Calgary Alberta - It was preordained that Keith Creel would become the 17th head of Canadian Pacific Railway (CP).
 
As the corporate scion of Hunter Harrison, Creel had helped the great man apply his "precision scheduled railroading" vision twice before, most recently at Canadian National (CN).
 
In 2012, when Harrison came out of retirement to smack CP out of its doldrums, it was just a matter of time before Creel jumped too.
 
The Alabaman arrived in 2013, as soon as he was legally permitted, and there followed four years of sometimes heartless effort to bring Harrison's military-like efficiency to bear on a company that had gotten soft.
 
The last stage of the makeover came when Harrison vacated his seat for his protege.
 
For the past year, Creel's first as CEO, his focus has been on healing the wounds from all the carving.
 
The mood of his remaining 12,000 employees was dark.
 
Grievances were piling up.
 
And Creel seemed slightly embattled.
 
After holding town halls across the country, he found enough common ground to sign seven multi-year agreements with CP's unions.
 
But earlier in April, members of the Teamsters (TCRC) and the International Brotherhood of Electrical Workers (IBEW) voted in favour of a strike.
 
For now, a walkout is on hold while workers review an offer from the railroad, though the Teamsters is recommending they vote against it.
 
For the 49-year-old Creel, who is trying to shift the story to a more positive subject, growth, the challenges of running the sixth biggest railway in North America never end.
 
On top of that, Creel is still mourning the death of his longtime mentor.
 
What was it about your relationship with Hunter that made you his protege?
 
To survive with him, you had to learn the business, because he was so knowledgeable. And because he's got a big personality, and he can intimidate people. But it was more like a coach, back in the day, when they'd scream and yell and cuss and fuss. It didn't bother me. Some people, it intimidated.
 
You refer to him in the present tense, but of course, he passed away in December.
 
16 Dec 2017.
 
He'd had some health trouble.
 
The past couple of years at CP, he was challenged. He was in and out of the hospital a couple of times. Hunter's the kind of guy who, I knew, would work until he died. And if he'd quit working, he would have died sooner. (1) That's just the way he's wired.
 
Were you devastated by his death?
 
It's like losing your second father. He and I talked about it. I was with him the full last week. We live two blocks away from each other. (2) I had to be somewhere Friday night and said, "I'll see you tomorrow." I got back as quick as I could Saturday morning, and he had passed away maybe two red lights before I got there. His son-in-law called me. The hospital allowed us to sit with him. So... (Creel falters, his eyes filling with tears.) But you know, we had a lot of good years together. And he's always gonna be a part of me.
 
How do your styles differ?
 
I used to tell people, Hunter can say and do things, and people would not take exception to it, but if I said and did the same thing, I'd probably go to jail. The world's changed. Hunter was a visionary leader, but you gotta have a bit more patience. You gotta spend a bit more time on the softer side of things. Hunter never had an affection for politics. In his mind, that didn't make trains move better, so he didn't engage in it. I've gotta have more balance.
 
What are you good at?
 
I've got a deep knowledge of the industry. But my biggest strength, I believe, is my ability to connect to people. Leadership. Motivating and inspiring other people to see and feel and care about the same things I care about.
 
When you joined CP, you two had identified it as "worst in class."
 
We'd competed against them for a long time, so we knew. [3] We took advantage of that. CP was never known for service. It was known for low cost. But with low cost, typically, you get what you pay for. Precision scheduled railroading was ingrained at CN at that time, and at CP it didn't exist.
 
So what did you attack?
 
Straight out of the gate, we started reviewing every assignment, every train, every job. Sort of a zero-based exercise. We set up reports on all of our own internal measures, which determine the health of the terminals and the network, seeing where we have surplus assets. We took a ton of excess capacity out, train starts, consolidations, and revised the schedules. It took probably six months, because you're bringing all your officers in together, the superintendents, the train masters, the people who really know. It's like having a classroom and you're like, "Why do you do this? Why do you do that?"
 
The goal was to cut costs?
 
Improving service was the goal. And as a result of that, we cut costs by eliminating assets.
 
You changed the length of your trains, increasing them from something like 5,000 to 7,300 feet.
 
Those are averages. Part of precision scheduled railroading is that you create capacity by running longer trains, 'cause you have fewer trains out there. If I have fewer trains, I don't need as many crews, I don't need as many locomotives. And on the railroad itself, you're creating capacity for additional business.
 
You took out a thousand switches.
 
At least a thousand. That's just assets that are in the ground. If they're in the ground, you gotta maintain 'em. You're paying people to inspect something you don't need. Every switch is a potential for derailment, in my mind. Because they break. If it's not necessary, get it out.
 
As a result of all the efficiencies, there were job losses. How many?
 
We were paying around 18,000 full-time equivalent employees. We're at just over 12,000 now.
 
