(The Calgary Herald posted the following story by Lisa Schmidt on its website on September 23.)
CALGARY — The North American railway industry should move its freight business to a schedule-based system, which would be more productive and a stronger competitor against trucks, the head of operations for Canadian Pacific Railway Ltd. said Monday.
Neal Foot, senior vice-president of operations for the Calgary-based CPR, said rail carriers need to present themselves to customers as one integrated system by shifting to scheduled railway operations from the tonnage-based model used for decades.
That means viewing the railroads “as one big system that everyone plugs into and where railways start to share yards and networks — the way airlines share gates and ports,” Foot said in a speech to an international conference of railway planners in Calgary.
Trains and individual shipments would be scheduled, unlike the tonnage-based system of holding trains until enough freight cars and tonnes have accumulated to make the trip economical.
“We will be making the rail industry more productive and this will put us all in a stronger competitive position to take back and build market share,” said Foot.
Productivity gains would be passed on to shippers in the form of lower rates, he said, while the public would see reduced traffic congestion, less smog and improved cross-border trade flow.
CPR started to move its operations towards the schedule-based system in the late 1990s, using computers to map out complex interconnections of equipment, facilities, track and crews, determine optimal routing and calculate freight-yard workloads to avoid congestion.
The changes have cut costs by more than $500 million, the company says. The system cost about $250 million to implement, mostly in upgrading computer systems.
Other railways — including North America’s largest — have been watching CP’s changes, although they expect that it will take some time for a fully integrated system to get up and running.
“We’re just seeing in the last five years the technology starting to emerge that can do that,” said John Gray, vice-president and general manager of business development, Union Pacific Railroad, based in Omaha, Neb.
But the interest is definitely there, he added.
“I think in one form or another all the major carriers are moving that way,” Gray said.
“They are doing it in different ways and taking different approaches but they are all in one form or another recognizing that you have to schedule some part of your business.”
Daniel Mazur, assistant vice-president of strategic planning for Virginia-based Norfolk Southern, noted there are still some challenges to overcome.
“It’s a cultural change as much as it is an operational change,” he said, adding that the current perception in the railway industry is that schedule-based system means more costs.
Shares of Canadian Pacific Railway fell 21 cents to $33.10 on the Toronto stock exchange Monday.