Follow us on Twitter!
Blog Header Logo
DG&A's Transportation Consulting Blog
Posted by on in Rail
  • Font size: Larger Smaller
  • Hits: 21424
  • Print

CN Rail and CP Rail – Canada’s two “Precision” Railroads set to Power its Economy

Pierre Berton, the late, famous Canadian author noted in his book, “The Last Spike,” that CP Rail has held a respected place in the country’s history.  He wrote that “no other private company, with the single exception of Hudson’s Bay Company, has had such an influence on the destinies of the nation.” For most of the past 15 years, CP Rail faced stiff competition from CN Rail as Paul Tellier and Hunter Harrison led the company’s move from a bloated government run enterprise to a highly profitable public company.  In fact CN’s operating ratio of 61.3 is not only the best among the major North American railroads, it is one of the best of any company in the transportation industry.

The fact that CP Rail lagged so far behind CN Rail and the other class 1 railways in North America led the activist investor Bill Ackman, of Pershing Square Capital, to launch his “palace revolt” proxy battle that resulted in the replacement of CP’s former President with Hunter Harrison, whom he brought out of retirement to drive the railway’s profit improvement.

As we pass through the last quarter of this year, Canada’s two largest railroads are heading down separate tracks.  With an operating ratio is the low 80’s, Mr. Harrison has embarked on a series of actions to reduce costs through improved asset utilization.  This is another way of saying that CP Rail is planning to move its equipment more quickly and efficiently, to become Canada’s second “precision” railroad.   It is seeking to accomplish this by undertaking a series of initiatives.  These include:

  • Building trains at CP’s intermodal terminal in Vancouver with blocks of cars for long haul destinations. This reduces stops and streamlines connections.
  • Increasing average train lengths to 7,000 to 12,000 feet
  • Speeding up the fueling of trains
  • Improving daily scheduling
  • Investing $1.2 billion in 2012 and $1 billion in 2013 on key infrastructure projects
  • Working with customers at both ends to improve coordination

The net result of these changes is that CP Rail now provides 4 day transit times between Vancouver and Chicago and Toronto.  These changes represent half of the transcontinental trains that CP launches daily across its network.  Mr. Harrison is not expecting an overnight drop in the company’s operating ratio.  He told Bloomberg News that he is targeting about 65 percent in the next four years.

Shippers appear to be taking notice of improved service on both major Canadian railways. 

In the 2011 Canadian Industrial Transportation Association Shippers’ Pulse Survey, the respondents gave the railways’ intermodal service a 78 percent favourable rating as compared to 82 percent for LTL and 84.5 percent for truckload.  Carload service was ranked at 70 percent.  These scores are 45 percent better than the ratings in 2009.  The railways’ quality rankings were also up 22 percent as compared to 2010. 

The railways offer three primary types of services to its customers - - unit trains, carload service and intermodal.  Both railroads are positioned to capitalize on trade between NAFTA partners but also trade with Asia and Europe.  Michael Bourque, President and CEO, Railway Association of Canada, highlighted in his presentation at the 2012 Surface Transportation Summit that Oil, LNG, shale development (sand, steel pipe, chemicals) are now moving by rail.  This is not just a stop gap measure.  There are many long term contracts now in place alongside pipeline shipments.  The railways can supply capacity and service to a variety of industries.

CN Rail, that already climbed the efficiency mountain under Hunter Harrison, is seeking profit growth from these specific opportunities.  CN is enjoying steady growth through the Port of Prince Rupert, BC, the closest North American port to the Asian market.  The 13% year/year growth in intermodal traffic through this port is helping drive CN’s intermodal volume increase. 

It is also planning to capitalize on the boom in commodities, namely iron ore.  It is expecting to invest $3 to $6 billion on infrastructure to service the mines in Sept-Iles, Quebec, on the Gulf of St. Lawrence, in northern Quebec.  Iron ore exports are expected to rise more than 35 percent as China seeks to diversify its sourcing of this key steelmaking ingredient.

