25 September 2004 Riding the Rails   Twenty-five-metre cranes capable of lifting 46 tonnes load rail cars at CP Rail's intermodal freight terminal in Vaughan, where containers are taken off trains and put onto trucks. There can sometimes be an uneasy relationship between trains and trucks.   Patrick Sinnott loves trains.   More precisely, he's nuts about containers.   As head of Canadian Tire Corp.'s supply chain, Sinnott last year moved 134 million cubic feet of merchandise across the country to the retailer's 455 stores.   His central strategy is intermodal shipping, which involves moving specialized containers by ship, rail and truck.   In fact, the Tire is the only Canadian retailer to own its own fleet of 16.1-metre-long containers, 1,257 so far.   These containers are constantly on the move, tracked and controlled by computer. Store managers punch in their orders nightly, setting off a series of events in distribution centres in Toronto, Calgary and Montreal. Containers are packed and then sent on their way. Some stores received as many as 12 containers a day during peak times.   "We don't have any of our own drivers but we have technology," said Sinnott, who holds a PhD in mathematics.   Between 1995 and 2003, intermodal rail traffic nearly doubled in Canada, to 712,377 carloads, which haul as many as six containers each. Every container on the back of a train means one less truck plying the highways and polluting the air.   Intermodal is already showing signs of hitting capacity constraints. Solving a bottleneck through the Rocky Mountains could involve tens of millions of dollars to add track.   But, at the same time, intermodal is becoming a vital source of profits for the railways.   At Canadian Pacific Railway, intermodal surpassed grain and coal shipping as its top revenue generator, accounting for 27 percent of sales in 2003.   Other major shippers are also using intermodal rail, including Sears Canada Inc. and Hudson's Bay Co.   "Most retailers are becoming aware of what rail has to offer," said Canadian Tire's Sinnott.   During a tour of CPR's 280-hectare intermodal yard in Vaughan, he explained that the trend toward containers will increase for the simple reason that more and more consumer goods are manufactured in Asia and shipped over the ocean.   "That bodes well for the railways and the retailers who know how to work with the railways," Sinnott said, noting his company is in the middle of doubling the size of its distribution centre adjacent to CPR's Calgary intermodal yard.   "If it wasn't manufactured in Canada or the northeast U.S., it's going by train."   The railway business has tight profit margins, but relatively simple technology has created major cost savings.   Both CP and CN have invested in thousands of rail cars designed to carry two 16.1-metre stacked containers, or as many as six smaller ones.   Within two or three years, container ships are going to become much bigger and that means railways must move containers out of ports more efficiently, said John McBoyle, CPR's vice-president of intermodal.   "We want to make sure everything is double-stacked."   CPR runs a service between Toronto and Montreal that allows shippers to send tractor-trailers by rail between the two cities. Last year, the "Expressway" service took 73,000 trucks off Highway 401.   "It's not a huge facility. Roll on. Roll off," said McBoyle.   CN used to operate a similar service between Montreal and Toronto but cancelled it earlier this year, citing lack of profitability.   Such services highlight the strange relationship between railways and truckers. They are arch-rivals yet they often need each other.   The railways complain that the government essentially subsidizes truckers because they don't pay to use the highways, which their extremely heavy trucks wear down much more quickly than passenger vehicles.   The truckers insist they offer door-to-door service, and say the country would grind to a halt without trucks.   "We are a little skeptical that intermodal is much of a solution to anything," said Doug Switzer, manager of government relations at the Ontario Trucking Association.   "Where it makes sense for freight to move intermodally, it already does."   As for all the pollution trucks generate, Switzer is confident hydrogen-fuel-cell technology will eventually solve the problem. "There are quantum leaps coming."   Such technology may take years, and Canada doesn't have that much time if it hopes to meet its Kyoto Protocol limits for greenhouse gas emissions, said Murtaza Haider, an assistant professor of civil engineering at McGill University.   "That can only happen if we reduce our emissions from cars and trucks."   Though trucks play a vital role in Canada's economy, railways can still gain market share in longer hauling, Haider said.   "The goal for intermodal rail is to offer flexible and reliable travel times at affordable costs," he said. "Rail can innovate. It's up to them."   Given the need to reduce pollution and traffic congestion, governments ought to start charging truckers fees that reflect the true cost of using public roadways, Haider said.   "Tolls and congestion pricing is our way out of gridlock."   Shippers consider 800 km the magic divider between shipping by train or truck. For anything less than that distance, it's currently more effective to use trucks.   The differences are getting smaller, suggested Paul Waite, vice-president of Canadian National Railway Co.'s IMX intermodal operations.   Three years ago, CN shaved 24 hours off its transcontinental freight service, Waite said.   "So if they were to run their tractor over the road with a single driver, we can move it just as fast on the rail," he said.   On the profit side, the switch to rail cars that can double stack containers is a huge boost to efficiency and capacity, he added.   Truckers are facing a number of issues, including soaring fuel and insurance costs and public pressure to reduce the hours a driver can be on the road a day, he said.   "All these things added together against a backdrop of a train service that basically mirrors a single driver service, bodes well for the future of intermodal."   Ron Tepper is so confident in the outlook for container shipping, he "intermodalized" his business, Consolidated Fastfrate Inc., five years ago.   It was an expensive and painful process to relocate and invest in 17 new facilities across Canada, said Tepper, president of the Toronto-based shipper.   Revenues have since doubled and Tepper enjoys a cozy relationship with CPR. "I won't say it's lucrative because that's not the right word just yet."   To get to the next step, the railways need to invest tens of millions of dollars in new track and stronger locomotives to run longer, faster trains, he said.   "There should be more growth on the intermodal side, but it will take investment from both railways and perhaps some government involvement to make it happen."   Intermodal has been on the rail for 40 years, and so has Elmer Schwarz. He respects intermodal container service, praising CN's recent improvements.   "It works like an airline. You make a reservation, get to the station on time, pick up your boarding pass and get on the train," said Schwarz, president of Toronto-based Western Canada Express Inc.   His firm uses intermodal at times, but he still embraces the good old boxcar even though it involves a lot of packing and unpacking.   "The rule of thumb is, if possible, we use a rail car. We can put a lot more into it."   Schwarz is a die-hard rail booster, especially when it comes to longer hauls.   "We do not run a truck across Canada. We never did it."   John DeMaria, director of supply chain for Home Depot Canada, is one of Schwarz's biggest clients. DeMaria had spent 23 years with Sears Canada, a stint that included building the department store giant's huge intermodal site adjacent to CPR's Vaughan yard. He's confident that the demand for rail will continue to increase.   "It's the only way I can get consistent, five-day service to the West, and the rates are certainly the best," he said.   "Any of the big users will tell you the same thing."   DeMaria insisted that businesses are looking beyond the bottom line.   "The moral and social obligation is to use the highway that is less used, which is rail."