Consistent growth will preserve CPR's independence, Ritchie says (4/15/2002)
4/15/2022On April 12, Canadian Pacific Railway CEO Rob Ritchie presented the Class I's growth plan in Calgary, Alberta, at the railroad's first shareholders meeting since 1971 — the last time the Class I stood as an independent company.
And growth is exactly what CPR is looking for to prevent the railroad from becoming the second former Canadian Pacific Ltd. subsidiary to lose its newfound independence since the Oct. 3 spin off. (PanCanadian Energy recently merged with Alberta Energy Co. to create EnCana Corp., an independent oil exploring and producing company.)
"As an industry and as a company, we will grow by improving both our products and our services," said Ritchie, according to a prepared statement. "We will grow by improving the ease in which customers can do business with the CPR … [and] we will grow by introducing innovative rail products, such as Expressway."
CPR in 1999 introduced Expressway, a roll-on/roll-off trailer-on-train service designed to enable shippers to bypass congested roads. The service last year grew 200 percent, and the railroad expects Expressway to continue growing between Montreal, Toronto and Windsor/Detroit — at a somewhat slower pace but with a larger customer base.
The Class I also plans to attack more carload business: "With improved train service, with our collection and distribution facilities (all 121), with our improved car supply and with a reinvigorated sales force, we can begin to turn the tide of markets lost to trucks in this area," said Ritchie.
Long-term partnerships with other Class Is, too, would enable CPR to grow by developing more interline products.
"Strategic partnering means consulting on commodities, and designing blocking strategies and train services that bypass yards," said Ritchie. "It [also] means pricing and servicing customers across multiple carriers with the same degree of attention as we apply to customers who are uniquely on our own railway."
Other growth targets include exploring ways to leverage CPR's brand name and skill sets, and annually increasing yield-per-unit by 1 percent.
"Taking all of these initiatives together, coupled with modest prospects for economic recovery, our objective is to propel quality top-line growth for the company to 4 percent a year," said Ritchie. "But … we will not take our eyes off the ball on the safety, service and productivity fronts — these are the horses that have brought us to where we are today, and I do not plan on unhitching them."
Ritchie believes that by fostering top-line growth and increasing operational efficiencies, CPR will reach its operating-ratio goal of 73 by 2004.
"For shareholders, these numbers mean we will be earning an operating income of approximately $1 billion, almost 20 percent above today's level," he said. "This increase should be reflected in our share price going forward."
Source: Progressive Railroading Daily News