Fall 2004 - Trailcon

ON TRACKCN reports rise innet incomeCN recorded a healthy 34%increase, to $326 million, in second-quarter2004 net incomeover 2003. Operating incomewas $575 million, an increase of32% from year-earlier figures,while the operating ratio of65.5% was 4.6 percentage pointsbetter than the prior year’squarterly performance.“Our strong quarterly resultsreflected a comeback inCanadian grain traffic, marketshare gains as a result of goodservice, yield improvement initiatives,and improved profitabilityresulting from CN’s IntermodalExcellence (IMX) strategy,” saidpresident and CEO E. HunterHarrison.The quarter also marked CN’sacquisition of the railroads andrelated holdings of Great LakesTransportation LLC. In July, therailroad also completed a $1-billionacquisition of BC Rail fromthe British Columbia government.CN terminatesRoadRailer serviceCN has ceased commercialoperations of its RoadRailerintermodal service betweenMontreal, Toronto, and Chicago,due primarily to a strike inFebruary of this year by mechanics,clerks, and intermodal yardworkers.According to Today’s Trucking,many shippers shifted freightfrom rail and intermodal totrucks during the strike. Followingthe strike, some of the truckfreight extended into longercontracts.CPR Q2 revenuetops $1 billionStrong growth in five of its sevenbusiness lines pushed CanadianPacific Railway’s revenue past the$1-billion mark in the secondquarter of 2004 – a 10%increase over the same period in2003. The revenue increasehelped drive net income up146% to $84 million in the quarterended June 30. This compareswith second-quarter 2003 netincome of $34 million, whichincluded a special charge for jobreductions, an asset write-down,and network restructuring.Operating income in the secondquarter increased 19% to $221million, while operating ratio forthe three-month period was78%, a 1.7% improvement.Intermodal revenue grew by $21million, or 9%, in the secondquarter of 2004, on top of arecord second-quarter 2003.Progress continued on therailroad’s MaxStax initiative toboost efficiency and margins inthe intermodal business. CPR hascompleted about 80% of its programto convert its intermodalfleet to high-capacity doublestackfreight cars, and is on trackto achieve its goal of a 16% productivityimprovement on intermodaltrains.CPR posts key statson Web siteCanadian Pacific Railway hasadded carload and key performancemeasure reports to its Website. The measures include averageterminal dwell time, averagetrain speed, freight cars on line,and bill of lading timeliness.As of press time, 2004 totalweekly carload for intermodal(originated and received) rangedfrom 19,409 to 25,191, whileaverage train speed fluctuatedfrom 25.3 to 30.4 miles per hourfor intermodal, and from 22.0 to26.4 mph for total system.Capacity crunchreaches crisis“North America’s surface transportationinfrastructure – our networkof railways, ports, and highways– is headed for a capacitycrunch,” said Rob Ritchie, presidentand CEO of Canadian PacificRailway, speaking at the CPRConnections 2004 Regional andShort Line Conference inSeptember.The transportation network has notkept pace with economic growth,he said. “Far too many outdatedregulations and policies continue tosap the strength of our railways andother parts of our transportationsector.” He called for regulatory andtaxation changes that would allowrailways to increase their pace ofinvestment in their networks.China’s rapid manufacturing growthis a major culprit in the capacitycrisis. According to a report in TheGlobe and Mail, port bottlenecks inVancouver and backlogs on theintermodal rail network are causingdelays of 10 days or longer for trainshipments to other parts ofCanada, while growing truck volumesand inefficiencies atCanada–U.S. border crossings arecosting millions of dollars. Importsfrom China have been rising steadilyover the years. In the first sevenmonths of 2004 alone, they soaredalmost 25 per cent, to $12.6 billion,compared with a year earlier,according to Statistics Canada. Theonly good news is that someCanadian suppliers may be able tocash in on the offshore backlogwith promises of fast delivery.Intermodal trafficup, but trailerloadings downLoadings of intermodal freight –containers and trailers hauled onflat cars – for the second quarter ofthis year rose 11.9% to a recordhigh 7.1 million tonnes, accordingto Statistics Canada. Trailers, however,appear to be on a downwardtrend compared with containers,accounting for only 5.7% of intermodaltraffic for the period, downfrom the peak of 7.8% in the firstquarter of 2003.Intermodal loadings in June fell2.5% to 2.3 million tonnes,accounting for 9.6% of total tonnage.Similarly, loadings in Julywere slightly more than 2.3 milliontonnes and accounted for 9.7% ofthe total tonnage loaded. On ayear-to-date basis, intermodalloadings increased 3.1% to 15.6million tonnes.FALL 2004 - VOLUME NO. 317