Tip:
Highlight text to annotate it
X
Hello.
As Peter mentioned I am Senior Editor of the JOC and one of
my main areas of coverage is container rail.
So I was very fortunate earlier this year to tour Canadian National Railways
new Calgary area intermodal terminal and logistics park.
The 220 million dollar terminal handled roughly 220,000 units last year and
has already secured a tennant at its logistics park. But they're not telling me who it is.
The investment and healthy container traffic in the Calgary area
reflects a company that understands that it takes more than clever branding
saying
"global supply chain provider" to become an actual one. And CN has shown that through
its cooperation with the ports,
carriers and inland points that that container service can hit that mark.
And it has shown in the billions of dollars it has invested in infrastructure
with roughly 1.9 billion dollars to be spent this year.
And CN is also aggressively sought back sought match back
opportunities for its customers and provide its shippers better access
by opening up ramps in Joliet, Illinois an Indianapolis.
This approach along with an operational strategy that is consistently kept CN
as the most profitable Class 1 railroads in North America
should be kept in mind during these harsh winter
that have slowed traffic – because that's when it really matters.
Here to give you a better understanding of CN's network
and the challenges and opportunities that the railroad faces is CN's president and CEO
Claude Mongeau. Thank you.
Thank you. And,
Congratulations on
that special recognition. I think they kept the tomatoes from me.
I received an
invitation from the JOC
several months ago to come.
And, I have to say this is
the place if you're trying to connect with the global container trade.
This is the venue. So I
quickly accepted thinking we have momentum
our supply chain collaboration agenda is really
clicking it's resonating with customers so
I'll have an opportunity in March in beautiful sunny
Los Angeles to tell our story
and expand a little bit, give you a sense
working on. well that was October.
Come January a pretty brutal winter I was watching
operations and the trans and some of the difficulties
we faced. I looked at my calendar every month I
looked a month ahead and I said what's that March
event that TPM. Then, February came
much easier in terms of winters
and I have to say I started to have second thoughts.
Can I talk about supply chain collaboration and
all the things we're doing without facing up
to the adversity that we've been dealing with. And
I'm a big boy; I know you have tomatoes. So, I'm gonna try
to do a little bit of both; I'm gonna try to tell you
something about what we're doing but also
take some time to explain to you the impact
of the brutal winter on transportation in general but also
for railroads in particular in CN. There's nothing like being here
to do that and I will leave time for question at the end.
So first a
few words on CN. As some of you know
CN was a bit of the odd man out
only twenty years ago
nineteen years ago when we were still a crown corporation.
we were a laggard in the industry very Canadian-centric network. And
being government owned we're not
the most innovative company. But over the last 20 years we've had
quite a remarkable business transformation.
Coming from a crown corporation
to in many ways leading the industry in such a short period is
no small feat. And that's what CN was able to do.
There were 3 legs to that journey. First
the IPO days becoming a privately owned company or a publicly traded
company. the expansion, the vision of becoming the best in North America and the expansion
to take our network from Canada deep into the US that
was the first leg of that journey.
the second leg was effectively focusing
our business model to
turn our attention to railroad efficiency.
we called it "precision railroading" "scheduled
railroading" It allowed us to lead against the competition in terms of
raw efficiency metrics which in transportation
is actually very good because
if you can move containers if you can move assets
faster in transportation time to market from A to B
is actually a fundamental driver of value for customers. It
helps with asset realization but it also helps
with service improvement. if you have the full package
If you actually focus also on the
customer touch points if you put yourself in the shoes of
your customers if you invest in understanding
your operation and how it impacts the customers that you
serve and that's the third leg of the journey
taking that beautiful franchise of CN at three goals
network taking that efficiency we worked so hard
to get to and
turning all of that to become what I call a
supply chain enabler. a true service-oriented
company that is in business to help its customers win.
