CN Rail Propane Exports Hit Record, Up 47%
1h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
propanerail-logistics
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Canadian National Railway reported moving a record 41,000 carloads of propane in May 2026, a 47% increase from the 27,890 carloads moved during the same month in 2025. The data was reported by finance.yahoo.com on 11 June 2026. The surge represents the single-largest monthly volume of propane ever shipped by Canada's largest railway and underscores a structural shift in North American energy export logistics away from pipeline constraints towards rail flexibility.
North American propane production has consistently outpaced pipeline and terminal infrastructure development over the past decade. The last comparable monthly record was set in November 2024, when CN moved 35,200 carloads of propane following the startup of the Pembina Cochin conversion project. The current macro backdrop features a 4.31% yield on the U.S. 10-year Treasury and WTI crude oil trading near $78 per barrel.
A primary catalyst for the May 2026 surge is the full-year operational ramp of multiple liquified petroleum gas fractionation units in the Montney and Duvernay shale plays in Western Canada. These facilities, which separate propane from raw natural gas streams, came online in late 2025. The resulting supply glut in Alberta and British Columbia created a significant price differential compared to U.S. Gulf Coast and international markets.
Rail provides the crucial arbitrage link between landlocked Canadian supply and coastal demand centers. This logistical chain was triggered by the widening of the Alberta-to-U.S. Gulf Coast propane price spread, which exceeded $0.40 per gallon in April 2026. That spread made rail transport economically viable despite higher costs compared to dedicated pipelines.
The core data point is the 41,000 carload figure for May 2026. Each railcar holds approximately 30,000 gallons of propane, translating to a total monthly volume of about 1.23 billion gallons. This volume represents a significant portion of Canada's total propane exports, which averaged roughly 3.5 billion gallons per month for all of 2025.
For a quarterly perspective, CN's total propane carloads for Q2 2026 are projected to exceed 110,000 based on the May result and April volumes. This compares to 82,500 carloads in Q2 2025. The year-to-date volume through May 2026 is approximately 185,000 carloads, a 32% increase from the 140,000 carloads moved in the same period last year.
A before/after comparison illustrates the magnitude. In May 2023, CN moved 22,500 carloads of propane. The May 2026 figure of 41,000 carloads represents an 82% increase over that three-year period. This growth far outpaces the broader North American industrial production index, which grew only 4.1% over the same timeframe.
Peer comparisons are limited as CN is the dominant propane rail carrier. However, its main competitor, Canadian Pacific Kansas City, moved an estimated 18,000 propane carloads in May 2026. CPKC's volume represents a 25% year-on-year increase, significantly less than CN's 47% surge, highlighting CN's dominant network position in key producing regions.
| Metric | May 2025 | May 2026 | Change |
|---|---|---|---|
| Carloads | 27,890 | 41,000 | +47% |
| Est. Volume (Gallons) | 836.7M | 1.23B | +47% |
| YTD Carloads (Jan-May) | 140,000 | 185,000 | +32% |
The record volumes directly benefit Canadian National Railway's revenue per carload and overall energy segment margins. Each incremental 10,000 carloads of propane can add an estimated $120-$150 million in annualized revenue, assuming current freight rates. This supports earnings estimates for CNI, which derives over 20% of its freight revenue from energy-related shipments.
Second-order gains flow to midstream companies with fractionation and rail-loading assets. Key beneficiaries include Pembina Pipeline (PBA) and Keyera Corp (KEY), which operate major LPG hubs in Alberta. Their fee-based models capture value from increased throughput volumes. U.S. propane exporters like Enterprise Products Partners (EPD) also gain, as Canadian propane often moves to their Gulf Coast terminals for international shipment.
The primary counter-argument is that this rail surge may be a temporary arbitrage play. If new pipeline capacity, such as expansions to the ATCO or Inter Pipeline networks, is sanctioned and built, it could displace higher-cost rail movements within 24-36 months, capping long-term growth for rail carriers.
Positioning data from the CFTC shows managed money has increased net-long positions in NYMEX RBOB futures by 18% over the last month, anticipating stronger distillate and LPG demand. Flow tracking indicates institutional capital is rotating into North American midstream and railroad equities, viewing them as infrastructure plays on the energy transition, which includes growing global demand for propane as a lower-emission fuel.
The immediate catalyst is the weekly U.S. Energy Information Administration propane inventory report, published every Wednesday. Traders will monitor builds at the Conway, Kansas, and Mont Belvieu, Texas, hubs to gauge demand absorption of the increased Canadian supply. The next major data point will be CN's official Q2 2026 earnings release, scheduled for 23 July 2026.
The key level to watch is the Alberta-to-Gulf Coast propane price spread. If it narrows below $0.25 per gallon, the economic incentive for rail transport weakens significantly, potentially leading to a sharp reversal in carload volumes. The 50-day moving average for CNI's stock price, currently near $142 CAD, will act as a technical support level if energy sector sentiment softens.
Should the U.S. Department of Commerce report stronger-than-expected manufacturing data for June 2026, it would signal strong industrial propane demand, supporting continued high export volumes. Conversely, a warmer-than-forecast winter in Asia or Europe for the 2026-2027 heating season could reduce international pricing and compress the export arbitrage window that makes Canadian rail shipments profitable.
The influx of Canadian propane via rail increases supply in key U.S. storage hubs like Conway and Mont Belvieu. This additional supply typically exerts downward pressure on wholesale propane prices in the Midwest and Gulf Coast regions, all else being equal. However, strong export demand from Latin America and Asia often absorbs this surplus, limiting the domestic price impact. The net effect is often a narrowing of the price spread between North American and international markets rather than a collapse in absolute U.S. prices.
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