25 March 2009
CP Feels the Pinch, Can't Predict Turnaround
North American railways are increasingly feeling the pain
of the recession and erosion of global trade, prompting a leading executive to caution that it's hard to predict the timing of an
economic recovery.
Freight carriers across the continent saw cargo shipments such as lumber, metallic ores, and autos decline an average of 16.1 percent
in the first 10 weeks of this year, compared with the same period last year.
Intermodal business for consumer goods and other items fell 15.2 percent.
Kathryn McQuade, executive vice-president and chief financial officer at Canadian Pacific Railway Ltd., told
institutional investors in Toronto yesterday that the statistics tell a story of tough times.
"Like everyone in this room, I am disheartened by the depth and breadth of the current recession," she said at National Bank
Financial Inc.'s annual transport conference.
Calgary-based CP has parked 350 locomotives and stored 15,000 railcars during the slump, and also temporarily laid off
1,600 workers, she said. At the end of last year, CP had 15,783 employees.
So far this year, CP's export and import volumes have fallen 20 percent at the Port of Vancouver and Port of Montreal in the
intermodal category - goods that are transferred in large containers between trains and ships.
Traffic within North America at CP has fallen 12 percent.
Ms. McQuade said she sees growth opportunities in the longer term as CP reduces costs.
"I believe CP will emerge stronger, more efficient, and with an even better network. And that gives me reason for optimism,"
she said, noting that grain is among the bright spots in Western Canada.
CP and Montreal-based Canadian National Railway Co. have seen their carloads decrease an average of 18.7 percent in the
first 10 weeks of this year, but grain is off just 0.9 percent.
CP expects to have many employees return to work if freight volumes increase later this year, she said.
But "the longer this recession lasts, I think everything gets more difficult. We just don't have much visibility," Ms.
McQuade said. "It really would be premature for me to start thinking about what we'd be looking at for 2010."
"There's been dramatic change out there in the marketplace. Continually, we're seeing ups and downs out there," said Gordon
Trafton, CN senior vice-president of its southern region.
CP chief executive officer Fred Green, meanwhile, has told employees that the railway is immediately suspending contributions to the
employee share purchase plan.
William Brehl, president of the Teamsters Canada Rail Conference's maintenance of way employees division, said the contributions were
a "nice gesture" while they lasted.
CP estimates reaping savings of $12-million annually from halting the payments.
Mr. Brehl said he hopes the savings will be "earmarked for infrastructure" and not to diverted into compensation for
management and directors.
Canadian Pacific (CP) Close: $39.59, up 4 cents.
|
|
