Canadian National Railway Company (CNR) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to this Annual General Meeting, CN's 25th AGM since the privatization of the company in November 1995. My name is Robert Pace, and I have the honor of serving as Chair of the Board of CN. I am participating in this meeting from my office in Halifax, Nova Scotia. On behalf of the Board of Directors and all of us at CN, I would like to extend our best wishes to all of our shareholders, customers, supply chain partners and stakeholders and wish that their families remain safe and healthy during this very difficult time. This year, in light of the COVID-19 pandemic outbreaks and governmental recommendations and as permitted under our company's bylaws, we made the decision to hold our Annual Shareholders' Meeting by way of online webcast and over the phone for the first time in CN's 100 years of existence. Myself and my fellow directors are pleased to have you participate in this meeting from the safety of your home or office as we are focused at CN on doing everything possible to mitigate the spread of the virus. The webcast allows you to attend the meeting live, ask questions and hear the questions and answers and submit your vote while the meeting is being held, if you have not already done so. Closed captioning is being provided over the webcast, and the meeting is held in both official languages. CN is also providing a toll-free conference call number for shareholders that do not have Internet access. For technical reasons, the 2 methods are not perfectly synchronized, and it is not recommended that you watch the webcast on your computer and use the toll-free conference call on your phone at the same time. Holding an online meeting naturally affects how we conduct today's meeting, including how voting will take place. Another significant difference in how we will conduct today's meeting is the manner in which questions from shareholders and proxy holders will be handled. Voting during this meeting can only be done through our online voting platform on the webcast. You will not be able to vote your shares on the phone line during the meeting and will have to use the online webcast for that purpose. If you have voted in advance of the meeting, then you do not need to do anything and we thank you. Shareholders participating through the online webcast can pose their questions in writing, and shareholders attending on the phone compose their questions over the phone line. The line operator, Allison, will queue in your questions and will open the line at the appropriate time for you to speak to the meeting. We'll provide more details on how to vote and ask questions as the meeting unfolds. I would like to express some personal thoughts over the past year. CN is an iconic company, a proud company, a great company and an essential company to all of us. Once more in 2019, we proved it all with excellent results. But ironically, it is during the 100th anniversary that CN faced its most challenging time, and I'd be remiss not to say a few words on these exceptional circumstances. After bitterly cold weather in early 2019, we had our share of rail disruptions later in the year through an unfortunate work interruption. While recently in 2020, we faced mudslides and illegal blockades across our network. And then sadly, the entire world came to a grinding halt due to COVID-19 pandemic. Fortunately, our record capital investments of $7.4 billion over the past 2 years, coupled with our dedicated workforce, have made our railway and intermodal services resilient. Since mid-March, we've all been extremely busy in making sure that our essential services keep running and keep doing so safely despite the countless challenges posed by COVID-19. Our dedicated railroaders have created new and safe work practices to ensure that CN employees are able to continue to provide their essential service to the entire North American economy. Together, as one team, we've been able to overcome challenges related to the economy, bad weather and illegal blockades, and the pandemic will be no different. On behalf of the CN Board of Directors, I'm now pleased to call this meeting to order. At CN, every work assignment begins with a safety briefing. Today is no different, and everyone attending in CN premises today received a safety briefing earlier, respecting strict social distancing measures. And we hope all of you, our valued shareholders, are keeping safe. Before we begin with the actual business of the meeting, I would ask Sean Finn, our Executive Vice President, Corporate Services and Chief Legal Officer, to share a safety moment that we can all take away in our everyday life. Sean?

So Chairman, safety being a core value at CN, it's hard to do a safety briefing for all of us by phone. So we thought this morning, we'd share with you a safety moment. The COVID-19 pandemic has confronted us all with having to adapt to a new reality. Many of us are now working remotely from home. And just like in the office, it's important to make sure our work environment is safe. Two hazards, in particular, are the cause of several accidents: Electrical hazards and slips, trips and falls. Make sure that your work environment at home is safe by avoiding overloading outlets, electric outlets; unplugging appliances when not in use; inspect electrical cords once in a while to check for damages. Also, to prevent safety hazards at home such as trips, slip and falls, holding the handrail when you use stairs is important; cleaning up spills immediately; and removing tripping hazards from walkways and stairs. Mr. Chairman, that's the safety moment for today.

