The CAR was created in September 1988 as a business unit of CP Rail (CPR) to serve the Maritime Provinces and the state of Maine.

[1] Its creation was predated by several years of declining traffic during the 1980s on CPR's eastern mainline from Montreal to Saint John and its supporting branchlines.

In Nova Scotia, the CAR abandoned the lines west of Kentville to Yarmouth following cancellation of Via Rail services in January 1990.

By 1993, traffic had declined on the CAR's Saint John-Montreal route to fewer than 25,000 carloads per year (including Via Rail's Atlantic).

This amount of traffic was unsustainable for the route, forcing CP Rail to apply for abandonment with U.S. and Canadian regulators, however the company was denied in lieu of selling the track to another operator.