Terra Transport - Background

Background

Canadian National Railways acquired the Newfoundland Railway from the Government of Newfoundland in 1949 under that dominion's Terms of Union of entry into Confederation. The majority of the Newfoundland Railway's operations were not economically self-sustaining, requiring significant subsidization; however, it was only after the construction of the Trans-Canada Highway across the island in the early 1960s that the railway began to see serious declines in traffic.

At the same time, CN took over the Newfoundland Railway's ferry service between North Sydney, Nova Scotia and Port aux Basques, Newfoundland and promptly began to improve the service, bringing in vessels dedicated to carrying automobiles and trucks throughout the 1950s-1970s.

By the early 1970s, CN faced increased scrutiny from federal politicians complaining about the railway's continuous losses. Successive federal governments of the period had frequently forced the company to undertake various endeavours in the national interest, often at the expense of business and economic logic. As a result, CN sought to restructure itself, placing many of these operations into separate subsidiaries to clarify the accounting behind their existence. Restructuring applied to operations which lost money and required subsidization, or which were not part of CN's core freight railway business.

In 1977, all east coast ferries operated by CN were transferred to a new CN Subsidiary, CN Marine. Passenger rail services were transferred to the new Crown corporation, Via Rail, and in 1979, all of CN's freight railway operations on Newfoundland, along with the CN Roadcruiser Bus service and CN's trucking operation, were placed into a new division named Terra Transport.