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UPDATE 1-CN Rail's profit, revenue beat as freight volumes surge

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July 25 (Reuters) - Canadian National Railway Co reported better-than-expected quarterly profit and revenue on Tuesday, as the railroad moved higher volumes of commodities including Canadian grains and fertilizers.

Northern American railroad operators' results are getting a lift this year from higher volumes due to improving economic conditions.

Smaller rival Canadian Pacific Railway last week reported a better-than-expected quarterly profit as it earned more from higher shipments of commodities.

CN said total carloads, the amount of freight loaded into freight cars during a specified period, rose 14 percent, while rail freight revenue per carload increased 3 percent.

The railway's operating ratio, a key measure of efficiency, increased to 55.1 percent from 54.5 percent a year earlier. The lower the ratio, which measures operating costs as a percentage of revenue, the more efficient the railroad.

Canada's largest railroad company said net income rose to C$1.03 billion ($823 million), or C$1.36 per share, in the second quarter ended June 30 from C$858 million, C$1.10 per share, a year earlier.

Excluding items, the company earned C$1.34 per share, slightly ahead of analysts' average estimate of C$1.32, according to Thomson Reuters I/B/E/S.

Revenue rose 17 percent to C$3.33 billion, beating analysts' average estimate of C$3.27 billion.

($1 = 1.25 Canadian dollars) (Reporting by John Benny in Bengaluru; Editing by Sriraj Kalluvila)