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Despite a strong Canadian dollar, rising fuel costs and weak forest products traffic, Canadian Pacific Railway had a banner third quarter.

Freight revenue totaled $1.1 billion, a 2 percent increase compared with third-quarter 2006's total. Coal and intermodal revenue each rose 7 percent and grain revenue went up 6 percent, offsetting a 21 percent decline in forest products revenue, and 4 percent decrease in sulphur and fertilizer revenue.

In addition, CPR's quarterly net income rose 34 percent to $229 million, diluted earnings per share jumped 36 percent to $1.47 and operating ratio improved 1.1 points to 72.9 compared with third-quarter 2006 figures.

The Class I's quarterly operating expenses totaled $906 million, up less than 2 percent year over year even though fuel costs rose 15 percent and equipment rents increased 12 percent. Compensation and benefits expenses dropped 6 percent, and purchased services costs fell slightly.

"We moved record volumes in the quarter, and with the recent acquisition of Dakota Minnesota & Eastern Railroad Corp., we are well positioned to continue our growth," said CPR President and Chief Executive Officer Fred Green in a prepared statement.