Thank you, Sean. Nothing is more important to us than creating a safe place to work. Safety isn't just a priority. It's a core value with CN. We devote significant effort and resources to ensuring a safe environment and culture in pursuit of our goal of being the safest railroad in North America and of eliminating work-related accidents altogether. Despite our best efforts, however, it is with the most heavy heart that I am reporting to you that one of our colleagues died in service since our last annual meeting. Mr. Imraan Qamar was fatally injured on August 15, 2019 at MacMillan Yard in Toronto. Please join me in a moment of silence in Imraan's memory. This tragedy reminds us all that railroading can be an unforgiving industry and how important safety is. I urge everyone to be highly vigilant about personal safety and protecting our colleagues as we perform our duties. This is the best way we can honor Imraan's memory during this national day of mourning for work-related fatalities. I would now like to introduce the senior officers of CN joining me on the webcast this morning and who are joining us from CN's headquarters in Montreal, Québec. Jean-Jacques Ruest, President and Chief Executive Officer of the company; Ghislain Houle, Executive Vice President and Chief Financial Officer of the company; and Sean Finn, who I introduced earlier. I will act as Chairman of the meeting and Sean Finn will act as Secretary of the meeting. Before we continue, let me review in more detail the process for the vote on today's motions as well as the question-and-answer session, which will follow our formal meeting. For the purposes of the meeting today, voting on all matters will be conducted by a single electronic vote, which will open after the last item of business. You will be able to vote and asked to vote today on: One, the election of Directors; two, the nomination of the auditors; and three, the nonbinding advisory resolution on the company's approach to executive compensation. During this meeting, all shareholders, whether registered or nonregistered, will be able to vote online and online only. If you have not already submitted your proxy, please log into the webcast using the 16-digit control number included on the proxy form or voting instructions form you received and click the Submit button at the bottom of your screen when prompted. The vote will remain open until we have concluded the official portion of the meeting. On behalf of the Board and the company, we'd like to thank the shareholders who have submitted their proxies in advance of the meeting. During the meeting, I'll entertain questions relating to a specific motion after that motion has been moved and seconded. All such questions will be handled by Sean Finn, who will also read out the questions as needed, and invite a person to answer the question. If you are a shareholder or a duly appointed proxy holder, you may submit a question at any time during the meeting by typing it in Ask a Question field at the bottom of the webcast screen and clicking Submit. Alternatively, if you are a shareholder and have your 16-digit control number in hand, you can also ask your question directly by calling 1 (877) 328-2502 for calls from Canada and the United States. I repeat the number. It's 1 (877) 328-2502 or the international toll-free member, which is 1 (412) 317-5419. [Operator Instructions] The line operator, Allison, will open the line at the appropriate time, and you'll be able to speak to the meeting. Time permitting and subject to our rules of conduct, we'll answer all written questions received as well as questions asked over the phone. Any questions relative to the meeting that cannot be answered during the meeting due to time constraints will be posted online and answered at www.cn.ca/en/investors. The questions and answers will be available as soon as practical after the meeting and will remain available until 1 week after posting. Consistent with our in-person annual meetings, all questions submitted in accordance with the rules of conduct for shareholders' meetings generally will be addressed in the order received. When asking a question over the phone, please state your full name, whether you're a shareholder or a duly appointed proxy holder and the name of the city and province or state where you live. Any questions not relating specifically to a motion will be addressed during the Q&A session at the end of this call. To move the meeting along, a number of shareholders have been already agreed to move and second formal motions, and I will call upon them at the appropriate times. There will also be one presentation by JJ Ruest, our President and CEO, today. Next, I would like to remind you of certain procedural matters related to today's meeting. The business matters to be conducted at the meeting are set out in the management information circular of the company dated March 10, 2020. As permitted under Canadian securities rules, the company is using the notice and access regime to make available its meeting materials and sent a notice on March 24, 2020, with all relevant information in that regard to holders of common shares at the close of business, March 6, 2020, the record date. A copy of the confirmation of the mailing of such documents has been filed with the Corporate Secretary for inclusion with the minutes of the meeting. I will appoint Jerry Trotter and Leanne Branston of Broadridge to act as scrutineers at the meeting. I've been advised by the scrutineers that based on the proxies received prior to the meeting and the shareholders and proxy holders attending this meeting via live webcast, there is a quorum for the meeting. I, therefore, declare that the meeting has been regularly called and properly constituted. The next item of business is the submission of the financial statements of the company. The annual report of the company, which contains the consolidated financial statements of the company and its subsidiaries at December 31, 2019, together with the reports of the auditors and management's discussion and analysis, has been mailed to the shareholders of the company who have requested copies. The annual report is also available for download at the bottom of the webcast page and on CN's website at www.cn.ca/en/investors. There is no formal action or resolution required with regard to this item on the agenda. Sean, are there any questions from the phone or on the line relevant to this item of business?

