(The following story by Dan Healing appeared on the Calgary Herald website on May 5, 2010.)
CALGARY — The new president and chief executive of CN says he chose Calgary to give his first public speech Tuesday because it’s a city “in the middle of the action.”
Claude Mongeau, a 16-year veteran of Canadian National Railway Co. who succeeded Hunter Harrison in the top job in January, showed he knows how to get an ovation as a Calgary Chamber of Commerce crowd responded with applause.
“I’m here to tell you that Calgary is a major CN city,” he said. “In fact, before the recession hit, our Calgarybased revenues were growing at a double-digit rate. And as the economy recovers, we expect to continue at that pace of growth in the future.”
In February, CN announced it would invest $100 million in a logistics park east of the city and close its cramped southeast Calgary train yard.
It said Calgary is considered the third-largest distribution centre in Canada and is becoming the logistics hub of Western Canada.
The new 272-hectare CN Calgary Logistics Park near Conrich in Rocky View County is expected to open in 2013 and will include an intermodal terminal with room for customers to custom-build facilities.CN
has a much smaller presence in Calgary than Canadian Pacific, which opened a 40-hectare, $27.5-million intermodal facility 12 years ago at 110th Avenue and 52nd Street S.E., near its main east-west line. It also has an extensive rail freight yard off Blackfoot Trail, and numerous head office staff.
On Monday, CN released its submission to the federal Transportation Department’s rail freight service review panel, a body appointed in September to assess service provided to Canadian shippers and customers and recommend commercial and, if necessary, regulatory solutions.
In his speech, Mongeau countered complaints about CN’s service by insisting that the company had to change 15 years ago after going from a Crown corporation to a publicly traded company.
“Let’s be frank about it, we had far too many cars used as free storage; we would let our critical hub terminals be used for staging instead of moving cars. . . . ,” he said.
“Customers may have had fewer complaints, but CN was essentially bankrupt.”
Mongeau said, for example, in 15 years CN has gone from dedicating 15,000 hopper cars to grain on a 23-day cycle from the Prairies to the West Coast to just 9,000 cars on a 14-day cycle.
The difference, 6,000 cars, is worth about half a billion dollars in capital costs, he said.
The Canadian Industrial Transportation Association has charged that bargaining power in the rail shipping business “is severely out of balance.”
President Bob Ballentyne said shippers don’t want a return to heavy-handed regulation, but they do want more protection.
“In rail, there are essentially only two significant carriers in Canada . . . there was too much regulation and now it’s probably to the point where there’s not enough regulation,” he said.