Rail president pegs shipping trends

May 29, 2009
by Lisa Wichmann

Asset utilization continues to be a struggle for rail shippers and operators, according to Cliff Mackay, president and CEO of the Ottawa-based Railway Association of Canada (RAC). He was speaking at the annual Supply Chain & Logistics Canada conference in Toronto recently.

“There’s been a lot of pushing and shoving about that, and [it’s] an area where…the shipping community and the rail community need to have a lot more conversations with each other about.”

The economic downturn is exacerbating the situation. One shipper in the audience told Mackay her rail shipments are being delayed due to lower volumes going into the Ford plant down the street. The rail company decides to postpone the train’s departure. Mackay responded by saying those issues of ‘big shipper’ versus ‘little shipper’ shouldn’t be happening.

Aside from schedule changes, rail companies are cutting staff in response to the downturn. Layoffs number nearly 4,000 so far, all of which were operating crew personnel.

“With the notable exception of grain, everything is negative, and some of it is dramatically negative,” Mackay said. “We’re down about 20 per cent…We’re heavily preoccupied with cash conservation and matching our existing capacity to the traffic we see at the moment.”

But conserving money is a tough endeavor in the rail business, which is the most capital- intensive industry in North America, he added. “If you don’t pay attention to the basics, all of a sudden you’re doing 15 miles per hour instead of 25.”

As to the future, Mackay said rail companies are seeing a ‘glimmer of light’ economically, but the situation is still dire. In the long-term, he’s optimistic about the role technology will play.

Positive train control, for instance, is already employed in Europe, and was mandated by the US government for installation on certain rail shipments by 2015. The technology involves remote tracking and control of the train’s braking, speed and other functions.

“There are big hurdles to overcome,” Mackay said. “First of all, it’s got to be a North American-wdie standard…It’s being worked on as we speak…What it will mean is we will be able to quite dramatically expand the existing capacity in the system,” he added. “You’re going to be operating trains faster, at shorter intervals…it will improve the asset utilization for existing capacity.”