A Canadian National switcher works the Vancouver waterfront yard - Date/Photographer unknown - Canadian National

13 November 2012

Hunter Harrison's CP Rail Turnaround Good for CN Rail Too

Canada - Canadian National Railway Co. says it is already seeing the impact of the improved operations of its rival, Canadian Pacific Railway Ltd., under its new chief executive, Hunter Harrison.
 
But Keith Creel, CN chief operating officer, said, paradoxically, the improved service at CP is helping CN's business as well, especially with the movement of goods at the Port of Vancouver.
 
Mr. Harrison took over as CEO of CP from Fred Green in June after a messy proxy battled led by Bill Ackman's Pershing Square Capital Management L.P. Mr. Harrison is expected to unveil the details of his turnaround plan for the country's second largest railway at a investor day in New York City in early December.
 
But Mr. Creel, who worked under Mr. Harrison during his tenure at CN, said his influence on the operations at CP was already making itself apparent.
 
"I used to work for Hunter, so I know they're reinvigorated," Mr. Creel said at a conference in Boston Tuesday. "I got very strong feelings that a strong competitor makes for strong competition, makes for two stronger railways."
 
He said that was already apparent at the Port of Vancouver where the access to the biggest grain elevator CN ships to is controlled by CP.
 
CN has to transfer its trains there to CP for loading. In exchange, CN takes CP's trains to the elevators it controls on the North Shore.
 
Historically, Mr. Creel said there were about two weeks a year when CN moves in excess of 5,000 grain cars a week at the West Coast ports. Typically anything more than 4,200 would cause backlog.
 
But he said because of the improvements at CP and changes to its own grain loading systems, CN just finished a streak of eight-consecutive weeks where it shipped more than 5,000 grains cars.
 
"I have seen some improvements in CP's metrics, which is encouraging," Mr. Creel said. "For us to be able to do 5,000 unloads in a week, that's also a reflection of CP doing better with their business."
 
Mr. Creel said he would imagine CP is seeing the same thing. "So, it's a good thing," he said.
 
At the same time, Mr. Creel said he was confident CN was much further along than its rival in offering reliable and efficient service with a renewed focus on customer service.
 
Prior to aggressively improving its supply chain management, he said CN was like a Ferrari engine with a Volkswagen Beetle body. Now, its Ferrari through and through, he said.
 
He said he expected CP to continue to move toward that goal as well, and begin to sell its service once it gets there. But for now, CP, he said, remains well behind CN in terms of the product they offer.
 
"Once they create a solid service, they're going to sell the service. They're not going to buy the business, they're going to sell service," he said. "If they do that it allows reasonable actions in the marketplace, where both railroads get recognized and get rewarded."
 
He said that in the end, that was good for both CN and CP. But he noted CN's team was competitive, and many of them, including himself, were taught what they know from Mr. Harrison.
 
"We're starting from this point. His team is starting from a whole different starting point," he said. "We're tweaking and optimizing. They're rebuilding."
 
Scott Deveau.