As I've mentioned before here on, times are good for railroad operators. So good, in fact, that many operators can actually pick and choose their freight and boost their profits by shipping more desirable types of cargo.

Such is the case for Canadian Pacific (NYSE:CP), which continues to post solid performance.

Although the company actually shipped fewer carloads and logged fewer revenue ton-miles, revenue was still up 10% for the quarter. Revenue per carload increased about 14% and more than offset the lower number of cars pulled during the quarter.

Freight revenue growth was led far and away by coal in this quarter. Canadian Pacific actually hauled 11% fewer cars of coal in the period but logged 48% more revenue for the coal that they did ship. Revenue from grain, forest product, and industrial shipments all increased and more than offset the declines from fertilizer and automobile shipments. Intermodal business was also strong in the quarter, posting over 10% revenue growth.

Not only did Canadian Pacific get more revenue for the cargo it hauled, but it also hauled it more profitably. The company's operating ratio came in at 75.5% for the quarter -- 2.5 percentage points better than a year ago and nearly 7 points better than in the immediately preceding quarter. That in turn allowed the company to post 47% growth in net income for the period, as well as positive free cash flow.

Given the strong demand for rail service, Canadian Pacific has moved ahead with some expansion plans. The company is spending about $130 million to add four additional trains (about 400 freight cars) to Vancouver that should be up and running during the fourth quarter of the year.

Canadian Pacific is not my favorite railroad [that illustrious title would go to either Canadian National (NYSE:CNI) or Genesee & Wyoming (NYSE:GWR)], but it is a very good railroad just the same, and certainly worthy of consideration for those looking to invest in the sector.

Of course, before anyone commits new money to this space, he or she should realize that the boom here has been going on for a little while already and that if economic growth slows down, the supply-demand balance for rail transport might move back more in favor of customers rather than haulers.

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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).