Mr. Chairman, there are no questions on the webcast or on the phone with respect to this item of business.

Thank you, Sean. We'll now proceed with the election of Directors. According to a resolution of the Board, 13 Directors are to be elected. Information regarding the nominees is set out in the management information circular sent to shareholders. I will now turn it over to Sean, who will read the names of those nominated for election as Directors.

Mr. Chairman, the following individuals are nominated for election as Directors of Canadian National Railway Company: Shauneen Bruder, Donald Carty, Ambassador Gordon Giffin, Julie Godin, Edith Holiday, Maureen Kempston Darkes, the Honorable Denis Losier, the Honorable Kevin Lynch, James O'Connor, Robert Pace, Robert Phillips, Jean-Jacques Ruest and Laura Stein.

Thank you, Sean. I would ask that Cristina Circelli, our Deputy Corporate Secretary, to move the motion to nominate the Directors.

Mr. Chairman, my name is Cristina Circelli. I am a shareholder of the company, and I'm pleased to nominate each of the persons named by the Secretary of the meeting to be elected as a Director to hold office until the next annual meeting of shareholders or until his or her successor is duly elected or appointed.

Thank you, Cristina. Mathieu Lamothe, will you second the nominations?

Mr. Chairman, my name is Mathieu Lamothe. I'm a shareholder of the company, and I second the nominations.

Thank you, Matt. Sean, are there any questions on the phone or online relevant to the election of Directors?

Mr. Chairman, there are no questions on the webcast or on the phone with respect to the nomination of Directors.

Thank you, Sean. As there are no such questions or further nominations, I declare the nominations closed. Pursuant to a resolution adopted by the Board of Directors, 13 Directors are to be elected and 13 eligible candidates have been nominated. As mentioned at the beginning of this meeting, voting today will be conducted by a single electronic vote, which will open after the last item of business. If you have not already voted, you'll be prompted to click the For or Withhold button next to the motion with respect to the election of Directors. We'll now continue with the next item of business, which is the appointment of the company's auditors. I would now like to call upon Alain Dussault to present the motion to appoint KPMG LLP as auditors of the company.

Mr. Chairman, my name is Alain Dussault, and I'm a shareholder of the company. I move that KPMG LLP be appointed auditors of the company to hold office for the fiscal year 2020 or until the close of the next Annual Meeting of Shareholders.

Thank you, Alain. Cristina Circelli, would you please second the motion?

Mr. Chairman, my name is Cristina Circelli. I'm a shareholder of the company, and I second the motion.

Thank you, Cristina. Sean, are there any questions from the phone or online relevant to the appointment of auditors?

Mr. Chairman, there are no questions online or on the phone with respect to the appointment of auditors.

Thank you, Sean. If you have not already voted, you'll be prompted to click the For or Withhold buttons next to the motion with respect to the appointment of KPMG LLP as the company's auditors. The Board of Directors and management recommending -- recommend voting for the motion. As mentioned, voting today will be conducted by a single electronic vote, which will open after the last item of business. The next item on the agenda is the consideration of the nonbinding advisory resolution on the company's approach to executive compensation. The statement of executive compensation contained in the company's information circular discloses such approach in detail. The results of the vote will not be binding on the Board. However, the Board will take into account the results of the vote together with other relevant information or comments from shareholders when considering the company's approach to executive compensation. I call on Mathieu Lamothe to move the motion.

Mr. Chairman, my name is Mathieu Lamothe. I'm a shareholder of the company. I move that the nonbinding advisory resolution on the company's approach to executive compensation as set out in the management information circular be approved.

