11/8/2016
Rail News: Canadian Pacific
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• realign its network to de-emphasize coal traffic and optimize the volume-growth potential of the more promising intermodal sector and solid merchandise segment;
• deploy more high-tech equipment and information systems to forge a highly automated railroad that can support safety, service-performance and efficiency efforts;
• pursue service excellence to help prompt volume growth and better meet customers’ needs; and
• develop a workforce of the future with the right tools and skills to drive productivity and innovation.Expected to take a number of years to implement, the strategy will help spur volume growth and increase profitability in the intermodal and merchandise franchises, and yet preserve the business value of coal as it becomes a smaller part of the company’s portfolio, says CSX Chairman and Chief Executive Officer Michael Ward.“We’ve got to adapt; the world has changed. Coal has gone from one-third of our annual revenue to about 15 percent,” he says. “We have been a more cyclical company, one that was a slave to the vagaries of the general economy. Now, we can be more nimble and flexible.”CSX will benefit by controlling the things it can control: service, safety and productivity, says Ward. In addition, the strategy can help the company attain its long-term goal of a mid-60s operating ratio.CSX plans to carry out the CoT in part by operating two networks: a primary one accommodating longer and heavier trains along the “Iron Triangle” mainlines between Chicago, New York City and Jacksonville, Fla.; and a local one comprising other lines and territories that don’t require the same train speeds and resource intensity. Each network will essentially have the same route mileage, and the local network would retain the same level of safety and customer service as the primary one.CSX also aims to extend sidings or build new ones to accommodate longer trains; triple the amount spent each year on technology adoptions; and provide better quality-of-life benefits and more modern equipment to hone a stronger workforce.Operational performance a prime componentService execution is the most critical aspect of the CoT, says Ward. To win over and best serve shippers of truck-competitive freight, CSX needs to align operating capabilities to customers’ expectations and provide consistently higher levels of reliability.“If we want to grow our other businesses, the service has to be there,” says Ward.He believes the CoT initiative aligns well with the company’s vision to be the safest, most progressive North American railroad, one that relentlessly pursues customer and employee excellence. It lines up with CSX’s core values, too, says Ward. That means continually striving to be fact-based, ensuring people make the difference, stressing safety as a way of life and getting the right results the right way.“It’s how we behave and who we are. It still fits,” says Ward. “The biggest difference [with the CoT] is being more intentional in deploying technology.”CSX strategists performed a lot of modeling exercises to ensure the strategy could be carried out, and the team plans to tweak and refine it as CoT implementation continues.“The way we see it is: OK, we have a path now, and we see where we’re going,” says Ward.A new terminal under construction in Pittsburgh, which is slated to open next year, figures to help boost intermodal business. CSX