CP 9127 undergoing inspection in a diesel shop.

15 November 2011

Canadian Pacific Better Prepared for Harsh Winter

Calgary Alberta - Canadian Pacific Railway Ltd. says it's more prepared to face adverse winter weather along its tracks after spending millions upgrading rails and secondary routes.
 
The Calgary-based company, which operates the country's second-largest rail network with extensive operations in the United States as well, was hit especially hard last winter by weather-related delays.
 
"Another La Nina year is in the forecast but we are much better prepared heading into this season," Mike Franczak, executive vice-president of operations, told investors at a transportation and aerospace conference in Toronto.
 
Heavy snowfalls and avalanches shut down a key corridor through the Canadian Rockies to West Coast ports last winter, slowing down shipments of potash, coal, and other goods for export. Then in the spring, flooding stymied shipments in Western Canada and the U.S. Midwest.
 
Its main north-south corridor to Chicago was out of service for 23 days because of flooding along the Souris River, which flows through Saskatchewan, Manitoba, and North Dakota.
 
"Last winter and spring were exceptionally difficult," Mr. Franczak said. "But we have taken steps to fortify our operation with contingent resources."
 
CP's rail yards are in good shape, its cars are moving well, and tracks are clear, which has improved the miles-per-car-day metric that measures how fast a train can haul shipments, Mr. Franczak said.
 
"Together these metrics are indicative of a fluid railway and one that is well prepared for winter," he said.
 
CP says it will have 61 of 91 new train cars it has ordered running by the end of this year, which should improve efficiency even in blustery weather. The rest will be operational by 2012, it added.
 
The replaced trains will be kept in warm storage so they will be available if required in a weather-related emergency.
 
In preparation for the coming winter, the railway is adding staff, who will be located strategically at critical points in the rail network.
 
It will also increase the number of snow plows, switch heaters, and snow fencing along some tracks.
 
Investments in new sidings and rail beds earlier this year have given some of its lines greater capacity to operate as secondary routes if something happens on the main line, Mr. Franczak said.
 
"We've effectively upgraded key areas of our network, secondary main lines, to enable handling of more traffic should it be called for in the case of severe winter or flooding event," he said.
 
"So we're in much, much, better shape heading into this winter in that regard."
 
The company has also been looking to boost efficiency by running longer trains, among other measures.
 
However, it is also facing pressure from a new significant shareholder, New York activist hedge fund Pershing Square Capital Management, which holds a 12.2 percent stake in the railway.
 
In a U.S. regulatory filing last month, the fund said it believes CP shares are undervalued, and that it wants to discuss with the company various ways to bolster its operational and financial performance.
 
CP's chief financial officer Kathryn McQuade would not say whether the company is in talks with Pershing, reiterating that the company does not comment on specific discussions with investors.
 
"I'm not going to speculate in terms of what our new shareholder has in mind," she said.
 
CP transports coal, fertilizer, grain, automobiles, consumer goods, and other materials across its vast North American rail network. As such, the railway is often thought of as a bellwether for the state of the overall economy.
 
Sunny Freeman.