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Canadian Pacific Outlines New Vision For The Future

Stocks in this article: CP

Railway on track to achieve mid-60s OR for 2016

NEW YORK, Dec. 4, 2012 /PRNewswire/ - Canadian Pacific (TSX:CP)(NYSE:CP) President and CEO E. Hunter Harrison today outlined CP's go-forward plan for change that will greatly improve service, increase the railway's efficiency, lower cost and grow the business.

"Momentum is building at Canadian Pacific and the organization is driving to a culture of intense focus on operations.  Service will be what drives this organization, by providing a premium, reliable product offering through a lower cost operation," Harrison said.  "We have initiated a rapid change agenda and have made tremendous progress in my first 160 days, and we are only getting started."

Progress Already Underway Harrison provided various examples of steps taken over the past five months highlighting CP's evolution to a more competitive railway, including the following:

  • New executive leadership team now in place including a new Senior Operations lead team with a mandate for centralized planning and decentralized execution, to eliminate bureaucracy and have service decisions made faster and closer to the customer;
  • Revamped intermodal and merchandise train service resulting in faster transit times for customers -  example of new intermodal services connecting Vancouver to Chicago or Toronto;
  • Closure of hump-switching yards in Toronto, Winnipeg, Calgary and Chicago - producing significant cost savings and more efficient operating practices;
  • Closure of intermodal terminals in Milwaukee, Obico ( Toronto), and Schiller Park ( Chicago) - reducing footprint and operating expenses while also facilitating efficient operating practices and reduced end-to-end transit times;
  • Improved train service and network velocity resulting in the need for 195 fewer locomotives and 3,200 fewer leased rail cars - current stored, year-to-date lease returned and declared surplus locomotive units total 460.

Harrison continued, "We are hearing feedback from customers that they are seeing and liking the results.  The reduced number of assets and the decentralized decision making within the organization will allow us to appropriately size to any changes in market conditions. I have always maintained that by focusing on the best possible service, along with appropriate cost containment, the operating ratio will take care of itself. CP is no different; we already see the service and related bottom line benefits of our early actions. It's an exciting time to be a part of this great franchise."

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