Canadian Pacific aims to pick off traffic from Canadian National

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CP CEO Keith Creel
Canadian Pacific
NEW YORK — Canadian Pacific looks at rival Canadian National’s congestion issues and sees opportunity.

CN hauled record tonnage in the third quarter and was caught short of crews and power amid the unexpected traffic surge. CN has stepped up hiring, added locomotives, and advanced capacity projects. But CN executives don’t expect performance metrics to bounce back to normal levels until the middle of 2018.

CP, meanwhile, has been trying to regain traffic it lost to CN during the E. Hunter Harrison era in Calgary, Alberta. And executives say CP has plenty of capacity.

Will CN’s growing pains help CP land more business?

“It has accelerated discussions with customers,” CP Chief Marketing Officer John Brooks told Trains News Wire at the RailTrends 2017 conference last week.

CP has taken on some short-term traffic from CN here and there, Brooks says. But the railroad is looking to develop long-term opportunities like the deal it reached with Hyundai and Kia for finished vehicle traffic that will shift from CN to CP in 2020.

Last week, CP CEO Keith Creel said he expects CP will gain a greater share of Japanese container lines’ Vancouver traffic.

CN handles 70 percent of the port’s container traffic after CP lost international contracts in 2013, 2014, and 2016.

Shippers don’t want to put all of their eggs in one basket, Creel says.

“I’m a believer in balance,” he told the Credit Suisse Industrials Conference last week.

CP currently handles about a third of the Vancouver traffic from the three-line consortium of Japanese steamship companies that now operate as one. CP has the K Line business, but CN handles MOL and NYK. The single K Line-MOL-NYK contract comes up for bid in 2018.

“I personally believe based on the value of our service offering, the capacity and the reliability we have in the network, we are going to see a shift,” Creel says.

CP will try to exploit its shorter route between Vancouver and Chicago.

“The lanes we’re shortest in and we have reliable service in, we should win in,” Creel says, especially considering that CP and CN use the same Precision Scheduled Railroading operating model Harrison implemented on both systems.

CP says its Vancouver-Detroit intermodal service, launched in August after being dormant for several years, is doing well. The service, which rides CP trains 142/143 via CSX between Chicago and Detroit, is 48 hours faster than competing rail routings.

“It’s fast and it can’t be touched,” Creel says. “The Western carriers can’t touch it, and our Canadian counterpart can’t touch it.”

CP is hoping for similar results from its Vancouver-Ohio Valley service, which was announced in October in conjunction with two Genesee & Wyoming regional railroads east of Chicago. The trains won’t start rolling until sometime in the first quarter of 2018, CP spokesman Andy Cummings says.

The service will run two or three days per week initially, then more frequently as volume grows, Brooks tells Trains. Growing the Ohio Valley traffic will hinge on CP’s ability to win more container business at the Port of Vancouver, he says.

CP also hopes to land contracts from chemical customers next year, along with other types of merchandise traffic.

CP recognizes it faces a tough competitor in CN, which has long been the industry’s growth leader and is widely regarded as the best railroad in North America.

“Again, that’s a very capable railroad and they’ve got a great franchise...They certainly understand how to run the business,” says Creel, who came to CP in 2013 from CN. “Are they having some growing pains? Yes.”

CN intends to hang on to the market share it has gained from CP, Chief Marketing Officer Jean-Jacques Ruest told Trains at the RailTrends 2017 conference.

Ruest likens CP’s share-shift talk to baseball teams’ pre-game chatter. You still have to win the game, he says, and competition is alive and well.

CN built its international intermodal business on supply-chain collaboration with the ports and steamship lines, Ruest notes. That streamlines transfer of containers from ship to dock to rail, he says, and CN works aggressively to find backhaul loads for export.

The RailTrends 2017 conference is sponsored by analyst Anthony B. Hatch of ABH Consulting and industry trade publication Progressive Railroading.

NEWSWIRETrains News Wire

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