Canadian National Railway Inc., which held its first annual meeting outside Canada on Friday, plans to invest $1.5 billion Cdn in its network this year to continue to make the railway more efficient and profitable, CEO Hunter Harrison says.

Harrison, addressing stockholders in his home town, Memphis, said this includes $100 million US announced this week for an upgrade and expansion to CN's major rail yard in Memphis, the company's largest investment outside Canada.

Other upgrades include computer systems to manage railcars in freight yards, modelled on systems installed at CN's MacMillan Yard in Toronto, to create what the railway calls "smart yards."

The investment also includes CN's share in a container terminal under construction at Prince Rupert, B.C., in partnership with the port authority and Maher Terminals, expected to be ready to receive its first container ship in the third quarter of 2007.

Harrison said the Prince Rupert operation, the first container terminal at that port, will open a new North American gateway to bring in consumer goods from China headed for CN's four major distribution centres: Memphis, Chicago, Toronto and Montreal.

"There'll be no congestion at the port or on the network," Harrison vowed. "The potential growth opportunities are immense."

He added that the link will also provide an overseas link for U.S. cotton.

Besides being CN's gateway to the U.S. South and the Gulf of Mexico, Memphis is Harrison's home town, where he started in railroading as an engine oiler 43 years ago.

On Thursday, CN reported a record first-quarter profit of $362 million Cdn on revenue of $1.8 billion. And its operating ratio - a measure of expenses and revenue - was 66.2 per cent, tops among the six Class 1 railways in North America.

Harrison noted that CN's shares increased 12-fold in the decade after its initial public offering in November 1995, while cash flow went from free cash flow of negative $118 million, to $1.3 billion in 2005.

The assembly observed a minute of silence for six CN employees who died in service during the past year: Four from Mississippi, one from Black Diamond, Alta., and one from Chambord, Que.

In one of two questions brought by shareholders at the meeting, Mike Wilson representing an Ontario environmental group demanded to know why CN has not cleaned up its abandoned line across northern Ontario, including a section in Algonquin Park.

Sean Finn, corporate secretary, said the company has been in discussions with the government of Ontario since the mid-1990s to sell the right-of-way to the province "at a nominal fee" and turn it into a path.

"We look forward to sitting down the with the province and doing it as quickly as we can," Finn said.