LONG BEACH, California — Canadian Pacific Railway’s recent expansion into the Ohio Valley and its productivity enhancements designed to increase network capacity signal CP’s intentions to grow its international intermodal freight, President and CEO Keith Creel said Monday.
“We will look at niche markets where it makes sense,” Creel told the 18th Annual TPM Conference in Long Beach. CP’s game plan is to use technology to enhance productivity so it can expand intermodal business in Canada and the United States without overwhelming its ability to handle the new business, he said.
CP seeks to increase its intermodal presence in Canada and the United States even as CP and Canadian National Railway have been challenged since last autumn by a double-digit surge in cargo at the Pacific Coast ports of Vancouver and Prince Rupert. While on-dock container dwell times are improving, Creel said he expects further improvements in the second quarter when a rail project to expand the capacity at Global Container Terminals is completed. “We need that new rail capacity,” he said.
CP is counting on growth in its international intermodal business to lift the railroad’s overall freight volumes. Intermodal represents 21 percent of CP’s freight volume, and within that category port-generated freight is 38 percent of CP’s total intermodal business, according to its 2017 annual report.
An immediate boost in intermodal volume will start April 1, when CP increases its share of the intermodal business of the Japanese carriers NYK Line, MOL, and “K” Line — of the Ocean Network — from 33 percent to 85 percent after the business shifted from CN. One way CP is increasing its capacity in order to handle higher freight volumes is through investments in facilities and assets. CP in 2017 invested $1.4 billion in upgrading its network, facilities, locomotive power, and railcars, and is budgeting $1.6 billion in capital spend this year. Creel described the investments as “strategic,” with short-term growth expected to contribute to long-term profitability.
CP is also expanding its capacity through the use of technology and improved processes. “It’s about turning assets and creating value,” Creel said. CP’s automated gate technology reduces the time that truckers spend at intermodal rail facilities. “They resolve problems before they get to the gate so they spend only 20 to 30 seconds at the gate,” he said. With a driver shortage in North America, reduced wait times increase truck capacity so drivers get more turns each day.
The announcement in October that CP is expanding its intermodal service from Vancouver to the Ohio Valley will open up markets such as Columbus, Cincinnati, and Dayton for retail imports in a region that has clusters of distribution facilities. Jonathan Wahba, CP’s vice president sales and marketing for intermodal and automotive, told JOC.com the Ohio Valley, which is rich in agriculture, such as soybeans, also offers opportunities for match-backs of export commodities to Asia. CP intends to reduce transportation costs by generating round-trip hauls to benefit customers as well as CP, he said.
The match-back potential is further enhanced by CP’s partnership with Bluegrass, a farm consortium in Ohio. Bluegrass offers transloading options where bulk commodities are loaded into empty marine containers that are generated by the retail distribution facilities in the region. The export containers are carried by rail to Vancouver for shipment to Asia.
CP’s investments in the cold chain, which include last year’s purchase of 41 gensets and the purchase in 2018 of 400 53-foot refrigerated containers, and CP’s recently unveiled TempPro product, will enhance its ability to carry frozen and chilled import and export products. The technology, which is designed to ensure the integrity of reefer products, will help customers meet federal food-safety requirements in the United States and Canada, Wahba said.
Contact Bill Mongelluzzo at email@example.com and follow him on Twitter:@billmongelluzzo.