CN responds to STB's rail-service concerns

CN President and Chief Executive Officer JJ Ruest has informed the Surface Transportation Board (STB) of the railroad's plan to speed up its service in response to recent shipper complaints.

Earlier this month, the STB asked all Class Is operating in the United States to submit their service plans in response to shippers' complaints about a deterioration in rail service. Ruest, who earlier this month was named interim president and CEO after the sudden resignation of Luc Jobin, is the first Class I executive to respond to the STB.

In a March 22 letter to the STB, Ruest said his first and top priority as president and CEO is to quickly improve the railroad's service.

"We have apologized publicly for not meeting the service expectations of our customers, nor our own high standards for service excellence," Ruest wrote. "I can assure you that the entire CN team has a sense of pride and urgency to regain the confidence of all our customers and stakeholders."

CN has taken steps to relieve congestion, particularly in the Chicago-to-Winnipeg corridor across Wisconsin and Minnesota, he said. He also mentioned he will be in Washington, D.C., in June and would like to discuss the railroad's service improvement plan with the STB at that time.

Meanwhile, the railroad's service improvement steps have included:
• a $500 million agreement to purchase 200 new locomotives and a lease of 130 locomotives to expand capacity;
• an aggressive train-crew hiring plan. In 2017, the railroad hired 3,400 employees for positions across the company to replace attrition and accommodate growth, including 400 in the Wisconsin-to-Minnesota corridor;
• focusing on improving train speed and network velocity, and reducing port dwell times and ground counts at intermodal ports, including reducing inland terminal carter time, particularly in Chicago and Memphis; and
• one-on-one direct communication with customers, as well as providing "state of the network" updates.

Additionally, CN in the coming weeks will begin deploying a CA$3.2 billion capital expenditure program to address capacity constraints. The program is the largest in CN's history and a nearly 20 percent increase over last year's investment, Ruest wrote.

Those capital expenditures will include a new siding project at the international border in Ranier, Minnesota, and double track in northern Wisconsin outside Superior, he said. Moreover, the railroad is adding yard capacity in Blair, Wisconsin, to support CN's "rapidly increasing frac sand business."

Other double track and siding extension projects in Western Canada will aid the railroad in building resiliency and capacity in that corridor, Ruest's letter stated.

Ruest also responded to service complaints the STB received from the National Grain and Feed Association and the Alliance of Automobile Manufacturers.

Regarding the grain association's concerns, Ruest noted that CN accounts for about 4 percent of grain movements by rail in the United States.

"Unexpected flooding has impacted important parts of the supply chain, and we are working to try to service short term spot business to provide some relief for those affected by this challenge," he wrote. "The congestion in and around Memphis has mainly been attributed to crew availability constraints and, as we continue to add new personnel, this situation will improve."

In addressing the automobile group's concerns, Ruest noted that CN's "greatest challenge with finished automobiles has been receiving our cars back from others through the industry pool."

"We have taken steps to improve cycle times to Michigan," he said, adding that to meet customer needs in the South "we acquired nearly 900 new multilevel [rail] cars in 2017."