Weighing the options

Railway Age, Dec, 2004

In combination with a careful sculpting of the fleet, terminals, and infrastructure, all of these incremental operations/IT solutions have been aimed at three key objectives: maximizing train yield, squeezing more capacity out of the existing plant, and improving service. This is best exemplified by the MaxStax strategy for intermodal, which accounted for 27% of 2003 revenues, the largest of the seven commodity groups.

Says Green, "When we introduced MaxStax in 2003, we characterized it as a series of improvements that would transform a good intermodal business into a great one. In addition to acquiring the right assets, it's about introducing new ways of doing things to attack capacity and profitability issues simultaneously."

MaxStax has included selected siding extensions, implementation of distributed power to maintain maximum train length no matter the temperature, acquisition of sufficient motive power to ensure reliability, and equipment changes to produce a homogeneous fleet of doublestack, standalone well cars for domestic and international traffic. Refinements to the terminals and the IT programs used to manage them are also part of CPR's equation.

Green points out that MaxStax has given the CPR the "double bang" of boosting productivity and freeing up additional slot capacity. "We are well on our way to achieving our performance targets of a 28% increase in containers per train and a 16% reduction in train starts. MaxStax has taken intermodal slot utilization from percentages in the mid-70s to the 90s; our objective is 98%."

Another factor in favor of CPR's approach, says Foot, is its cross-functionality, bringing marketing, ops, mechanical, engineering, and other departments together to devise collective solutions. In close quarters, they have come to more fully appreciate the role each plays. Foot says the use of a monthly scorecard has become a tool for measuring and refining all of the tools within the IOP, forcing each department to ask and understand interrelated questions: "Did the number of train starts match our projections? Was the car density per train correct? How many late clears on work blocks? The resulting figures become each department's tools for self-discipline. It's one thing for the leadership to demand that the bar be raised, but it's another when the teams are doing it, using the monthly scorecard to push it up themselves."

CPR executives go to great lengths to emphasize the importance of this teamwork. And they say it has been applied in even broader ways to lengthen and strengthen the railway's market reach. Ritchie--who has a reputation for being refreshingly outspoken on industry matters--has long argued in favor of alliances and partnerships as the creative, non-gut-wrenching alternative to more mergers, which he says would make the business asymmetrical and ultimately unsustainable. The CPR has put this theory into high gear.

The first flourish of this cooperative approach was the creation of the Pacific Can-Am Corridor to boost traffic moving from CPR points in western Canada and the Midwest to UP-served points in the Pacific Northwest, California, the Southwest, and Mexico. Jointly designed, marketed, and operated, it offers shippers one-stop shopping in all three countries. Joint CPR/UP teams manage the corridor; through trains between Calgary and Hinkle, Ore., using pooled motive power, provide the bridge over which this international traffic flows.