This whole process created a lot of hard feelings, right?
 
Change is not easy. You affect people. When you go from 18,000 to 12,000, there's definitely going to be hard feelings. But the way I look at it, I've got to protect the 12,000. If I try to protect the 18,000, I disappoint 18 instead of protecting 12. You gotta do what's in the best interests of the company and employees overall.
 
But there were things you've said you "got wrong."
 
You can't drive that kind of change and get everything right. The pace of change was so fast. Like the discipline issue, you have to have discipline or you're gonna have unsafe acts, and you're gonna have derailments, and you're gonna have people getting hurt and killed. But some officers were very overzealous. I spent a weekend reading dismissal cases, and I knew then. I said, "Gosh, we got a lot wrong." 'Cause some of these cases, you read 'em and you're like, "How could you do that? As a human being, how could you take somebody's job away because of that?" So we reinstated quite a few people. We made a lot of internal changes, and we communicated internally. There's a whole lot of power to explaining things.
 
You've said, "Now we've become known for reliable service." But the Ag Transport Coalition looked at shipments on CN and CP, and for a week in February, only 38 percent of hopper car orders were filled. Someone called the backlog a "crisis." This is an issue.
 
It's an issue. But for us, it was episodic and it was for the moment. In February, we had a derailment on the mountain sub, just west of Calgary, and then we recovered from that, and two days later we had one east of Calgary on a potash train, where a switch broke in the middle of winter. I'm not gonna criticize CN, but the grain harvest itself is more heavily weighted to their draw territory, as opposed to the southern part of the provinces, where we are. Our shipments in their draw territory are up 30 percent. So we're handling what we traditionally plan and handle, plus additional, which puts strains on resources. (4)
 
Kevin Price, a senior trader at AgroCorp, a west-coast crop shipper, said recently about CP, "It seems like they've starved their system so much, their employees are stretched right to the limit." That suggests all the efficiency-maximizing has gone too far.
 
That's completely inaccurate. He's misinformed. The winter creates its own set of unique challenges. It happens every year. You can't plan for two derailments back to back. It takes a while to work through it. You can't build a network that has so much resilience in it that you can absorb those kinds of episodic issues and stay in business the other 51 weeks of the year.
 
But the government is worried. They gave you and CN a deadline of mid-March to come up with a solution to the backlog. So what's your plan?
 
We've improved double-digits over the past two weeks. The problem, I don't say it's solved, there's still more grain to move, but it's not abnormal. We've moved more than we did last year. We're getting stronger every day.
 
Moving oil is an issue too, right? There aren't enough pipelines.
 
These levels were not predicted. We didn't know what was gonna happen with the pipelines. The Keystone had a leak, and they took capacity down 20 percent because of safety concerns, which put more pressure on rail. There's additional supply coming online, and pipelines have been delayed, so it's created a lot of capacity challenges that, quite frankly, the oil companies didn't predict. And the other thing that compounds that is that our supply chains, two railroads in this country, both need to work well, and if one doesn't, and I'm not pointing fingers, it puts you in a position where you can't succeed.
 
On to Bill C-49. (5) It's in the Senate right now.
 
It needs to hurry up. Our grain fleet, unlike CN's, is older. It's less efficient. We can't haul as much grain in some of our cars. But if we get Bill C-49 through, I can invest CP's money into renewing our fleet. We've got money set aside, in excess of a half a billion dollars over three years, to invest in renewed hopper cars. We'll go from having probably the worst fleet in the industry to one of the best. But I can't do it until the legislation goes through.
 
You've said the increasing demand for rail services is going to lead to consolidation. To what degree will CP be a player?
 
My view is we're the best run railway in the industry, with the best leadership team and the best employees, and we can create something that's pro service for our customers, pro competition. And I can make a case in the U.S., extending our reach and creating one seamless network. It would be great for U.S. shippers and great for Canadian shippers, and it creates capacity at the same time for the industry.
 
You see CP getting bigger?
 
I don't have a crystal ball, but I plan to be around for some time. And I think eventually, because of the need, it's gonna happen.
 
FOOTNOTES
 
1. "I failed retirement once, and I can't fail again," Harrison said back in 2016. Instead of retiring, however, he took the top job at CSX Corp. and died less than a year later, at 73.
 
2. Harrison, who had a passion for horses, retired to a farm in Wellington, Florida. Creel, whose daughter turned to a career in horses thanks to Harrison's influence, built a winter house close to his farm.
 
3. Harrison and Creel spent two decades together at Illinois Central and CN before jumping to CP.
 
4. Canadian Pacific has been using office workers and managers to fill in for unionized engineers.
 
5. Bill C-49 would make sweeping changes to the Canadian transportation industry, increasing competition and giving customers and the Canadian Transportation Agency more power to demand improved service from railway providers.
 
Trevor Cole.