Thank you, Mathieu. Alain Dussault, will you second the motion?

Mr. Chairman, my name is Alain Dussault. I am a shareholder of the company, and I second the motion.

Thank you, Alain. Sean, are there any questions from the phone or online relevant to the nonbinding advisory resolution on the company's approach to executive compensation?

Mr. Chairman, there are no questions on the webcast or on the phone with respect to executive compensation.

Thank you, Sean. Again, if you have not already voted, you'll be prompted to vote for or against the motion. The Board of Directors and management recommend voting for the motion. This concludes the items of business to be considered at today's meeting. We'll now proceed with the voting on today's business items being: One, the election of 13 Directors to sit on the Board of Directors of the company; two, the appointment of the auditors of the company; and three, the nonbinding advisory resolution on the company's approach to executive compensation. Once I direct the voting to be open, please register your votes by clicking the Submit button at the bottom of your screen. Once the electronic voting closes, the voting page will disappear and your votes will automatically be submitted. Many shareholders attending the meeting have already voted their shares, and therefore, should not complete the electronic poll since your shares will be voted in accordance with your voting instructions. I will now direct the voting to be open. We will wait a few moments for the completion of the electronic poll. We will provide shareholders approximately 1 minute to complete the electronic poll. Once voting is completed, I would ask that the scrutineers compile the report regarding the results of the voting on all business matters. We'll now wait the 1 minute. [Voting]

Okay. The 1 minute's over. My grandchildren probably could do that in 10 seconds. Thank you, and we'll now declare the voting as closed. We have now received the report of the scrutineers. According to the proxies received and the results of electronic voting, each Director nominee received more than 50% of the shares voted in favor of his or her election and on average in excess of 96% of all the shares voted. I, therefore, declare that the 13 nominees have been duly elected as Directors of the company to hold office until the next Annual Meeting of Shareholders or until their successors are duly elected or appointed. I also declare the appointment of KPMG LLP as auditors of the company have been approved by 96% of the holders of common shares represented at this meeting. And finally, I declare that the nonbinding advisory say-on-pay resolution on the company's approach to executive compensation has been approved by 97% of the holders of common shares represented at this meeting. I would now like to present the members of your Board of Directors and congratulate them on their election to the Board. They are a talented group from all over North America who make every effort to bring value to the shareholders of this company. They are all present at this meeting by phone or computer and are staying safe: Shauneen Bruder; Don Carty; Ambassador Gordon Giffin; Julie Godin; Edith Holiday; Maureen Kempston Darkes; the Honorable Denis Losier; the Honorable Kevin Lynch; James O'Connor; Robert Phillips; JJ Ruest; Laura Stein; and I am Robert Pace, and I am the Chair of the CN Board of Directors. Thank you to our shareholders for your continued confidence. As we have completed all of the business to come before the meeting, I will entertain a motion to conclude the formal part of this meeting. Cristina, would you kindly introduce a motion to that effect?

Mr. Chairman, my name is Cristina Circelli. I am a shareholder of the company, and I move that the formal part of this meeting be concluded.

Mathieu Lamothe, would you second the motion?

Mr. Chairman, my name is Mathieu Lamothe. I'm a shareholder of the company, and I second the motion.

Thank you, Mathieu. I hereby declare the formal portion of the meeting closed. We'll now move to the next agenda item, our President and CEO's presentation. Just as trains need locomotives to run, CN needs a chief locomotor to function, especially in challenging times. JJ has been this leader who, through the strike, the blockades, the COVID-19 and with the support of our truly dedicated railroaders, has kept CN in locomotion. JJ was appointed President and Chief Executive Officer in July 2018 after 22 years of loyal service to CN, mostly in sales and marketing. JJ, I don't know what your chemistry background that helped you find the magic formula, but you and your team have certainly led CN effectively through these successive challenges. Please share with us the highlights of your 2019 and give us your perspective on what lies ahead in the coming months. JJ?

