the third piece, of course, is that which we're all trying to convert, is that big truck market that moves all the way to Mexico to Canada. And as you said, the conditions around trucking economics are becoming much more challenging. And so we think that there's an opportunity for a lift there. So this will happen, as I said, there will be near, medium, and longer-term kind of plans that we're putting together with the FXC. And as we get those in place, we'll be able to say more.

Speaker 3

You mentioned Kansas City as well. Just how important is that for the fluidity of your North American network?

Tracy Robinson, CEO

Well, Kansas City has been a – I mean, we've been trying to figure out how to get into Kansas City and Mexico for years. And now we have it. Kansas City is conditional upon the merger going forward. And we will have the line into Kansas City on a haulage trackage arrangement and the first right to purchase that if UP ever decides that they will or are required to dispose of it, as well as Neff Yard as a landing spot. And so it positions us very well. Similar to Mexico, it will lengthen our haul immediately from Chicago to Kansas City, and then it gives us the ability to move freight immediately. Now, that will be a ways off it because it's conditional with the merger, but that will come too.

Speaker 3

Maybe shifting gears a little bit, It feels like you guys have almost taken advantage of the downturn, if you will, to kind of look inwards and kind of cost savings, to your point, kind of resetting some of the targets and kind of hitting those targets. Let's talk about cost savings for a second. Fast track, $40 million Canadian run rate savings in 1Q, $100 million realized benefits by 2Q. How much additional opportunity remains there, and is there like a multi-year run be there?

Tracy Robinson, CEO

Yeah, we're not done. I mean, this is part of scheduled railroading. Three, four and a half years ago, we started scheduled railroading. We have a couple things to do. We got the operating model right. We did our big, heavy lifting from an investment perspective, locomotive fleet, green fleet, the network. And now we're turning to refining it. And, you know, the first part of refining it is just you go, what Pat is doing, he's delivering those results you mentioned, is in the yards and terminals, looking at every process, looking at every service, looking at every facility, how we use our assets. And he's driving costs out, different services. We don't need as many locomotives. We don't need as many facilities. And he's going across. So it's producing significant results. And we're learning as we go about how to apply it across the rest of the network. So that benefit will continue to grow through this year. But this isn't something we're stopping with at yards and terminals. What we're doing is now taking it to the next level. We're going to look at facilities, we're going to look at engineering fleet, we're going to look at procurement, same processes, we're going to look at some of the support functions, so we're going to keep going. So the way to think about it is this, we're going to continue to grow and advance a little bit this year. Next year we'll embed the full year impact of the benefits from this year, plus there will be a next phase of opportunity. So it's about schedule railroading, it's about continuing to refine how we use our assets and how we use our workforce.

Speaker 3

Got it. I think technology has also been a big focus area for CN, kind of going back to Janet's old role as well, kind of many years ago, because we've been talking about this for years. So can you talk about, again, you were amongst the leaders in implementing, you know, autonomous inspection terminals and such. So can you talk about what the most exciting new tech initiatives are at CN right now and what benefits you can see from that?

Tracy Robinson, CEO

So, listen, as you say, I was away from the industry for eight years, and when I came back, this was the most significant change, was the technology and the autonomous inspection of both the underlying kind of infrastructure as well as the equipment that rolls by it. So that has generated for us significant data. And the opportunity with the capabilities of today to use that data in a different way on a predictive basis is significant, and we're working on that now. We've also invested heavily in some meaningful locomotive capability, where it comes from not just the nature of the locomotives, the efficiency of them, the technology that's on them, our ability to drive. We are the most fuel-efficient railroad and locomotive, and our fuel efficiency, we're at record levels this year, it's improved about 4% over the last three or four years, and that's real meaningful kind of value, and it improves the way, the predictability of the way that we operate. And so there's the next level of that. You know that we are exploring hybrid battery technology that allows us to take a look at how those batteries operate, allows us to think about the reliability they can offer. That's in concurrence with, you know, a continued modernization of our locomotive fleet. And so it's a combination of the next technology and how we use the data that's being produced from all the technology that we have. And I think it's pretty exciting around, you know, the ability to predict and the ability to optimize.

Speaker 3

So if you just put together everything you've told us so far, long-term growth opportunities, pricing power, cost actions and productivity, technology opportunities, what does this mean in terms of the long-term runway for OR over time?

Tracy Robinson, CEO

Well, listen, OR is an output, as you know. I mean, like what we are focused on is growing value. And if you look at, you know, if you think about, you know, when I talk to folks like you and investors, what I want them to understand, what they may not appreciate as they look at our business is the structural nature of some of the unique growth opportunities that we have. We've covered those off. We've got the capacity to handle those. So we've invested in that. Those were hard yards, but we've got the capacity in place now. And I would, it would be a great day if that capacity is challenged. But we're ready for that as well. We've got shovel-ready projects for the next level. But embedded in our current capital spending is some of that already. So we're continuing to do work. Like there's an Arty Bridge in Prince Rupert and the siding outside of Vancouver. So we're continuing to do that work. So these structural growth opportunities are significant and probably not well understood. You combine that with the productivity that we're generating and continuing to generate, I think that's significant. It creates operating leverage. And then it is. The third one is that operating leverage. If you think about the ability, because we've got the capacity, railroads are beasts that if you've got capacity and you've got the resources, you can add volume at very high margins. And so we are positioned well from that perspective. And I think, you know, this is the formula that we're trying to create, is the fact that you combine growth opportunities with operating leverage in a strong balance sheet, and, you know, it creates shareholder value. So as we look forward, yeah, you know, the operating ratio will be out there. It's driven by growth, by productivity, and it'll start with a five, without a doubt, as we've always said. But it's really about the earnings and the value that we drive for our shareholders. It's very important, and I think we can see that formula starting to really resonate.

