Calgary Alberta - At his second annual general meeting as chief executive of Canadian Pacific Railway, outspoken railway boss Hunter Harrison pointed on Thursday to the company's financial performance over the last two years and said even he could not have predicted such a rapid turnaround.
 
Two years after a bruising proxy battle that resulted in the replacement of then-CEO Fred Green by Harrison, CP has shaved its operating ratio, a measure of railroad efficiency where a low number is better than a higher one, from 82.5 percent to as low as 65.9 percent in the fourth quarter of 2013.
 
The company had a record first quarter to start off 2014 in spite of extreme winter weather conditions, and expects to hit an operating ratio of below 65 percent in the near future.
 
Harrison, whose tough management style has led critics to accuse him of creating a "culture of fear" at CP, said he only now feels fully recovered from the proxy battle and some of the "ugly" things that were said about him at the time.
 
He said he hopes the financial results speak for themselves and added he believes there is room for even more improvement.
 
"I want to thank the shareholders. Thank you for the confidence you've shown in us," Harrison said.
 
"I hope you're happy, because if you're not, I don't know what we have left."
 
Harrison also spoke to shareholders about CP's concerns surrounding increased government regulation of the railway sector.
 
While Harrison commended federal Transport Minister Lisa Raitt's decision to order older, dangerous, tank cars off the rails, he said CP does not agree with newly announced rules imposing stricter speed limits on trains carrying dangerous goods.
 
CP is also opposed to the federal government's new Fair Rail for Grain Farmers Act, which gives the government the ability to mandate grain shipment volumes, imposes penalties on railways for non-compliance, and extends "inter-switching" limits so that shippers have an increased ability to transfer their traffic to an alternate railway.
 
Harrison told reporters after the meeting that he understand the pressure regulators have been under, both on the rail safety front as well as from the agriculture industry.
 
But he said he believes the government's reactions so far have been "knee-jerk" ones, adding he is particularly frustrated that he hasn't been able to have a meeting with federal Agriculture Minister Gerry Ritz.
 
"They've come at us with rules and regulations that don't make sense to me," Harrison said.
 
"I think when there's some rational dialogue with all of the participants, that something different will come out of this that makes more sense for all of us in the supply chain."
 
CP will abide by the new rules, Harrison added, but he warned that increased regulation could harm Canada's competitiveness over the long haul.
 
"I look back at the mid-1990s and CN and CP at that time were at the bottom of the pack for Class 1 railroads in North America.
 
Now where are you?
 
You're at the top," Harrison said.
 
"Canada has the finest rail system in the world... be careful, be careful, about playing with a winning combination. Because this could turn around quickly."
 
Harrison said he would like to see Washington and Ottawa collaborate on rail regulations, adding "it would make a lot of sense to have the same rules and regulations on either side of the border."
 
However, Lynn Jacobson, president of the Alberta Federation of Agriculture, discounted Harrison's concerns about competitiveness, saying he believes Canada's railways simply don't want regulation and are doing whatever they can to convince the government to back down.
 
Jacobson said farmers affected by this winter's rail backlog are worried that CN and CP will make enough noise that the government might relax the terms of the new grain-hauling legislation before it passes third reading in the House of Commons.
 
"There's always the fear the railways will affect the legislation," Jacobson said.
 
"They're lobbying hard, we know that."

Amanda Stephenson.