Thank you, Robert, and good day to all of you joining us via webcast this morning. Welcome, and it's a true pleasure to speak with you this morning. Well, we are certainly living in interesting time. And this new format AGM is a compelling demonstration of how uncommon the last year has been, especially the last few months. Yet, when we look back 2019 with a festive mindset, all of us being quite excited to celebrate our 100 years anniversary. We've had encouraging results in the first quarter of 2019 on our way to set a new record despite the cold winter months we had in 2019. Then, major challenges hit us, hit all of us. First, we had a very late and wet harvest followed by the TCRC work stoppage in November. In January of this year, in British Columbia, torrential rain caused mountain of rock and mud onto our mainline, locking our access into the key important part of Vancouver. Adding to all that, the very public and illegal month-long blockade of our railroad in February. But thanks to our resilient people and significant capital investment of the last 2 years, our network showed resilience. And time after time, we have recovered quickly. And now the pandemic. While the illegal blockade stopped many of our trains from moving for a month, COVID-19 has brought the entire economy to a near halt in the short term. The combination of this event is so unique that we couldn't hold our AGM without saying a few words about this entire situation. As CEO, I am extremely impressed and incredibly proud with the performance and dedication of all of the CN people. They have turned this around, pulled together as one like never before to ensure that CN keeps delivering essential goods such that North American citizen have what they need. At this year's AGM -- at next year's AGM, you will realize how this extraordinary teamwork and exceptional dedication from our colleagues is helping maintain our course and fulfill the need of the North American economy. You will see by then how CN will be there, as it has always been, when the economy bounce back. Better yet, CN will actually be one of the catalysts of this recovery. Just to give you a sneak preview, I'd be pleased to note -- you'd be pleased to note that our railroad is in full operation, running very fluidly. And in fact, COVID-19 never stopped us. Now a quick review of 2019. It was a historic year for CN as we celebrated 100 years on the move. Just watch the following video to get a sense of what we've accomplished throughout last year. [Presentation]

Well, thank you for that. It's a proud video. Some of the factors I mentioned earlier and a weakened economy in the second half of 2019 led to a lower overall volume for the company. Despite this, 2019 reached a record $14.9 billion. We've also rightsized our resource, always keeping our rolling stock and staff to optimal level, adapting to exceptional changing situation. In 2019, we've invested $3.9 billion in the company. These investments ensure the safety and strategic capacity of our infrastructure, particularly in our Western region. Five principles anchor our sustainability commitment: Safety, environment, people, community and governance. Regarding the environment, over the last 25 years, we have reduced our locomotive emission intensity by 39%, avoiding 45 million tons of carbon emission while maintaining record growth in volume of freight we move across the continent. CN continues to lead the rail industry, consuming approximately 15% less fuel per gross ton-mile than the industry's average. Two years ago, we were the first railroad in North America to set a climate science target. We're ambitiously aiming for a 29% reduction in emission per ton-kilometers by 30 -- 2030 based on the 2015 base. Another example of our dedication to environmental sustainability. In 2019, CN planted 130,000 trees in communities along our network. Since 2012, we have planted over 2 million trees, making CN one of the leading private non-forestry company planters in Canada. In terms of safety, we can and must do better. We were reminded today of our deep loss with the passing of our colleague, Imraan Qamar. Through his strategic -- through this tragic accident, we were cruelly reminded how unforgiving the movement of big equipment can be. That's why we continue to make working safely an utmost priority, developing and coaching our people on life-critical rule to be applied when operating alone or in team or as the supervisory role of others. We've also continued to leverage big ideas and technology. We are pioneering operating technologies that will improve, among other things, inspection quality of the network and of its rolling stock, train fuel efficiencies, further prevent derailment and create more capacity. Technology has a great future in our industry and CN is a pioneer in making that future happen. Regarding our people, a diverse and respectful workforce and culture enable us to respond to the needs of our customers and shareholders, giving us access to a larger talent pool and increase the effectiveness of our decision-making through a wide range of objectives. On the community, the prosperity of communities across our network is also very dear to our heart. As an example, to strengthen community relation and increase the impact of our community investment, CN established in 2019 a number of community board across the network. Finally, a brief look at governance. CN is committed to diversity, inclusion, not only in principle but also in practice. At CN, the Board has a target of at least 1/3 representation by women, which it has exceeded. And we also have a target to have by the end of 2022 an executive management team in which at least 30% are women. Now let's look at future growth. Our strategic supply chain expertise is enabling our market growth with existing customers -- with new customers and by entering new market. And we also have grown when we acquired companies and bring them into the CN portfolio of business services. A great example of this approach is our 2019 acquisition of TransX, one of Canada's oldest and largest intermodal transportation company; and of the Intermodal division of H&R Transport, which specialize in transport of temperature-controlled consumer goods. These strategic acquisition increase our presence in consumer goods market and increase the volume of rail in our intermodal network. They add new supply chain solution and get CN deeper in the supply chain of the retail company. CN's commitment to the efficient movement of temperature-controlled goods and our remote monitoring of artificial intelligence technology are key to food safety. In 2019, the acquisition of talent through the acquisition of these companies, TransX and H&R, we've also added 200 new reefers in our fleet and all that to aim to convert long-haul truck to rail and intermodal and develop new rail market for CN. Finally, pending final regulatory process, CN is proposing to acquire the Massena Rail Line from CSX with a view to offer interline intermodal services with CSX, connecting the Port of New York to the consumers of Central Canada. At the Port of Québec City, we have planned for a new state-of-the-art container terminal in a joint venture partnership with Hutchison port of Hong Kong. In Prince Rupert, we have the capacity infrastructure project totaling $250 million, all of this in joint funding by CN, the Prince Rupert Port Authority and the government of Canada. To accommodate our growth at the Port of Vancouver, CN, the Port of Vancouver and the government of Canada have also agreed to jointly fund $400 million in rail infrastructure to support and expand trade. In support of Western grain export, I'll note that since 2015, 2/3 of the grain elevator that's been built in the Canadian prairies are erected exclusively on CN network. Through collaboration and game-changing infrastructure, we are strengthening Canada's strategic position as a world-class trading nation, making CN a world-class trade company for North America. Concluding, 2020 represent another special milestone for our company as we will celebrate 25 years since our IPO of November 1995. With that in mind, CN's strategy is focused on long-term profitable growth with new solution for a new economy and a -- as a world-class transportation supply chain company. Unfortunately, given the current short-term pandemic, the economy is expected to decline in 2020. As a result, CN will continue to focus on tight cost control and asset utilization to align result -- resource with evolving demand. We continue to keep a close eye on a potential strategic partnership or acquisition with a focus on long-term game-changers. So we are definitely not waiting for the economy to bring the business back to us and this go-getter attitude is what makes CN thrive. We are confident, financially solid. CN is strong. CN is built to last. Thank you.

