How CPR defines scheduled railroading: an application of MultiRail service design software that helps manage shipments has enabled Canadian pacific railway to become a highly scheduled carrier and a more aggressive marketer, especially for truck cargo

Railway Age, Sept, 2003 by Frank Malone

Forced by necessity as one of the smallest Class I railroads and the most dependent on connections with the others, Canadian Pacific Railway has embraced model-driven, shipment-focused operations planning to become, by all appearances, one of the largest users of scheduled railroading processes.

The use of shipment-management science and operations research led to a 2002 cost-base reduction calculated by CPR at more than C$500 million. It also has supported diversion of traffic from trucks to both carload and intermodal trains, notably through "co-located" distribution facilities in new partnerships with customers and greatly improved alliances with connecting railroads. For first-half 2003, CPR reported higher volumes for five of seven commodity groups.

The railway now relies on an Integrated Operating Plan (IOP) that moves all trains on schedules regardless of tonnage. Blocking loads and aggregating blocks to move as a single unit bypassing yards, the IOP encompasses schedules for: (1) empty cars to fill customers' orders; (2) loaded cars in dock-to-dock movements; (3) trains in all main line corridors; (4) workload at yards and intermodal terminals; and (5) track and locomotive maintenance.

The key IOP model is the MultiRail service design software tool developed by MultiModal Applied Systems, a company involved to varying degrees with all major railroads. Shipment-blocking and block-aggregating route paths designed through MultiRail algorithms form the foundation of an IOP balancing act between optimal CPR trainload requirements and customer carload delivery needs (sidebar, p. 74). CPR and MultiModal won a Franz Edelman award from INFORMS"' (Institute for Operations Research and the Management Sciences) for their efforts. "Does that mean our trains are on time, all the time, or more often than other Class I's?" CPR said in accepting the award. "No. But it does mean we've put in place excellent tools to schedule every, aspect of our operations to meet our service commitments."

Unique linkage with MultiRail

CPR's routings are related to analysis components unique to the CPR/MultiRail partnership. First, the IOP was modeled within the MultiRail application using the railway's automated forecasting system. MultiRail has direct access to detailed CPR traffic volumes that reflect seasonal impacts as well as marketing projects. Thus, traffic data drives the IOP design process.

Second, the design process includes an "automatic feed" hard link between MultiRail analysis and CPR execution that allows quiche and efficient conversion of plan into reality. This involves a "Service Excellence" suite of operating systems. The real-time IOP undergoes quarterly updating and weekly reviews for quick reaction to changing business conditions and opportunities, in a context of continuous improvement.

That feature proved itself doing last year's labor problems at U.S. West Coast ports. Retaining much of the container business diverted through Vancouver, CPR reported a 10% increase in intermodal business for first-half 2003.

CPR officers call their MultiRail relationship "integrated," while MultiRail sees it as "institutionalized." Rob Ritchie, CPR president and CEO, simply sees the result, the IOP, as "the best schedule-based example in the rail industry." He prescribed MultiRail for CPR after it had helped to revive the railway's struggling subsidiary, in eastern Canada, the St. Lawrence & Hudson, a largely merchandise- and intermodal-oriented regional carrier. "We needed the deliverability and the origination strengths of eastern Canada, so we needed to make that segment work," he says. Profitable again, the St. L&H has since been folded back into the CPR system.

As for CPR at large, Ritchie says: "We were struggling with relatively high costs and low profitability, all in the face of rising customer service requirements. Not sure that our traditional operating strategies were up to these challenges, I decided that we needed a new game plan." (See p. 4 for more background.) The MultiRail -supported IOP took over in May 1999.

Carl Van Dyke, MultiModal president and CEO, adds: "I can say unequivocally that no other user of MultiRail has made such effective Use of the tool, or has so thoroughly adopted the tenets of the scheduled railway."

The Edelman award recognized that CPR was doing much more than running trains on a scheduled basis. Neal Foot, senior vice president-operations, says the CPR approach considers everything that affects a customer's shipment dock-to-dock, based on how these aspects are hooked together in the service execution system with the MultiRail product to do the basic design of the IOP. "It's much more of a process-oriented approach involving product rather than service design," says Foot. "This is completely different from our former approach, which held trains until we had enough tonnage to fill them to capacity." That led to poor asset utilization and inconsistent service.

Scientific vs. "gut feel"