I represent
the third leg. I've been at this job
leader for 4 years and I have to say
our strategy is working well and the strategy and the fit of
our franchise works best with the
global container trade with overseas business
uniform work allows our customers shipping
their customers those who own the cargo
movie with us to come North America
from ways now to the east from
Asia to the West goals increasingly from North America from
Latin America back up to North America through the Gulfof
Mexico three calls network allows us
for lock very very strong
foundation of for
but it's not enough footprint is not enough
vision you have to have leadership
constant focus on innovation
and that's what we've been able to deliver it see
from railroad efficiency to
operational in service excellence from hub to hub
constructs looking at railroad trains as opposed to
single cars or or single containers to more and more
first my last mile focus from being
great room to becoming true supply chain
neighbor innovation I was planning to spend 20 minutes
unveiling in more detail is what is driving
seein and gender innovation
is what is prepared propelling forward
but I will leave a little bit I'm to talk about winter
let me in stop on this chart which is perhaps
most important
becoming a true supply chain in Avery's Arjan
firmly believe anyways
playbook that applies to everyone in this room
what we're trying to do its equal
to a freight forwarder shipping fine to anybody
global container trade
notion working
stronger supply chain collaboration
brains whether it's
agency work ever you are sightings
it certainly cm we have started
agenda now across our lines is
all carload them really started
really took hold first
more we started by having
for framework collaboration agreements from coast to coast
we now reports in
network week to keep down to
terminal operators partner with 9 a.m.
service level agreements design
called come together to provide
shipping lines and their customers goods
complicated the it's about
precious few matrix bring us together
knots matrix row metrics
matrix metrics the week customer would
well glowing box
how how should does
you metrics too many when you trying to
across organizations you probably sinking complexity
if you too few your problem
optimizing the right trade-offs
deciding on which one
Mart once you have a recipe and %um
consistently you good going
because precious few matrix become the basis
gauge gauge min breeds more collaboration
you now people on the ground
looking same metrics to problem solved
joint on the go about what happened
last week what happened
today yesterday or increasingly
mooring next week
framework of collaboration agreement has been in place
into mall for us morning three years almost four years
and it's starting to develop in to what I would call
eco-system collaboration that's just an additional
year richness you go Richard
twin house you'd in boxes
you go from on what we do today to a capability
understanding how how the heck
in what we need to do to to capacity
or cool capacity decisions
to the most important which is
deeper mutual trust when the system works
when you gain mutual respect
understanding you each trying to achieve
you mutual trust mutual trust
great mutual trust works
can trust me mutual trust
works also in winter
like what we're facing this year so
supply chain enabling construct
I'd see has been able to differentiate
its that's why working
gaining market share one box
building new relationship in this exciting space
it's working because it's
foundational should its keeps on giving
if you keep with you get
to hire higher-level collaboration
goals from to the floor
lead actually to years you
no would be possible when you workings
looking metrics
having this approach operation
can be on a commercial basis or
more strategic level to
in be to to bring
market innovation creates win-win opportunity
that's where CNN me we want
we want leveraged strain our relationship with supply chain partners
on the ground operationally to get to a point where
we more seamless go to market approach
see and we call it 1cm taking the complexity out
selling our products doing it with
if you were disconnects inside even see
when you applied see go to market with supply chain
joint selling partners or
I was mark recent very important
customers for you come together to
actually explain to to our joint customers what is happening
issues we're facing selling together explaining together
getting better together when
on its way takes seems go to market
approaches are simpler more integrated
is the wave of the future it's not easy
but it's a good sleep extending
reach in railroad term it's you
spaces might be services Jason sees
in our case extending our network reach means adding
terminal because we understand you are growing
ships you need more we need to follow
are shipping customers and we need to follow
customers bring more destination
deeper reach round-trip thing
round-trip thinking one core innovation
Rowntree thinking just railroads shipping
round-trip thinking is about creating supply chains
hours use most
possible create moles possible
both directions sold we can create you
also restore profitability it's about
innovative matchmaking how can we how can we
rain are capabilities
me you configurations
creating frenchie free we do
speed we we bring our customers in our car
France Lincoln with are
into moral capability use our shipping
customers boxes and create
opportunity from the midwest East
can backed Western Canada
if tutored journey is paid by someone
box that's going to be more profitable roundtree
takes connecting Don takes me