Speaker 3

Five, without a doubt, sounds pretty confident, so that's great. Any questions from the audience?

Speaker 1

Hi, Tracy. Just wondering, going back to fuel, I know you guys had noted fuel to be a earnings and OR tailwind in the second half of the year if prices held. Obviously, we have not seen them hold. So just wondering your latest thinking there on the net fuel impact for the second half of the year, and what does underlying OR progression look excluding fuel?

Tracy Robinson, CEO

So, yeah, we've proven not to be great at forecasting fuel price, and it feels like we're not alone on that. So I think at the end of the second quarter, we said if fuel prices held where they were, exactly as you say, we'd see a tailwind. If now fuel prices did not hold where they were, if you look at where they are now and we look at Q3, Q4, we'll still see a tailwind on earnings, the small tailwind, probably 10 cents or so, Q3, Q4. The OR impact has turned to a tailwind, maybe 50 basis points or so for Q3, higher than that for Q4 if fuel prices stay where they are today. It could be 150, could be 200 basis points, depending. That one can still move around as fuel moves around. And so it has shifted. And, you know, listen, fuel surcharge is the right thing to do. It's about passing along the impact of that. You know, generally it's very effective. For us, it's about a two-month lag. And so you experience the cost differently than you experience the revenue from the fuel surcharge. And so that can complicate all of what you're seeing. But as you're right in saying, what it kind of is a mask is the underlying kind of operation of what I call the engine, right, the operating ratio. And so we are getting pretty lean and productive. When you isolate our 210 basis points impact on fuel in Q2 on operating ratio, it would have been a very nice number. Same thing for this year. we're getting down to the point where we are almost to that level that we aspire to.

Speaker 3

Any other questions? Tracy, you said at the top that you're seeing customers get off the sidelines because they know that there's not going to be a normal environment maybe in the foreseeable future. Does it feel like there's a lot of pent-up demand there, or do you think that they're getting off the sidelines and doing the minimum necessary to keep the...

Tracy Robinson, CEO

I think it's industry-dependent, Rob. I think that, you know, there's a lot of work to be done on the future of what's going to happen to the steel industry in Canada. I think that, you know, on the other hand, I think that the future for potash fertilizer is very strong. I think the future for the ag sector is very strong. I think in any economic, in any trade scenario, the future of energy is very strong. I think if you, you know, automotive, it will depend. But we've seen those supply chains adjust. If you think about lumber, it's more reliant on housing starts as well as the trade environment. So it's a broad range of outcomes. But we are seeing, just as we are focusing on what we can control and making sure that we manage and create our own future, we're seeing industries and customers do that as well. And it is creating opportunities.

Speaker 3

And so maybe I can have you close with kind of just your freewheeling view on the future of railroading, right? And obviously there's tons going on with policy, with technology, with the merger, with regulation. When you come back to Laguna 10 years from now, what does this industry look like and kind of what might be different?

Tracy Robinson, CEO

Well, when you and I are back in Laguna 10 years from now, we might be on that patio.

Speaker 3

Well, I'm certainly hoping so.

Tracy Robinson, CEO

Yeah, yeah, so we'll see how that happens. But listen, I think, you know, despite all of the turmoil and what's going on, I think it's a great time to be in railroading. This is, we power the economy, and the focus on economic growth in this continent, but around globally, is significant right now, and it's meaningful, and I think it plays to our favor. We are an industry that's got the capability to move big things and to serve industries well, and that's the way we think about our business. We think about our ability to kind of dramatically change an industry and the markets that they get to. And it's why we pre-invested in the capacity that we did. It gives you flexibility. It gives you the ability to be nimble with your customers and to provide solutions. And we're seeing that take place. It also drives productivity. And if you want to be economic in transport, you need to be productive and fast and nimble. And we've invested heavily in that. If I think about the future, you know, no matter what mode of transportation you're talking about right now, technology is going to be a major player in the future. It's going to change the face. And whether it's, you know, automation, what level of automation around what parts of the modes, how we do that together and how we leverage that together in order to provide, you know, better, seamless, more responsive, faster, more reliable supply chains for industry who are also investing. I think it's a really exciting time. And the technology capabilities are out there. It's for us to apply them, and it's for us to use all of the capabilities coming out now in a responsible way to use that data to the benefit of our industry, but more importantly, the benefit of the industries and the economies in which we operate. It is a really exciting time to be railroading.

Speaker 3

Great. That's a great place to end. Tracy, thank you so much for your thought. Thanks for being here, and thanks for getting us off to a great start on day two.

Tracy Robinson, CEO

Thank you.