Innovation, supply chain collaboration drive improved customer service

Market-based innovation, increased productivity, and greater supply chain collaboration are the keys to a more customer-focused and effective rail industry.

CN is convinced this is the right business agenda. As such, we are working hard to raise our highly successful precision railroading model—the foundation of our railway’s significant gains in productivity and efficiency—to the next level by focusing on supply chain initiatives and service excellence in ways that help our customers grow and compete more effectively in markets at home and abroad.

Among CN’s earliest measures in this regard was an initiative last year to enter supply chain collaboration agreements with all of the major east coast and west coast ports our railway serves, as well as level of service agreements with some of their key container terminal operators.

These agreements established clear frameworks for CN, the ports, and port stakeholders to measure and monitor the performance of participants against established benchmarks. They also set up processes to communicate proactively on service-related matters and to resolve any issues between CN, the ports, and port supply chain participants on a commercial basis.

CN also has introduced a supply chain approach to managing the flow of coal from mines to ships at west coast terminals. This helps CN improve service to its coal customers and grow their volumes to Asian markets. An end-to-end view of the coal supply chain, along with a focus on closer customer collaboration, improves coal logistics, which in turn allows coal producers to take advantage of sale opportunities.

In another customer-focused innovation, CN introduced its Scheduled Grain Service last year, a program that has significantly increased the reliability of our grain service. CN applied precision scheduling to grain car deliveries, setting up operating protocols so that cars arrive at specific elevators at scheduled times on scheduled days every week. This plan has resulted in a fundamental improvement in system reliability, which translates into predictable service to the grain industry. An increase in scheduled reliability means a better export program for Canadian farmers.

CN continued its innovation in 2011 with the introduction of our Scheduled Potash Service, which is focused on the comprehensive management of the supply chain in collaboration with customers in Western Canada. By scheduling potash service, CN has reduced car cycle times for privately owned hoppers from mine to destination and return to mine for loading by approximately 25%—a huge gain in efficiency for both CN and our customers. This improvement helps our potash customers get to market faster and move more bulk product. CN has also benefited from the additional capacity provided by these efficiency gains.

CN hasn’t stopped there. By listening closely to our merchandise customers and working to better meet their needs, CN has elevated its car-ordering system to the next level of precision. CN developed information technology that allows customers to specify car placements by time of day, in addition to day of the week. What’s more, CN designed more stringent car-order fulfillment targets that allow us to measure the success of our car placement by time of day. We believe such “first-mile/last-mile” initiatives respond effectively to customer needs at origin and destination and will help all stakeholders obtain an end-to-end view of service quality.

CN’s customer-focused initiatives—and those of the rail industry as a whole—will only succeed in a commercial environment that drives market solutions, encourages innovation, and builds increased supply chain collaboration.

Robust rail regulatory regimes already exist in the United States and Canada today. While some parties are advocating increased rail regulation, it is important to realize that any change to rail regulation would likely undermine the positive momentum of innovation, stifle collaboration, and hurt the rail industry’s ability to invest in service and infrastructure improvements.

Railways are crucial to the economies of the U.S. and Canada and their competitiveness in global markets. These economies simply cannot afford the risk of additional, burdensome, and unwarranted rail regulation.

The relaxation of rail regulation in both the U.S. and Canada since the 1980s has been a great success. It helped to revive the rail industry, improve service, generate competitive rates for customers, and encouraged railroads to step up investment in their networks. That is why CN believes the governments in both countries should stay the course in support of regulatory regimes that foster service innovation and are driven by commercial solutions.