When you first look at Canadian National's (NYSE:CNI) earnings report for this second quarter, you might not be all that impressed. After all, where's the strong pricing power that we saw from other railroad operators like Union Pacific (NYSE:UNP) and CSX (NYSE:CSX)? Shouldn't one of the best-run rail operators do well in this kind of environment?

Well, blame it on the loonie. Canadian National reported revenue growth of 6%, with carload growth of 2% and revenue ton mile growth of close to 5%. What that might suggest, then, is that pricing was weak, and reported revenue per revenue ton mile was up just 1%.

But this is where the loonie comes in -- because of foreign exchange movements, reported revenue was about 5% lower than it would have been in constant-currency terms. So while this is certainly hurting the company, it's not an issue of specific performance as much as circumstances out of the company's control.

And in terms of what the company can control, it continues to perform well. The operating ratio fell again (lower is better) and stands well below the level of even well-run American operators like Burlington Northern (NYSE:BNI) and NorfolkSouthern (NYSE:NSC). What's more, asset utilization continues to improve, and I feel that's an underappreciated performance metric. When you squeeze just a little more out of a big asset base, the benefits are disproportionately large.

As I see it, the risks at Canadian National are pretty much the same as for the other Class 1 rail operators - namely, that economic growth slows and the railroad companies see a reduction in demand (in terms of carload) and/or less pricing power. Of course, as we've seen for a few quarters now, there's also the risk that ongoing moves in the currency market will mute some of the reported performance for the Canadian operators.

We're not talking about General Electric (NYSE:GE) or IBM (NYSE:IBM) here, but then again, the performance of those two stocks doesn't come close to what the rails have done in the past year. I can't say that I really believe that the railroad business has fundamentally changed, and so I'm pretty skeptical on just about any rail as a long-term holding. Nevertheless, if you think there's more room left to run in this cycle, Canadian National might be a worthwhile place to start your research.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).