CN Emphasizing On-Time Performance

A Class 1 railroad that helped pioneer the precision scheduled railroading operating model is emphasizing the “scheduled” component of the model.

Speaking at an investor’s conference last week, Canadian National CEO Tracy Robinson said the Montreal-based carrier has committed to operating trains on time even if they have not met their tonnage goals, Trains magazine reported on its website.

During the conference Robinson said what typically happens is managers wait until multiple trains arrive at a yard where an outbound train is being made up.

Rather than send the outbound train out on time at 7,000 feet, they wait until enough inbound cars have arrived to send the train out at 10,000 feet.

“No one knows when that train is leaving across the network,” Robinson said. “No one knows when it’s going to get to the next yard. What you’ve just done is you’ve optimized for that terminal, for your yard, and for that train.”

Robinson said putting the focus on on-time service provides shippers a more consistent level of service.

“And so you’re going to get more asset velocity, more consistent utilization of power and crews, and more predictable service,” she said.

CN officials say that in recent weeks on-time train departures have improved to 87 percent compared with 79 percent last year. On-time arrivals are up to 73 percent compared with 61 percent last year.

CN Chief Operating Officer Ed Harris said the CN operating philosophy is not precision scheduled railroading but simply scheduled railroading.

“Tracy and I never talk about PSR,” he said. “That’s not in our vocabulary. I don’t even acknowledge PSR.”

He said CN’s scheduled railroading model is based on rail car velocity, safety and commitment to shippers.

“I don’t talk about precision scheduled anything,” Harris said. “I talk about car velocity. I talk about train speed. I talk about customer service. I talk about the spotting plan. I talk about the scheduled service.”

Plane Lands on CN Tracks in Flint

A single-engine plane made on emergency landing on a Canadian National mainline in Flint, Michigan, on Thursday morning, Trains magazine reported on its website.

The aircraft’s pilot declared an emergency shortly after taking off from Bishop International Airport, which the former Grand Trunk Western route skirts on the airport’s north edge.

The pilot was the sale occupant of the aircraft and was not injured.

The forced landing occurred near Linden and Bristol roads on the CN Flint Subdivision.  The aircraft was a Piper PA-28.

The incident is being investigated by the Federal Aviation Administration and the National Transportation Safety Board.

15 Cars of CN Train Derail in Pennsylvania

News reports indicate that 15 cars of a Canadian National train derailed north of Pittsburgh on Wednesday on the former Bessemer & Lake Erie.

No hazardous materials were involved in the derailment, which occurred about 8 a.m. on Wednesday in Brady Township in Butler County.

The derailment site is about 40 miles north of Pittsburgh. Workers were still cleaning up the derailment site on Wednesday night.

Carries Continue to Dispute STB Small Rates Rule

Four Class 1 railroads are continuing their efforts to get the U.S. Surface Transportation Board to modify the terms of an arbitration program regulators established to settle small rate cases.

CSX, Norfolk Southern, Union Pacific and the U.S. companies owned by Canadian National asked the STB to allow a carrier to file its opt-in notice of the program at any time.

The arbitration program being established by the STB requires all Class 1 carriers to agree to participate or the program won’t be in effect.

Regulators have given the carriers until Feb. 23 to agree or disagree to join. The carriers have been calling for additional time before they must make their decision.

The same carriers had last December asked the STB to stay implementation of the arbitration program but regulators rejected that request without prejudice on Jan. 24.

The STB established two rules regarding small rate cases in a rule making proceeding that was finished late last year.

Aside from the arbitration program, the STB established a final offer rate review mechanism for settling small rate disputes.

At the time the STB called the new rules an effort to streamline the process for shippers and railroads to resolve small rate disputes.

If all seven Class 1 railroads agree to join the arbitration program they will be exempt from the final offer rate review process for five years.

The carriers petitioning the STB in the latest filing contend the STB’s decision to set an opt-in deadline is unlawful because it fails “to give notice of its intent to impose this draconian measure; departed from contrary agency precedent without explanation; failed to provide legally sufficient justification for its action; and contradicted its own reasoning in the Final Rule that carriers needed to know the contents of the arbitration program before making a five-year commitment to it.”

Wolverines Disrupted by Derailment, Equipment Issues

A Canadian National derailment in Detroit has disrupted Amtrak’s Wolverine Service.

The derailment occurred late Tuesday night in southwest Detroit when eight cars derailed, including one that was reported to be leaning over a bridge.

The derailed cars were empty and no injuries occurred as a result of the derailment.

However, Amtrak cited unexplained “equipment issues” for cancelling trains on Wednesday and Thursday in the Chicago-Detroit (Pontiac) corridor.

The CN derailment led to Train 351 from Chicago being terminated in Detroit rather than continuing on to Pontiac.

On Wednesday, Train 352 to Chicago was cancelled. Today (Feb. 2) No. 350, the early morning departure to Chicago, and Train 355, the late afternoon departure to Pontiac, are cancelled.

Amtrak is providing alternative bus transportation to passengers affected by the cancellations.

CN Operating Income Up 22% in 2022

Canadian National said on Tuesday that its operating income in 2022 rose 22 percent to $6.8 billion.

CN officials said revenue increased 18 percent, to $17 billion while adjusted earnings per share rose by 25 percent.

The operating ratio was 60 percent, a 1.2-point improvement over 2021, or 59.9 percent on an adjusted basis.

