Canadian Pacific looks to regain carload traffic

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CALGARY, Alberta — Canadian Pacific admits that its merchandise network — the smallest among the major Class I systems — is not what it could be.

“It’s an area where arguably we haven’t had a lot of success … or as much success as we’d like,” Chief Marketing Officer John Brooks said during the railroad’s Oct. 4 investor day.

Now CP has a renewed focus on carload traffic that aims to regain business lost to trucks and rival Canadian National.

“CP is back and ready to compete in a major way in the merchandise space,” says Coby Bullard, vice president of sales and marketing for merchandise traffic.

The railroad’s merchandise trains are running at about 75 percent of capacity, on average, meaning that CP has the ability to tack 2,200 feet of cars onto the typical manifest train.

“That’s huge,” Bullard says.

CP has a three-pronged plan of attack: Gain additional business from existing customers, maximize use of freight cars by gaining minimum volume commitments, and extend the reach of the merchandise network through an emphasis on shortline partnerships and transload centers.

Many rail-served customers also rely on trucks. CP handles only 50 percent of the volume moving out of one of the Rayonier lumber mills it serves, for example, and the story’s the same at many other customers with rail spurs.

“We want to make sure we’re getting all of the rail-capable business that we can get,” Bullard says.

CP successfully used this approach with Shell Canada energy traffic moving from the Alberta Industrial Heartland near Edmonton to Vancouver, British Columbia.

Shell has grown to a $100 million customer, up from $20 million a couple of years ago, thanks to CP’s Edmonton-Vancouver “energy train,” Brooks says.

In January, the train was running only at 36 percent of capacity. Thanks to growth with Shell and three new contracts with other companies that ship LPG, refined products, and chemicals, the train is now at 75 percent of capacity. And CP expects it to run full sometime in the next six months as additional contracts are signed.

The service is at least 48 hours faster than CN’s longer route, CP officials say, allowing shippers to move the same amount of volume with fewer freight cars.

Transload centers are another growth opportunity, Bullard says. CP this year landed a contract to handle Georgia-Pacific products via a transload center in Hamilton, Ontario, that serves the Toronto market.

CP expects to make announcements soon on deals to convert the dormant Expressway intermodal terminals in Toronto and Montreal to logistics centers. “We see tremendous opportunities in both of them,” Bullard says.

CP pulled the plug on the Expressway TOFC short-haul intermodal service on June 1.

As CP revamps its carload business, shortlines are critical: Some 59 percent of CP’s merchandise traffic originates or terminates on a shortline. And shortline-related traffic is up 23 percent this year, Bullard says.

Last month, CP held its first shortline conference in a decade, with representatives from 39 railroads joining CP officials in Calgary.

CP has a new agreement with the Indiana Rail Road to reach an Indianapolis transload center, Bullard says.

Bullard joined CP in December 2017 after working in the trucking industry and at BNSF Railway.

He brings a family connection to merchandise traffic that dates to 1883 in Bullard, Texas, 90 miles east of Dallas. The family convinced the Kansas & Gulf — which went on to become the Cotton Belt — to locate its depot in the country store that the Bullards operated.

“Those trains brought in the goods that our family sold in our store,” Bullard says. “And those trains carried away the fruits and vegetables and all the products that were generated in the area from the local farmers.”

It’s a legacy Bullard says he carries with him on the job every day.
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