THE US$300m purchase of the relatively small Elgin, Joliet & Eastern Railway by Canadian National, announced on September 26, will have an immense impact on CN's business according to CEO Hunter Harrison.

CN has agreed to pay US$300m for the 320 km Class II regional railroad, which is currently owned by the Transtar subsidiary of United States Steel Corp. Harrison says the deal will fill the last gap in CN's US network and significantly change the way it operates.

The EJ&E runs from Waukegan to the north of Chicago through Joliet in the west to Gary, Indiana, in the southeast, with a branch into South Chicago. The main line encircles the outer suburbs, allowing CN to bypass the city's endemic railway congestion and potentially saving a day or more for freight travelling between Canada and major US markets.

CN intends to sell part of its land holding in Chicago to raise $100m for upgrading the EJ&E, including new connections to integrate it into the CN network. EJ&E has been earning profits of about $20m annually, but CN officials expect that figure to double as the result of operating efficiencies.