Traffic volume for 2022 was up 1 percent when measured by revenue ton-miles but was down 0.5 percent when measured by carloads.

During the fourth quarter, operating income rose 22 percent, to 1.9 billion with revenue increasing 21 percent, to $4.5 billion.

Earnings per share was up 24 percent, or 23 percent on an adjusted basis. The operating ratio improved 0.4 points to 57.9 percent.

Quarterly volume was up 6 percent on a revenue ton-mile basis, or 2.4 percent on a carload basis.

In looking ahead CN CEO Tracy Robinson said the railroad faces an uncertain outlook for 2023 due to a potential economic downturn.

Speaking during a financial call with investors, Robinson expects freight volume to outperform North American industrial production this year but see a decline of 0.5 percent due to a slowing economy.

CN executives expect bulk traffic such as grain and coal to remain strong through the first half of this year and thus provide a cushion against declines in other traffic.

CN, NS CEOs Defend Scheduled Railroading

CEOs of Norfolk Southern and Canadian National sought to make the case for why precision scheduled railroading is best for shippers and railroads during the recent Midwest Association of Rail Shippers.

As reported by Trains magazine on its website, CN CEO Tracy Robinson argued that scheduled railroading is working for shippers and the railroad alike.

NS CEO Alan Shaw reiterated a point he made last year that the Atlanta-based Class 1 carrier is seeking to refine its scheduled railroading practices to move away from the cycle of reducing its workforce during economic downturns as has been the industry standard.

Robinson described PSR as basic railroading that provides consistent service. The key to that is providing on-time service.

“We are moving meaningfully faster, and we are dwelling less,” Robinson said.

“So we’re learning as we go, we’re relearning as we go, and we’re going to remain focused on scheduled railroading.”

During his remarks Shaw said NS is no longer trying to “time the market” in its decisions about crew staffing and assets.

“Because frankly, that’s where we’ve gotten in trouble in the past,” he said. “The economy moves up, and we don’t have enough crews, or enough intermodal chassis, or enough locomotives.”

Shaw said NS is taking a longer view by seeking to determine what it needs to get to where it wants to be in terms of operating efficiency three to five years from now and pouring resources into achieving that.

He attributed the service issues NS has experienced in the past couple years to trying to move up and down with the economic cycle.

Reacting to the current economic cycle has been useful in achieving short-term profitability but Shaw said that has come at the cost of lost revenue opportunity in the longer term.

“We took a look at this, and look at the revenue opportunity you lose, when you have a poor service product,” Shaw said. “And we’re also talking about the additional costs. I don’t think people realize a faster railroad is a less expensive railroad. One that’s running on time, one that’s running on schedule, is less expensive than one that’s running off schedule.”

Additional information about what Robinson and Shaw had to say can be read at https://www.trains.com/trn/news-reviews/news-wire/cn-ns-ceos-tell-shippers-service-will-continue-to-improve/

CSX, CN Seek to Block New STB Rate Rule

CSX, Canadian National and Union Pacific have gone to court to try to block implementation of a U.S. Surface Transportation Board rule seeking to streamline the settlement of small rate disputes with shippers.

CSX filed suit in the U.S. Court of Appeals for the 11^th Circuit challenging an arbitration process that the STB plans to launch as part of the new rules, which the agency said are designed to make it easier, faster and less expensive for shippers to initiate cases seeking up to $4 million in relief over two years.

The rules were adopted in December as part of a new process called Final Offer Rate Review. The rule drew applause from shippers but was attacked by the Association of American Railroads as unworkable.

UP filed a similar lawsuit in the appeals court for the Eighth Circuit seeking to block the STB rule. CN’s challenge of the rule was filed in the Seventh Circuit appeals court by its U.S. subsidiaries, Illinois Central and Grand Trunk Western.

A sticking point in the small rate case rules is the arbitration component. STB wants all Class 1 railroads to agree to binding arbitration while the railroads have called for voluntary arbitration.

The AAR has argued that the Final Offer Rate Review process exceeds the agency’s legal regulatory authority.

AAR s position is that the effect of the new rule is that regulators will choose and impose the rate proposed by the shipper or the rate offered by the railroad.

The trade association also has been critical of the requirement that all Class 1 railroads must agree to participate.

The STB for its part has sought to frame the new rule as striking a balance between competing interests.

CN, CSX Make Sustainability List

CSX and Canadian National have been named to the Dow Jones Sustainability Indices of North America.

The DJSI is made up of companies that achieve high scores on S&P Global’s Corporate Sustainability Assessment.

The index is based on public and nonpublic data submitted by participating companies with  more than 10,000 publicly traded companies invited to participate in the S&P Global CSA.

CN Appoints New Chief Operating Officer

Canadian National has replaced its chief operating officer.

The Montreal-based Class I railroad has named Edmond “Ed” Harris as executive vice president and chief operating officer effective immediately. He succeeds Rob Reilly.

Harris has been a consultant to CN since April 2022. He previously served as executive vice president of operations at CSX (2018 to 2020) and chief operations officer at Canadian Pacific (2010 to 2012.

Harris also held executive positions at Illinois Central and CN, including serving as CN’s executive vice president of operations.

In a news release, CN said Harris in a consulting capacity “worked closely with the entire CN operations leadership team on the company’s operational and service excellence initiatives, as the team delivered meaningful rail operations performance and customer service improvements.”