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Intermodal Report: You Must Take the e-Train
To succeed as a railroad today, its no longer good enough to merely provide reliable, safe and cost-effective transportation. Now, a successful railroad must also become an electronically connected and superior link in an entire supply chain of manufacturers, retailers and transportation services.
CNs objective is to do that better than any other North American railroad. The natural flexibility of intermodal service plays a large role in our plan to be the transportation link of choice for those supply chain partnerships as they aggressively expand and improve their competitive positions in North America and around the globe.
CNs overall strategy is to make it easy to do business with us and to simplify our processes. We see e-business as an important step in becoming a leader in customer service.
Our wholehearted embrace of this electronic revolution has vaulted us into a new era of precision, service-driven transportation. It is the cornerstone of CNs plan to provide a reliable and effective service that will place us far ahead of the rest of the railroad pack. A service provided with no surprises and no excuses that is fully open and transparent to our customers. A transportation system against which all others will be judged.
Among the most important arrows in CNs electronic quiver is our Service Reliability Strategy (SRS) system. SRS is pardon the pun the engine that drives our trains
and our operational planning, customer service and virtually every other aspect of the one product which we exist to produce: service.
SRS is at the heart of our unique service plan, which has reshaped CN into a scheduled railroad. This has given customers the ability to better plan inventory levels. Our service plan gives each car, trailer and container its own trip plan that fits into that schedule. And it gives CN the ability to monitor and control shipments. It electronically provides timely and accurate information to our customer sales and support staff, who then provide customers with on-going information about their shipments.
CN has developed an electronic product catalogue, which provides our sales force with the details of our service offering, encompassing more than 3,200 specific routings. Our service plan gives us the power to monitor scheduled arrival times for shipments against the service commitments. It drives operational decision making and allows us to take steps to correct any service slippage and assure on-time delivery.
It is largely through even more advanced e-business systems that we expect to capitalize on the rapid intermodal growth we have triggered with this precise and realistic approach to meeting increasingly stringent customer service standards. We have chosen a supply chain planning and management infrastructure developed by i2 Technologies, Inc. We view it as a major advance in the development of an e-business platform that will allow us to compete even more effectively with the trucking industry.
Under this latest e-business initiative, i2s planning engines will help CN to improve our intermodal products and better manage our intermodal capacity and assets. Using the Internet, it will allow us to better match customer orders with that capacity. Use of the Internet for access is fully in line with our policy of making CN user friendly. It is, in a sense, a response to the constant reminders from our president and chief and executive office, Paul Tellier, that part of the railroad industrys problem has always been a desire to complicate things. This approach is fully in line with his logical drive to simplify business dealings with our current and potential customers.
With this easy-to-use i2 technology, CN will be faster responding to our intermodal customers service needs. We will make it easier for them to do business with us. The customer benefits are large: fast, flexible, responsive and reliable service at competitive prices.
Electronic accessibility is also one of the keys to attracting smaller shippers who have not considered rail a viable transportation option, either because of perceived carrier unreliability or the assumption that relatively low volume or frequency make it impractical. An aggressive pursuit of this new business will place great emphasis on our e-business capabilities.
Over the next several months, we will be phasing in an e-business plan that will improve car tracing and tracking, e-billing, and sales force automation. This three-pronged initiative will integrate the data resources of all CN departments so that customers will receive the same information no matter who their point of contact is at CN. And we will be doing all of this in a user-friendly manner that will provide customers with clear, quick and easy-to-use processes to trace a shipment or make a payment.
But the best tools are useless if they simply surround a product which fails to meet customer needs. That brings us back to my comment that CN seeks to become the railroad against which all others will be judged. We believe we are delivering daily on a commitment to service which is unique.
The results of this thrust are particularly apparent at CN Intermodal. Executive Vice-President and Chief Operating Officer E. Hunter Harrisons plan for a premium intermodal service demonstrates this. Drawing together all the marketing, operational and support groups within CN, this plan has slashed nearly 24 hours off our intermodal schedules between Toronto and our network of modern terminals in Winnipeg, Saskatoon, Edmonton and Vancouver.
The timing couldnt be better for this service. Fuel prices are on the rise, putting pressure on trucking costs. And, right now, the rail competition isnt in a position to match CNs time in transit. Its a recipe for giving customers the premium service they want, at a premium price thats less costly than trucking.
We have been working with many of our customers over the last year to help us understand the emerging e-markets and the impact they will have on their businesses. It is all but impossible to predict the winners and losers as the new dot com business models take hold. However, you can be sure that reliable, cost-effective physical distribution will be mandatory to provide e-fulfillment to the new e-business reality. Our customers have come to expect seamless integration of new technology and business process from us and we will continue to meet that challenge.
From CNs point of view, the benefits are just as great. It will attract more traffic and revenue, which is the whole objective of a for-profit, investor-owned business as capital-intensive as railroading. It will boost asset and capacity utilization. Even though CN is already the leader in North American railroad efficiency, with an operating ratio of 68.6 percent, this will help us move up to the next plateau.
In my dual positions at CN, I am excited by the benefits I see flowing from this blending of e-business, supply chain management and intermodal service. Its a combination that delivers value to customers, consumers and railroaders. Getting our customers on board the e-train is yet another example of how we at CN are, indeed, making a great railroad greater.