Canadian Rail: Gearing Up in the West

Transcription

1 Canadian Rail: Gearing Up in the West WCWGA 42 nd Annual Convention January 6, 2012 Moose Jaw, Saskatchewan Bruce R. Burrows V.P., Public and Corporate Affairs

2 Outline 1. Who we are 2. How Railways Do Business 3. Market Based Investments 4. Customer Focused Initiatives 5. Innovation in Western Grain 6. Building on Success-Western Grain 7. Concluding Remarks

3 Who We Are Represent Canadian rail industry Some 50 freight, commuter, intercity and tourist railways An affiliation with more than 500 rail industry suppliers Growing Associate Membership Core rail representation from all sectors Class 1s: CN, CP and US carriers Short lines: Over 40 across Canada Passenger: Commuter, Intercity, Tourist RAC = One Industry Voice

4 Who We Are Coast to coast national carriers: vital to Canada s economy, supply chains and society Extension of Canada s industry and resource base connects regions, NAFTA and global markets Partners with other supply chain participants such as ports Capital expenditures: typically 20% of revenue Over 45,000 km of track, almost 20% larger than the National Highway System Contributes more than $12 billion annually to the Canadian economy Employs 35,000 and another 50,000 suppliers Handles more than 70% of nation s surface freight on a tonne-km basis Over 1,100 trains a day Short Lines carry 25% of originated carloads CN and CP move more than 440,000 carloads of Canadian agricultural products on annual basis, which represents close to 14% of originated carloads Agriculture Carloads Carloads originated by commodity grouping Intermodal 23% Manufactured & Miscellaneous 3% Food Products 1% Paper Products 5% Fuels & Chemicals 12% Machinery & Auto 5% Metals 4% Agriculture 14% Forest Products 6% Coal 9% Minerals 18%

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7 How Railways Do Business Railways operate their business within a normal commercial framework: Commercially based bilateral confidential contracts which include: Service provisions Price Dispute Resolution Commercial tariffs Regulated tariffs Western grains and grain product Just under one half of Canadian grain shipments have been non-board grain Commercial environment drives market solutions, encourages investment & innovation

8 Market-Based Investments Almost 20 freight railways serving western markets In 2011, railways invested more than $2.7B in infrastructure, rolling stock, and technologies Railways have contributed capital to grain companies for rail siding improvements Development of facilities to grow rail services, including logistics parks (eg. Regina, Calgary, Nisku, Fort Saskatchewan) IT investment

9 Market Based Investments Key investments in the Asia- Pacific Gateway: $2B invested to date by CN and CP Grade separations Co-production and directional running Other general upgrades to the western network for benefit of many commodities Longer Sidings New locomotives Rolling stock CP s northern route

10 Market-Based Investments In the Alberta Industrial Heartland CN has been investing in its facilities in Fort McMurray and other Oil Sands areas CP well-connected to transload facilities near the Oil Sands Railways are developing sophisticated railroad pipeline to N.A. and overseas markets Bakken crude oil deposits CP is investing $90M in its Estevan, SK facility to increase oil carrying capacity Around 20% of the Bakken light oil formation moves by rail Despite uncertain economic times railways are maintaining capital expenditures in an effort to increase supply chain performance

11 Customer Focused Initiatives- Right Across Canada New service based collaborative agreements with all major supply chain partners, e.g.: Ports and Terminal Operators Development and communication of Key Performance Indicators (KPI) across the board-already already in place for intermodal terminals Signed confidential agreements with customers across the board Disputes resolved through Commercial Dispute Resolution Simplified optional services Customer advisory service changes Enhanced supply chain collaboration benefits all supply chain partners

12 Innovation in Western Grain CN Initiatives Include: Open Order Book New scheduled grain service plan CP Initiatives Include: Launch of the Grain Hub System with increased locomotive/crew base Introduction ti of the Grain Car Request System Results: Improved first/last mile performance 2010/11 highest grain unloads at Vancouver in 20 years and near-record at Prince Rupert Significant increase in grain service reliability Supply chain agreements increase collaboration and efficiency Will participate in grain supply chain analysis These initiatives lead to increased supply chain visibility and improved efficiency

13 Building on Success- Western Grain Grain now moves faster through country elevators and rail system Reduced inventory in the system Increasing country elevator inventory turnovers Improved railway loading and transit times Conference Board of Canada has observed The logistics of handling and shipping Western Canadian grain has improved over the past Decade Supply chain planning: need information to flow between supply chain participants to prevent congestion before it happens Significant upstream/downstream impacts when pipeline is slowed Various factors need to be embedded in supply chain thinking Challenge to the grain supply chain: how to increase unloads at the West Coast

14 Concluding Remarks The rail supply chain requires a stable regulatory environment The regulatory framework provides an appropriate balance between all participants Commercial incentives and mutual trust are catalysts for innovation and progress; vast experience moving grain regardless of market structure Railways are working collaboratively with their customers and other industry partners to meet their needs and drive further efficiency into the Canadian grain supply chain rail just one component in the logistics chain Commercial solutions, as opposed to regulatory intervention, will allow for increased efficiency within the western supply chain which will benefit all participants