On the Right Track: New CPR boss says rail back in shape to take freight from trucks
CALGARY — Canadian Pacific Railway’s new president and CEO says company improvements will enable the carrier to finally give truckers some real competition for freight.
Fred Green said skyrocketing fuel prices, higher costs for trucking equipment, and a lack of qualified truck drivers, may translate into more demand rail freight services.
According to Canadian Press, Green, who was the company’s chief operating officer before taking over for the retired Robert Ritchie, predicts five to eight percent growth this year, largely on the major track expansion completed during 2005.
As Today’s Trucking reported last year, CPR completed a $160-million program to increase train capacity on the railway’s network between the Prairies and the Port of Vancouver. An 8,500- foot-long track was built at CPR’s Coquitlam yard near Vancouver for trains of Canadian bulk commodities destined for ocean-going ships calling in the Lower Mainland.
The result, says Green, is a 12 percent capacity boost. “As we started to use that capacity, we were able to run the railway much more efficiently,” he said, adding that other operational enhancements have the potential to hike capacity even that further.
Truckers have heard this all before, however. Despite promised improvements over the years, the rail industry hasn’t been able to polish intermodal efficiency to the extent needed to lure freight away from trucks.
Not long ago, the director of the Canadian International Freight Forwarders Association blamed much of the port congestion on both Canadian coasts on the major railways. He said that railroads are operating with a “19th century mentality” by not being able to clear immense traffic and container buildup, or provide enough rolling capacity.
All that is quickly changing, insists Green. Last year was the busiest and most successful year in CPR’s 125-year history, with a profit record of $543 million, up 32 percent from 2004, he says.
The company has been ramping up to move more bulk commodities and resources to the Port of Vancouver for Asian markets that are hungry for Canada’s raw materials. It is also moving increasing volumes of finished goods, shipped in containers arriving from Asia, to consumers in the U.S. and Canada.
Potash has been the gold for rail lately. Although shipments of potash and coal have been softer in recent months, Green said he sees good opportunities in the medium term.
Green also says train speeds were up 17 percent in the first quarter of 2006, which creates more capacity without physical investment.
CP Rail executives continue to insist on a more level playing field with trucking, arguing that truckers are given a competitive advantage because they access publicly-funded highways while rail pay property tax on right-of-ways. Officials recently met with Prime Minister Stephen Harper to express those age-old concerns, reports CP.
Former CEO Ritchie says he thinks the industry is “on the threshold of an important change in the competitive landscape.”
“I believe that we are starting to see recognition by those driving public policy that not only does rail pay its own way, but it can also relieve a significant burden from the highway network, returning it to the motorist who pays for the vast majority of this infrastructure.”
Of course,those arguments have long been dismissed by the trucking industry. Canadian Trucking Alliance CEO David Bradley routinely counters that truckers pay their fair share of the highways through fuel taxes — of which only a miniscule portion actually gets funneled back into road improvements.
Furthermore, Bradley rightly points out that trucking is the only transport mode whose equipment and fuel usage is regulated in Canada. By law, 2007 model truck engines will virtually eliminate pollutants such as particulate matter and nitrous oxide.
Instead, it’s the rail industry which has lobbied that capital cost allowance rates for rail equipment be accelerated ahead of trucking on environmental grounds, despite the fact, as Bradley points out, rail carriers “persistently oppose “regulations that would limit their locomotives to less harmful levels of smog-causing emissions.”
Bradley has said many times in the past that rail’s problems over the last 20 years have little to do with the claim of being stuck behind the regulatory eight-ball. “These (CCA) rates have no impact on the choices made by shippers,” he wrote in response to a Railway Association of Canada op-ed last year. “Yet it is losing market share to trucking. The reasons have to do with the quality of service and the ability of trucking to satisfy the 21st-century demands of freight.”
— with files from Canadian Press
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