takes partnerships to make
but we have a number of initiatives I was planning to give you many examples
I'll leave you just with the site that seems
go to market extended network reach
round-trip thinking innovative matchmaking
not just see the gym it's working for us
which good playbook from me you
especially our partners to follow
work with us is global campaign tree
disney's XI but we need to find new ways
to create if we won
if we want to continue to grow prop
this is the confidence booster the strategies worry
working the PlayBook cm in delivering results
we have grown into moral franchise night
use overseas Wesco the TPM
you know convention after all I could have used another
lane seem grow me quite as exciting because this is one
rights but sixteen percent
world mature market
shows that we r them
continue to be winning one box
with our partners were also on board new relationships
new shipping lines coming on board working with C
it's allowing us to go deeper into the US
grow with our partners it's working
we're aiming help our customers and it's working
me or not with challenges
years the second part in my speech
I'm gonna try to keep it simple the
to explain to all especially does
view who are ultimately user
our joint services terminals the shipping lines
in the railroads we are facing this year
very brutal very unusual winter
situation very
very tough winter tried to
come up we way expressing
when to be takes
you small section two-month period
you explain things eventually people
always be you move on to something else
when you winter like this year extends over
weeks doesn't stop you run outta
simple explanations you have to go a little deeper
explain underlying actor what's
dried next summer you
feeling well if you look year
you will see are
winters in for winters
normal winter number
snowfalls number extreme cold temperatures
typically does issues isolated geographically
and concentrated few periods
through period December 2
March what we are facing this year
is on a snow mornin
any time in the last 30 for thirty-five years at least
extreme call yes very
you see art is
winter two years ago 2011-12
you could see few instances few
Corazon C him with temperatures
below minus 25 degrees
but very few peak where
most not corridors are
level with a restriction because extreme cold
this year winters started December
and nonstop many most
corridors having temperature below mines
now below minus 25 for those you
work in night is about ***
-13 degrees
when it gets too -30 like was
actually this weekend in Saskatoon it doesn't matter with
night sales to to scales
me when you
minus 30 degrees temperature explain to you in a minute
railroading becomes very very
called door
word on a long jobs cm
eros little bit
in the winter in up
the US into Canada impacted
it's not just row it's also
Times Magazine come to my rescue just before this conference
came out with this great stories get a copy
people organic now come out
forty house in cancellation
in the US in January more
ever history for lines
more flight cancellations in January along
in the last four years
I was in about for
peers report in Toronto
shuttered four-day
shop peers
trucking very resilient modem operation
you men attached to the low eventually
solo ultimately get destination
because it's more difficult less capacity in real
get an appointment
all transportation him
any other people came to my rescue national
Weather Service I expect one became
recently would be callin W
accumulated weathers very in
basie add up records for snowfall
in extreme call
some are calling it the winter misery index
cities like Detroit are
the roof index worse history
Chicago second-worst Minneapolis
Fort worst
don't do it in Canada which the I'm gonna get somebody Environment Canada to
do it
I can tell you one thing Saskatoon and Winnipeg you have to go back to 1893
to have colder months December in
have to go back to 1955 to have
colder month January
fine winter we face
goals deeper freezing rain
New Orleans snowstorms in atlanta
we have all vortex impacting
Hall North America week
very unusual my people cm for twenty years I've never seen anything like this
my people tell me ones more experienced in
35-year have to go back to nineteen
remember 30
use one winter remember
was closed issue
so maybe it's wishful thinking I'm thinking about
this winter as one winter in a career
here's what happens to railroads
when you have especially the cold winter
because there's really two factors there's outdoor challenge
you know extreme call your item point mines 50-degree windshield from mylan
happen train you do with C
you particular employee from getting you get taxis to show up on time
you make sure people are not collings all
all issues comes with snow hearing
in where we all face
outdoor challenge railroads
I we'll see with
very well were more outdoor and moves
but we deal with outdoor challenge
we are people like to
him on our operations more equipment
years more disruption
things featured him
but it's not your ask people
what's peculiar about roles roles
is when you have extreme cold weather when you get
-25 degrees air brake system
week here from from the train
to the back the train to be able to see
break and so we have to shorten trains
as much as 30 percent Sam
steer one 30-35 its you
as much as to 70 percent depending on the train
series its tree situation -3 degree
so the combination outdoor challenge
reducing speed work repairs disruption
and the company combined with the fact
times too short reduce the train
by average because our train
10 to 15 percent see
YouTube 8c mine percent trains reduction
nines most if you look at the chart below