Thank you, JJ. The Board of Directors and I look forward to working with you and your executive team to continue the move CN onward together. We'll now proceed with the question-and-answer session. During today's session, we will answer written questions received online as well as live questions over the phone. For those wishing to submit questions online, you can type your question in the Ask a Question field at the bottom of your screen and click Submit. [Operator Instructions] Time permitting and subject to our rules of conduct, we will answer all written questions received online as well as questions received over the phone. For each written question, the Corporate Secretary, Sean Finn, will summarize the question, read the name of the person who asked such question and invite a person from CN to answer the question. We will begin by answering questions submitted in writing from the webcast. Sean, would you please read the first question from our shareholders on the webcast, please?

Mr. Chairman, thank you. The first question from the webcast is for JJ from Tom -- from Tony Yee. You mentioned earlier that the network was fluid and operational. Can you provide information on how you ensure the health and safety of employees still at work and the communities where CN has operations?

Well, thank you, Tony, for your question. First of all, all of the CN employees are at work, not just a few, but all of them. Most of them work in the field, probably 20,000 of them. They never stopped coming to work. And about 4,000 of them are probably people who works from home. In term of the safety, it's job one and it was always job one even before the pandemic started, but even more so during the pandemic. So in cooperation with the union and with our management as well as our team led -- a special team led by our company doctor as well as Steve Covey, very early on, we got into a very specific practice as to how we give our people very safe working condition, meaning how do we make sure the equipment is clean, the tools are clean in between each person touching them, that each crew has -- who's working in a locomotive that it's been cleaned in between crews, that we give our people safe bunkhouse, et cetera, et cetera. So a huge amount of effort in creating procedures that create disinfection procedures and also as deploying the equipment, the stuff that one needs in terms of the supply of -- stock supply of disinfectant. But in many cases, we had to resort to create our own blend since supply is getting a little tight or was getting a little tight. So safety has really been the #1 constant focus. And there's no doubt that CN has a very solid plan and then we -- so far, we've been able to do this very well. And as a result of that, the railroad never stopped running. And we're moving all the freight that's available or offered to CN.

