Un-dated
Perfecting the Scheduled Railroad at Canadian Pacific Railway
The Problem
Canadian Pacific is a fully integrated and technologically advanced Class I railway providing rail and intermodal freight
transportation services in Canada and the Eastern and Midwestern U.S. North American freight railroads rely heavily on
"tonnage-based dispatching", in which trains are only run when enough traffic has accumulated. Although this
approach attempts to minimize the total number of trains needed by maximizing their size, in practice it disrupts the efficient
utilization of crews, locomotives, and equipment. It also yields inconsistent transit times, making delivery service less reliable at
a time when shippers need better service to compete in their own markets. Finding a better alternative required operations research
expertise in handling the many details and constraints of scheduling.
The O.R. Solution
Canadian Pacific turned to the concept of operating every aspect of the railway on a fixed schedule. Working with MultiModal Applied
Systems, the railway developed an operating plan that was tightly matched to traffic patterns.
- The O.R. team's model optimized the routing and classification plan for each railcar movement and determined which trains to
run;
- Team members tailored the plan for recurring daily fluctuations in car volumes and developed contingency plans for high and
low-volume days;
- Shortest-path-based algorithms within MultiModal's unique MultiRail application identified opportunities to reduce
equipment miles, train-miles, and train-hours, thereby reducing operating cost and transit time, and
improving service reliability for shippers.
The Value
The change in railway operating philosophy and practice has reduced Canadian Pacific's cost base by more than $285 million, made
service more reliable, and increased profitability.
Robert Ritchie, CPR President and CEO, said, "We have developed the best scheduled railway model in the industry... The result has
been huge gains in efficiency and productivity and better service for our customers. Our job, however, is never over... I learned that
an awful lot of opportunities still exist for us in the area of revenue management and contract negotiations. We're continuously
looking for new ways to improve, and operations research and management science are going to be crucial to our success in the
future".
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