reducing train 15 percent
to nine-percent be
15 percent strain
%um 20 percent reduction
your capacity the whole
like bar these network trains
wanna kill you were not doing bad minus nine percent
most our peers in the rail industry actually trains
be deteriorated mornin the other bar
industry and you
in the back is a good proxy for what happens when use
22-25 capacity in the car
business into more in a minute but your
hours to be role you don't have enough
train capacity you train you can in
train more and grooms star rolling
traffic way for a better day
moved so you're yards more and more
cars the car so call conceding
in urgency 32 hours look
Klein cm to something like fourteen
thousand cars throughout very cold
period it's a normal winter
like the one I show you a minute ago you tough winter for a couple days
you get good weather you capture winter
little bit good you capture
makes for a bumpy ride experienced
we with with packs to service
but humility in creates the kind
situation issue it's cold all the time
you get to a point where ground into morning
raise least for
or park yards usage
raise that's what we
in dealing with reason
is because it does to actors
fortunate I'm right chances being
such consist extend
region polar vortex
temperature is low happens every year
but it does not in this degree
your least history is the guy
something in my view in
since thirty-five years maybe winter is not over
so we are talking not quite 100-year
but unusual
conditions its bring this on fring to mall
makes what's car capacity out wifey
global containers allowed Mar
in Prince Rupert I have a certain number of platforms
have a certain number of training Mike Grier those trains
in car supplied capacity
my supply chain parten is a function
the number of platforms mind train footage
lines the mine work nyse:
when things are running reasonably well we have cm
trying to model trains roughly 75 trains in the Greek
doing our job right well spaced out actual
charge from our network and
would into more platform
and they are moving about 450 miles
per day platform last week
our plans on that basis you
outdoor challenges equipment breakdown
more bad orders was a few platforms if you
you know outdoor challenges making
disruption creating congestion on your network
use be now Lauren
call temperature that's the killer
training goes down you'll see in a minute trains
compensate but it gets to a point guard
trains not fully compensate weekend
get into a mold everyday
extreme call thats nice
Ridge
day maybe was March 1st
in Saskatoon maybe was sometime in January
winter restrictions
anything below minus 25 degree calls for
shortening those mean
Graham roughly 25 additional
portraying so many crews
motives to move more trains
risks congestion more cranes
in agreeance punched you
create terminals as well
we are like partners on the water
ship ride
you get punching terminals likes
for Toronto or Detroit
cars the gets to
Lauren brittan very people
for text in the range of 300
miles per day so use you after
about 20-25 percent train
trade for
call 15-20 percent train
reduction but the rest
im 3 p.m. make
whose everyday 45
percent through dude for a few days
you consistent
this winter the winter career you
service in ground
increasing well getting what's acceptable
a lot of explaining to do like doing
said same was meeting earlier
in understand operation said having
season fighting weeks Cincy except
too much in
winter that's what the real world awesome
now were gonna come out
this winter trust me tickets winter
career hoping for it we r
staying with our strategy I believe our strategy is weatherproof
we have the same level engagement the same im
in the same degree of trust even though it's
lines in winter even pointers
adversity brings yes partners
it's all about mutual support mutual trust
helping each other tactical planning it's about learning
as we fight to build resiliency to
you improve next year improve on more
to terminal capacity do all the things
need to be done to build resiliency and it's about
also looking at the longer term issues structural
issues nowhere week
not just cm time partners we too close to capacity
we need to build resiliency
this winter and we will make investments together I hope
to make sure minimize the risk
significant disruptions from winters
will be much in the future
so again we hope to wear to come out a bit stronger
and a in frankly
leave the global container trade
space is very exciting we're not getting
discourage setbacks we are getting energize
we have a job to do to rebuild our reputation we have a job to do together
to regain confidence our customers explanations
make this speech is being you can be able to use them
on on you and and we have a lot of
home to sail modest action
2d to explain what we're doing
together to make probable
difficult situation you know
come again but let's make no mistake
winter is winter we should also do
work helping joint customers
understand in winter we should
like different expectations if we do 2.53
well in the summer maybe it's a
winter can get for anything like this year
but problem Nazi was
everything clicks like sunny so
building trust regaining
momentum explaining action
sitting exchange expectation right to keep
exciting market going strong
foreseen love you in this room is what I came here today
on this to see
nice see I believe that the way to get
is through supply chain collaboration deeper
broader will continue
push innovation to constant
you so that we can together
as partners we can help
our customers with him in there markets
in with that there's any more time I'm you get two meals a questions
this
the