In order to grow, railroads must collaborate with customers, CN CEO says

NEW YORK — Canadian National CEO Tracy Robinson says she understands the skepticism surrounding key questions about the industry: Can railroads grow? Can they maintain service levels as freight volume ebbs and flows? Can they be resilient in a fast-changing world? And can they attract the talent necessary to tackle the challenges of the future?

“In the face of this skepticism … I would tell you there’s a tremendous amount of good things that are happening in this industry,” Robinson told the RailTrends conference last week.

One of them is CN bouncing back from sluggish service and operations. When Robinson became CEO in 2022, she had CN take a back-to-basics approach. “We went back to Scheduled Railroading,” she says. Have trains depart on time, arrive on time, and have cars make their connections as planned.

“We do that well. Now this drives velocity, which gives us the opportunity to do more with less. And our commercial team sells into this plan. We want business that belongs on our network. That means that we can service it at a level that our customers expect,” Robinson says.

“We’ve got a mantra: We make the plan, we run the plan, we sell the plan. There’s only one plan and it’s sacred. Everybody understands the plan and, as importantly, they understand what their role in the plan is,” she says.

“We’re faster, we’re more consistent, we’re better at servicing our customers, and our scheduled operating plan is proving more resilient,” Robinson says. “And in this business, whether we like it or not, we need to be resilient.”

The railroad has recovered quickly from disruptions like the wildfires in Jasper, Alberta, and the work stoppage this summer.

“When something’s off the rails, when there’s an issue or a climate event, we are like a 5-year-old soccer team. We’re all on the ball,” Robinson says.

CN also needs to operate safely every day. Efficient, resilient, safe operations, and good customer service are keys to unlocking growth, she says.

The railway’s new chief commercial officer, Remi Lalonde, is a former CN forest products customer who brings a shipper’s perspective to CN, Robinson says. His mandate: Have discussions with customers to learn how they can grow their business. “Because if they grow, we grow,” Robinson says.

She cited partnerships that CN has formed with its customers at locations across its network, from British Columbia and Iowa to Tennessee and Ontario.

A new fuel distribution center at MacMillan Yard in the Toronto area is a prime example. “It came about when one of our commercial vice presidents actually had two customers together in the same room,” Robinson says.

When they were talking about how much money was going to have to be invested in the pipeline network in Eastern Canada, they came up with a less expensive option: A rail-truck transload. One of the customers built a fuel facility at MacMillan Yard. A first phase opened in May that can handle 20,000 carloads a year; a second phase is under construction.

“This is the kind of growth that we want — something that makes sense for our customers. It solves their problems,” Robinson says.

“We’re going to have to be nimble. This is how we grow and this is how we grow in a way that’s not just about the rise in the fall of the economy,” she says. “This is about sustainable growth options that proceed regardless of where we are in the economic cycle.”

CN also is placing a greater emphasis on interline service with Class I and short line railroads. Railroads need to compete with each other, she says, but they also need to cooperate to fully unleash their growth potential. “We’re all aligned on growth,” Robinson says of CN and the other Class I railroads.

CN has beefed up its interline team to develop services like Falcon Premium, which reaches Mexico via Union Pacific and Ferromex. It also has renewed its interest in its 150 short line connections, and is collaborating with them on commercial opportunities and more seamless interchange. Last year, CN’s interline business with shortlines was up 10% even as the railway’s overall volume declined by 5%.

“We are proving that we can grow and that we can do it sustainably and thoughtfully,” Robinson says.

Growing over the longer term, she says, will require reimagining the railroad business to keep pace with change – and attracting the people who can make it happen. “If we’re frank with each other, we would acknowledge that as an industry traditionally we haven’t been known for attracting different ways of thinking,” Robinson says.

She also encouraged railroaders to push back against skepticism and negative rhetoric about the industry.

“We need to get out there, all of us, and set the record straight on what this industry is doing, what we do well, why we do it, why we’re good at doing it, and our imagination of what we’re going to build for the future of this industry and this continent,” Robinson says. “So I’m going to leave you with one thought because we all look into the future and it’s a big part of all of our jobs. It’s up to each of us to not only tell the story of our industry, but to shape it, collaborate, innovate, lead with safety. Now together we will continue to grow to serve our customers and to create an industry that’s even better for the next generation. We’ll be successful in five or 10 years from now if we’re still sitting here saying, ‘boy, it’s a good time to be a railroad.’ ”

RailTrends is sponsored by independent analyst Anthony B. Hatch and trade publication Progressive Railroading.