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Strategic Partners in the Supply Chain

Managing in a World of Change How Railways are Delivering Value

by Fred Green

In the early 1990s, at the tail end of considerable consolidation, the North American rail industry peered into its crystal ball and saw what it had to do to stay relevant for the 21st century. The industry transformed and rebuilt itself. The change was nothing short of a metamorphosis. And as a result, the North American rail freight system is today the best, most efficient and most modern in the world.

North American railways invested a total of $6.6 billion in their businesses in 2002 and they are going to continue to invest at that sort of level for the foreseeable future. Railways on average reinvest 25 per cent of revenues annually, and our customers benefit considerably from the productivity gains that we have achieved through this aggressive investment program.

Rail is an essential part of our customers’ supply chain. But we are not just moving coal, sulphur and potash. Today’s railways deliver just-in-time consumer goods for most major retailers. Virtually every automobile in Western Canada is delivered by train, except for the few miles from the rail yard to the car dealership. We are looking at this as part of a holistic solution for our clients.

Railway companies are building alliances. Alliances create joint operating and service efficiencies, and make the rail industry more competitive with trucks. Alliances say a lot about the inner workings of the railway industry today – about its increased flexibility and how open it is to new approaches to business development and service improvement.

The railway industry today fully understands the supply chain management and logistics industry. We also understand that it is not just about our little piece of the puzzle. It is about holistic solutions. Alliances are part of the railway industry’s metamorphosis. We are morphing to deliver solutions that the marketplace needs.

Meanwhile, the rail industry’s innovation work has taken many forms. Everyone of my associates in the major Class 1 railways has a series of initiatives under way. Some of these initiatives will blossom and some may not. Some will morph into other new initiatives. Arguably, you could say that these initiatives are the rail industry’s R&D and that tells you how serious we are about supply chain management and logistics.

Some of CPR’s initiatives are focused on transload, supply chain management, co-location, intermodal and Expressway.

Our transload product, Connetix™, is a network of logistics and commercial product-handling experts and facilities delivering dock-to-dock transportation solutions. Connetix™ is not simply the old transload. It is working with customers and saying ‘what are your problems?’ and ‘what are the solutions you need?’ If you want, you can call this logistics. Or you can call it simple supply chain management. The point is the client has a problem and we can help them solve it.

CPR has a business called Tronicus, which provides customers supply chain solutions for their inventory, transportation, facility, information and technology requirements. Tronicus services range from logistics re-engineering to supply chain management outsourcing.

In the area of co-location, major retailers such as Sears Canada and Canadian Tire, as well as the large freight forwarder Consolidated Fastfrate, have built regional distribution facilities next to our intermodal terminals.

Through Expressway, CPR partners with motor carriers to transport their trailers in the Montreal-Toronto-Detroit corridor. By using Expressway, truck companies and private fleet owners can save on tractor investments, and driver, fuel and maintenance expenses, and avoid lost time on congested roads. The Internet booking and simplified electronic check-in process provide excellent examples of how CPR understands the need for data accuracy, speed and the importance of being easy to do business with.

Shippers who haven’t thought about what more rail can do for them might be missing opportunities – opportunities to improve their efficiency, to work with railways as partners, to gain access to North American Markets from Canada to the U.S. to Mexico, to get access to overseas markets by connecting them with the major ports.

I challenge shippers to think of rail as a strategic partner.

The rail industry is stronger than it has ever been. We are hungry to work together. We are determined to expand our market place and our market reach, as well as the services we provide that marketplace.

Historically, the best way for our industry to grow has been to figure out how to help our customers to grow.

I invite shippers to leverage what our industry already has, challenge us to meet your unfulfilled needs and steer us to morph again so that we remain a vital component of your logistics and supply chain world.