By Brian Dunn
CN defines itself as a true supply chain enabler; with the supply chain mindset embedded in all that they do, starting simply with the way that they define service. “In general, we try to define service as close as possible to the way a customer defines it,” explained Jean-Jacques Ruest, Executive Vice-President and Chief Marketing Officer. “In Intermodal, which represents about 20 percent of our business, we don’t just look at our part, but we look at total transportation time. After all, that’s what the customer is looking at and buying, from the time the goods are shipped to the time they are actually received. In some cases, we’re a big part of that journey, and in some cases we’re not.
“When a shipping line uses a CN-served port as their first port of call, it saves time for the customer. Why? Because we collaborate and work closely with terminal operators to reduce dwell time, and therefore total transportation time. We do this primarily by focusing on “glowing” boxes, which are containers that have a dwell time of longer than 72 hours. Together, with our partners at the ports, we work together to help solve problems like these glowing boxes, ultimately making the supply chain more robust.
CN has service level agreements with the terminal operators to ensure that they are all working efficiently and collaboratively. “Whenever these agreements come up for renewal, we work jointly to tighten the KPIs, key performance indicators, to improve the overall level of service,” explains Keith Reardon, CN Vice-President of Intermodal. As a result, the level of trust and collaboration with all terminal operators has improved.
One of the main challenges facing all rail operators is how to grow the business internally now that mergers or acquisitions are less a part of the equation than they were in the past. “One solution is to offer new services and products to attract more business on the existing rail network, and that is exactly what CN is doing,” said Mr. Ruest.
Trans-border reefer service
“One of our focus areas is our reefer services, which we are expanding to reach across the border. That’s an initiative that Keith’s team is working on right now.” reinforces Ruest
CN is currently bulking up by adding refrigerated assets to serve this cross-border market, including one hundred 53-foot reefer containers, gensets that can power up to 16 refrigerated containers, and clip-ons which are portable generators attached to single reefer containers for smaller loads. “With clip-ons, we now have the flexibility to go into smaller markets and get our customer’s product moving in and out quickly,” Mr. Reardon noted. “We can even remotely monitor gensets from our desks in Toronto, which our customers love. We are also investing in the next level of technology that will allow our customers and our terminals to have remote access to that same information. By listening to our customers, we are investing in improving and expanding our refrigerated service because after all if it’s a growth business for them and it’s a growth business for us.”
OnDeck transportation trays and Flexitanks
Another big initiative at CN is the introduction of OnDeck transportation trays for steel and construction materials, allowing CN to offer an alternative for customers who traditionally use trucks, said Mr. Ruest. “Quite a lot of what’s moving on roads today is moving on flatbed trucks. So now we have our own flatbeds, in the form of these trays, which are easily loaded by sliding it right into a container with a regular forklift.” The end result is 50,000 pounds of steel that can be loaded into a container in under a minute. “That has also helped create more diversity for the back-haul,” Mr. Reardon pointed out. “Previously, if products were transported on a flatbed on the outbound trip, we might have an empty flatbed on the return trip. However, with OnDeck transportation trays, we now have a container that you can bring anything back in. It’s a true innovation for our customers.”
Another innovation which is currently in the testing phase at CN is the use of Flexitanks to move non-hazardous liquids by container. Essentially this new product is a reusable leak-proof bladder made of flexible material than can easily be loaded in dry 20-ft containers, and with a thumbs up from the ocean liner, they can be used to ship product overseas. “We don’t buy these bags, but we allow customers to use them in our containers on our network as long as they’re the ones we’ve tested and approved,” said Mr. Ruest, who added that one Flexitank can handle a payload of up to 55,000 lbs.
“The bottom line is that we’re continuing to innovate and collaborate with all current and potential customers that want to enjoy the economic benefits of moving by rail versus by truck,” added Mr. Reardon. “We have an open mind and we’re innovating with them. We’ve spent a lot of time and effort over the last year on new products and services that we probably wouldn’t have done three or four years ago.”