With such a high profile and well publicized change in leadership, everyone is expecting big things from Hunter Harrison and CP Rail.  As rail speeds and efficiencies improve, this will open up a larger share of the truck market for conversion to rail service.  With rail being such an energy efficient alternative to road transportation, on longer lengths of haul, we should expect an ongoing series of sales and operations initiatives as both Canadian railways look to capitalize on these opportunities and spur growth in the Canadian economy.



  • No comments made yet. Be the first to submit a comment

Leave your comment

Guest Monday, 21 August 2017

Most Recent Posts


Tag Cloud

US Manufacturing Map-21 2013 Economic Forecast Trucking LinkedIn shipper-carrier contracts freight RFP Canada's global strategy BNSF freight costs President Obama Rotman School of Business fuel surcharge dynamic pricing Search engine optimization NCC network optimization USA Truck US Auto Sales Accessorial Charges Freight Capacity Freight Recession 2015 Economic Forecast Freight Shuttle System Adrian Gonzalez Spanx 3PLTL Freight Matching transportation audit Sales Training Freight online shopping the future of transportation Rail bulk shipping future of freight industry Canada FCPC Freight contracts ProMiles FMS Job satisfaction Global Transportation Hub tanker cars Schneider Logistics broker security Success failure entrepreneur Deferred Packaging Muhammad Ali UP Hudsons Bay Company freight forwarders Sales Grocery dimensional pricing Driver Shortage 2014 freight volumes Derek Singleton Global experience Outsourcing Sales Toronto David Tuttle drones University of Tennessee truck drivers Trump routing guide 2014 freight forecast Canadian freight market Loblaw Business skills Social Media automation Celadon CSX Crisis management Right Shoring autonomous vehicles Canadian Transportation & Logistics Consulting Management Yield Improvement professional drivers Leadership shipping wine Truckload Software Advice Inbound Transportation Sales Management Dedicated Contract Carriage driverless solutions provider Canada U.S. trade Shipper mentoring CN Rail derailments Tracy Matura energy efficiency freight transportation conference transportation news Packaging NS freight audit Distribution ShipMax KCS Training Crude Oil by Rail Transportation FCA Comey Business Transformation Strategy BlueGrace Logistics Associates CSA Regina US Housing Market Horizontal Supply Chain Collaboration Retail 2012 Transportation Business Strategies. Jugaad Career Advice MBA MPG 2014 economic forecast Carriers APL CSA scores FuelQuest RFP Load Boards Canada-U.S. trade agreement YRC LCV's truck driver financial management EBOR Training New Hires cheap oil Keystone Pipeline Twitter transportation newspaper Transloading coaching rail safety driver shortages robotics Freight Carriers Association of Canada Education Canadian economy Facebook CN Doug Nix small business TransForce Scott Monty US Economy Bobby Harris customer engagement Failure capacity shortages freight payment Canadian truckers Werner driver Microsoft Climate Change Freight Management IANA LTL e-commerce Wal-Mart Reshoring Omni Channel shipper-carrier roundtable Whole Foods Rate per Mile peak season trucking company acquisitions Transportation Buying Trends Survey JB Hunt Transplace Dan Goodwill Retail transportation Transportation service Swift freight payment freight audit Social Media in Transportation economic forecasts for 2012 CITA Shipper Pulse Survey Otto freight rate increases intermodal Entrepreneur home delivery $75000 bond shipping Conway New York Times Ferromex trade freight transportation Warehousing 3PL TMS 360ideaspace Dedicated Trucking Emergent Strategy Cleveland Cavaliers Success CP Rail Business Strategy Colilers International Railway Association of Canada employee termination Freight Rates Finance and Transportation Transport Capital Partners (TCP) capacity shortage marketing TMP Worldwide Infrastructure Life Lessons Surety bond Donald Trump Broker business start-up freight broker home delibery Stephen Harper Trade Vision freight bid US Election pipelines carrier conference shipper-carrier collaboration hiring process freight transportation in 2011 freight agreements Blogging Politics last mile delivery consumer centric Driving for Profit Harper Davos speech Masters in Logistics Fire Phone Doug Davis Load broker selling trucking companies FMCSA buying trucking companies CRM economy NMFC Transcom Fleet Leasing freight cost savings broker bonds NAFTA Amazon

Blog Archives