THE Canadian National Railway has faced a perfect storm of good and bad news prompting various actions that produced a perfect mess for Canada's No 1 railway, according to Milwaukee's Progressive Railroading journal
THE Canadian National Railway has faced a perfect storm of good and bad news prompting various actions that produced a perfect mess for Canada's No 1 railway, according to Milwaukee's Progressive Railroading journal. First the bad news. Facing poor results and expecting poorer prospects in 2016, CN braced for shrinkage, shelved capital spending and laid-off train crews.
CN - together the Bank of Canada - greatly underestimated the strength of Canadian economy, which was about to boom with the US economy.
'Performance slipped well below the company's standards. A series of miscalculations, such as unforeseen upswings in crude oil and west coast port traffic, plus several mishaps and extreme weather events became too much to overcome,' said the Progressive Railroading article.
And CN's traffic unexpectedly surged 11 per cent in 2017. That unprecedented double-digit gain blew past the full-year projection of three per cent growth and greatly surpassed other Class I railways traffic increases.
CN didn't have enough locomotives, crews and other resources to meet the unplanned volume surge, given the railway had flat or declining carloads in six consecutive quarters prior to 2017's start.
Then came February 2018 weather, the worst in the railway's 100-year-plus history. CN had to shorten trains because of the cold, which cuts air brake power on longer trains when temperatures plummet.
Shorter trains meant more train and more train crews, which caused engineers and conductors to run out of operating hours, and creating a shortage of manpower and trainsets.
Since CN's revenue ton miles are forecast to increase from two per cent to four per cent in 2018 on a year on year basis, they knew the railway needed to be better positioned to take on more traffic in the near term.
The CN board fired president and CEO Luc Jobin vice president and chief marketing officer Jean-Jacques Ruest CEO.
'Moving the Canadian economy is in our DNA. We can and we will do much better, and that starts today - no excuses,' Mr Ruest said.
The plan is to spend C$400 million (US$309.7 million) to build double track, construct and extend sidings, and add yard capacity mostly in western Canada to improve fluidity for several growing traffic segments.
The additional track and sidings will enable CN to operate more trains in that part of its network at the same time.
'There is a sense of urgency - we need to get back on track. We need to rebuild capacity, to rebuild for next winter,' he said.
Righting the ship is necessary to tap volume-growth opportunities that are apparent in just about every business sector, said Mr Ruest.
'We have to do more to exploit the economy in front of us. All railroads should be in good times now,' he said.