Investments in infrastructure
CN also invests heavily each year improving existing infrastructure and upgrading its fleet. Last year, that investment was close to $1.75 billion, or roughly 18 per cent of revenue, an amount that is expected to be spent again this year.
“We handle a lot of products for retailers and similar customers who move temperature sensitive goods like cheese, beer, wine, juice or canned goods. To make sure we accommodate them we’ve upgraded our fleet so that now about 40 per cent have heating units in them to protect products from freezing while in transit,” said Mr. Reardon.
There has been significant expansion in CN’s overseas business and coal exporting activities which has resulted in much greater use of their coastal lines. Specifically, the rail line connecting Edmonton and Prince Rupert has seen increasing demand as a direct result of the port having the most efficient connection to Asia. To be able to best serve their customers, the company has spent over $150 million since 2004 upgrading and expanding sidings on this line.
“We’ve also recently expanded our Intermodal and transload facility in Prince George where we transload forest products into containers for export via Prince Rupert. We also now have a locomotive reliability centre right there in Prince George to do repairs where all the traffic is happening versus bringing it back to Edmonton. This helps to reduce our costs and allows us to provide a higher level of customer satisfaction,” Mr. Reardon added.
New Intermodal terminals
On January 10th, CN opened its new Intermodal terminal at its also new $200 million Logistics Park in Calgary, which is one of the fastest growing regional markets in North America. The new terminal has 30 per cent more capacity and reduced truck turnaround times, thanks to four automated in-gates and three automated out-gates. The logistics park can accommodate more than 2.5 million sq. ft. of warehousing and distribution facilities, including a rail-to-truck transload operation and Autoport facility for the regions’ finished vehicles market. The park “will help CN to reduce transportation costs for our customers through highly efficient materials handling, transportation and distribution processes and thus will help them grow their businesses,” said Mr. Ruest.
In addition, CN is expanding its intermodal terminals in Toronto, Edmonton and Detroit, three important growth markets according to Mr. Ruest. And, like Calgary, new terminals are being created in Indianapolis, Ind. and Joliet, Il. This summer, CN will have a single line Intermodal service from Prince Rupert and Vancouver all the way to Indianapolis. The Joliet Intermodal terminal, also scheduled to open this summer, will serve the Southwest area of Chicago growth, while CN’s existing intermodal terminal in Harvey, Il. will continue to serve the Chicago.
“We hope that the new terminals in both Joliet and Indianapolis, as well as the expansion in Detroit will, over time, increase the new traffic coming to CN via the Canadian West Coast ports,” said Mr. Ruest. In addition, CN lines up with Kansas City Southern Railway in Jackson, Miss. to reach the Mexico market.
Helping bring Canada to the forefront of international trade
The company also has a growing network of agents and employees in Asia for freight forwarding and business development. “We have this network of people out there who typically work with a Chinese, or Korean or Japanese company to help them understand Canadian geography, the CN network, the ports we serve and the supply chain,” explained Mr. Ruest. “ Basically, we’re there as a go-between to convince them there’s a good opportunity for them to invest in a potash mine, a coal mine or an iron ore mine, and we’ll help them get the project off the ground and meet port representatives, and ultimately try to help them make it happen.”
When the Chinese were buying a lot of Canadian lumber, more than they do now, the company encouraged them to use a CN-friendly shipping line to ship from B.C. to China, and won over the lumber companies to use the CN supply chain in Vancouver. “It’s a bit of match-making to put a supply chain together to make Canadian lumber more attractive than U.S. Pacific Northwest lumber or New Zealand lumber,” said Mr. Ruest.
In the last 12 months, CN has added a presence in Vietnam and India to get those markets to consider using the ports of Halifax and Montreal instead of, or in addition to U.S. East Coast ports.
“Rather than the Ports of Halifax and Montreal competing with one another, they came in as a team to represent the Eastern Canadian region to compete with the Port of New York or the Port of New Jersey, to get some of the U.S. Midwest traffic. As you can see, CN is becoming a true supply chain enabler; embedding this supply chain mindset in everything we do, from beginning to the end of the container’s journey.” Mr. Ruest said.