Thank you, JJ. The next question is from Salvatore Forgioni, who's a shareholder. My question is as follows: What is CN doing to increase rail safety on its network in North America?

So another key aspect. I think the things that people may not know as much is how technology is playing a key role into that. So you have technology playing a key role, equipment that will reduce the number of derailment in the present and the future, automated track inspection, automated train inspection, a number of safety device that makes sure that the rolling stock and the fixed asset are in the best possible condition to prevent anything that should not happen. But more -- even more important is behavior. And at CN, we have the life-critical rule, the 10 rule that are simple rule that reminds us whether your conductors and engineers, somebody working on a track or supervisors working with your team, the 10 rule -- the 10 critical rule that will prevent you from being in a position where your life might be at risk or the life of your coworker may be at risk. So the basic of behavior through the 10 critical life -- life-critical rule as well as technology to support us make sure that the rolling stock and fixed asset that we have are maintained in good condition to prevent anything that might be related to maintenance.

[Interpreted] Jean-Jacques, the next question is from [ Lucia Savar ] from [ Westmount ], a shareholder. What are you doing in terms of receiving more technologically and environmentally advanced locomotives?

[Interpreted] Over the past 2 years, we received 154 locomotives that meet current standards. Those engines are more effective and more efficient in terms of tonnage that they can pull, but it -- also in terms of emissions, but more fundamentally, we have a fleet of over 2,000 engines. CN is a leader in reducing greenhouse gas emissions. On average, our performance is 15% better than the industry average in North America. We have the best performance in terms of emissions amongst all railroads in North America, and that is mostly due to our operating practices and also to the equipment that we have. But definitely, having those 154 more recent engines helps us have a superior environmental performance.

Same vein of question is can you please -- from a shareholder, can you please share what CN is doing to reduce its carbon footprint and general impact to the environment, not including carbon offsets only?

Yes. Well, so what we were just saying earlier is the new locomotive are more fuel-efficient, but more importantly, our work practice, how we build train, the tonnage of the train to the horsepower ratio, not idling the locomotive when the temperature is above 0. Making sure the locomotive, on the way back, when they bring back mostly empty cars, that the locomotive which are not required to pull the freight have been shut down, that we use the proper throttle when we go into a siding. So we -- one of our saying is don't hustle up to stop. So when you're going to be meeting another train, it's best to slow down and just get in the siding in time as opposed to siding at full speed and sit there for 20 minutes waiting for the next train to go by. So more and more, we expect that the locomotive will be managed through software as opposed to the human so that we maximize the fuel efficiencies the same way as you would do for your own personal car when you put it on cruise control. So cruise control is a way to optimize the fuel efficiency based on the weight of the train, the speed, how many train you're meeting, what kind of carrying you're at, what is the temperature of the day, windy, et cetera, et cetera. More and more technology is playing a role as to how the locomotive should be run. And more and more that is automated, and more and more of that in the future will continue to be automated as supposed to rely on people experience.

Thank you, JJ. Next question is for Ghislain Houle, CN's CFO. What is the greatest financial impact to CN under the current situation with COVID-19 and impact to CN's customers?

Thank you, Sean, for the question. Listen, I think greatest impact right now for CN on COVID-19 is volume. As we reported yesterday, our Q1 results, we had some very strong results in Q1. But when you look at our volumes -- and again, as railroads, we do provide volumes publicly every week in terms of carloads and RTMs, RTMs meaning revenue ton miles. And we believe that revenue ton miles is a better proxy. And when you look at our volumes month-to-date in April, they're down 15%. And if you look more specifically in the last few weeks -- in the last week or 2, volumes are down 20%. So with volumes being down, obviously, you can expect that earnings will be pressured. So I would say at this point that the biggest financial impact of the COVID-19 on CN is the -- I mean as you -- as JJ mentioned, the economy and people are to a halt. So again, our customers are not moving as much freight as they did last year.

The next question also for Ghislain is from a shareholder, probably a pensioner also. Is it expected that COVID-19 epidemic will impact payments to pensioners?

Yes. Thanks, Sean, again. COVID-19 will not impact payments to pensioners. And maybe I can add on. In terms of funding status, we determine funded status for regulation every year. And at the end of 2019, our pension plan was in very good health. I mean it's fully funded with a surplus of around $3.5 billion on a going-concern basis or around $600 million on a solvency basis. So our pension plan is in -- so far, is in very good shape.

Thank you, Ghislain. That is it for the questions on the webcast. In order to ensure all shareholders have a chance to ask their questions, we will continue with the questions received over the phone. We'll first begin by opening the French phone line. Allison, would you please open the French lines [Interpreted] and introduce the first shareholder?

There is a question from Stephen Covey.

[Interpreted] Thank you, Mr. Chairman. I'm Steve Covey. I'm a shareholder of the company, and I have a question to the executive team. Could we have more information about the implementation of PTC? Have you abided by the 2019 time line? And what can you tell us about the time line for 2020?

[Interpreted] Thank you, Steve, for your question. In terms of the PTC, PTC is a system that's more and more going to be automating our trains and the way they operate. The key objective of PTC is to make the railroad safer. So we have time lines to meet with the U.S. government by the end of 2020. And we are exactly where we need to be, if not ahead. And right now, we're very confident of meeting our time lines and having the system in place at the end of this year. So everything is unfolding as it should. And just as a reminder to shareholders, PTC is an investment that we've been putting in, in the past 5 to 7 years, totaling almost USD 1.4 billion. So this was a major project in terms of computerization. And this is the platform that we're using to automate our trains along with other technologies beyond 2020. Thank you for your question.

[Interpreted] There are no other questions in French. Questions on the English phone line? Allison, could you please open the English phone line and introduce the first shareholder question?

We have a question from [ Laura Smith ].

Hello, Mr. Chairman, my name is [ Laura Smith ]. I am a shareholder of the company, and I have a question for management. I understand that you've invested a record of $7.4 billion in capital over the last 2 years. How much will be invested this year?

Ghislain?

Thank you, [ Laura ], for the question. So this year, we will invest $2.9 billion. So again, we had 2 years of elevated CapEx that we told our shareholders to resolve some of the capacity issues that we had a few years ago. So now we're going back more into historical levels. And this year, we're planning on investing $2.9 billion. Thanks for your question, [ Laura ].

Good. Allison, could we now proceed to the last question that appears on the phone line right now and open the line to the next shareholder question?

We have a question from [ Catherine Fremont ].

Thank you, Mr. Chairman. My name is [ Catherine Fremont ]. I'm a shareholder of the company, and I have a question for management. Is CN's value peak still strong? And do you have any concerns about CN's liquidity and access to funding?

Well, maybe I can start, Ms. [ Fremont ]. So yes, the CN balance sheet is extremely strong. And as we mentioned on our earning call yesterday, we're in a pretty good position to create very solid capital here. Ghislain, you want to add some more?

Yes, maybe I can add some more. So we are very well positioned to go through this crisis. We have the strongest investment-grade credit rating in the rail industry. And as we've mentioned yesterday, I think in the Q&A section with the investors at our analyst call, proud to report that in April, we issued $800 million of commercial paper at rates that were lower than LIBOR, i.e. rates that are lower than -- or that resemble precrisis environment. So we're very well positioned and have a strong balance sheet to go through this crisis.

And also to mention, we are maintaining our dividend and we've maintained a 7% increase in dividend that was announced earlier. So we're confident about the future.

There being no further questions on the phone line, this concludes the question-and-answer portion of this meeting. As mentioned, any and all relevant questions that could not be answered during the Q&A session will be posted online and remain available until 1 week after posting. [Interpreted] All the questions that we've received during the meeting and that could not be answered will be posted on the CN website and remain online as soon as possible. I will now turn the meeting back to the Chair of the Board of CN, Mr. Robert Pace.

Thank you, Sean. In closing, I want to thank everyone who made today's event possible, including all of those who worked so hard behind the scene to ensure that our shareholders were able to participate in the meeting online and over the telephone. I want to thank you for joining us and participating in today's meeting. Be safe and good health to all. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]