Evidence of meeting #120 for Agriculture and Agri-Food in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was capacity.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Sean Finn  Executive Vice President Corporate Services and Chief Legal Officer, Canadian National Railway Company
Michael Cory  Chief Operating Officer and Executive Vice-President, Canadian National Railway Company
Joan Hardy  Vice-President, Sales and Marketing, Grain and Fertilizers, Canadian Pacific Railway
Steve Pratte  Policy Manager, Canadian Canola Growers Association
David Bishop  Executive Committee Member, Board of Directors, Grain Growers of Canada
Bev Shipley  Lambton—Kent—Middlesex, CPC

9:10 a.m.

Liberal

Lloyd Longfield Liberal Guelph, ON

Right.

9:10 a.m.

Chief Operating Officer and Executive Vice-President, Canadian National Railway Company

Michael Cory

All parts of the supply chain have to add and create capacity. We feel that we're doing our part in terms of the rail infrastructure, the people and the locomotives. It's not a matter of a shortage. It's what the entire supply chain actually can handle.

9:10 a.m.

Liberal

Lloyd Longfield Liberal Guelph, ON

Okay.

Ms. Hardy, I see your hand up.

9:10 a.m.

Vice-President, Sales and Marketing, Grain and Fertilizers, Canadian Pacific Railway

Joan Hardy

Yes, thank you. I just wanted to make a comment on that.

In terms of the comment about being behind in the supply chain of grain, the harvest in our CP network started at the beginning of September. The harvest in the north was a bit more delayed but we have been moving very strongly since the second week of September. The fact that the harvest was slightly delayed doesn't necessarily mean that we're behind. What it means is that grain will move longer in a season. The markets will continue to be there.

9:10 a.m.

Liberal

Lloyd Longfield Liberal Guelph, ON

Okay.

9:10 a.m.

Vice-President, Sales and Marketing, Grain and Fertilizers, Canadian Pacific Railway

Joan Hardy

The capacity, as Mike says, is limited in many ways by the terminal availability and shipping and receiving as well. We're all going to be operating to the maximum of the supply chain that will be sort of in line with the grain as it is being presented.

9:10 a.m.

Liberal

Lloyd Longfield Liberal Guelph, ON

Okay. Thank you.

Just quickly, maybe this doesn't apply to our winter season, but there's the deepwater port in Churchill and the opportunity it presents. Is there any opportunity there in terms of spreading out the shipments throughout the course of the year through Churchill?

I see some smiles.

9:10 a.m.

Chief Operating Officer and Executive Vice-President, Canadian National Railway Company

Michael Cory

I think it's a little early. We railways don't dictate necessarily where cars go. We take an order from a shipper and we move it to where they direct us to move it to.

9:10 a.m.

Liberal

The Chair Liberal Pat Finnigan

Thank you, Mr. Cory and Mr. Longfield.

Mr. MacGregor, you have six minutes.

9:10 a.m.

NDP

Alistair MacGregor NDP Cowichan—Malahat—Langford, BC

Thank you very much, Chair.

This is for CN rail. You mentioned the $3.5-billion capital investment that's going on. How many years is that spread over?

9:10 a.m.

Chief Operating Officer and Executive Vice-President, Canadian National Railway Company

Michael Cory

It's one year.

9:10 a.m.

NDP

Alistair MacGregor NDP Cowichan—Malahat—Langford, BC

Just one year...? Okay.

With the forecast for an increased demand for rail services and the fact that, as Mr. Longfield mentioned, we have this target of reaching 75 billion dollars' worth of exports by 2025, do you feel that the capacity building you're going through is closing the gap, or are we simply swimming in parallel with the demand?

9:10 a.m.

Chief Operating Officer and Executive Vice-President, Canadian National Railway Company

Michael Cory

Our view on investment is such that we're prepared to make the investments, as we showed this year. We look at business volumes and longevity. We look at so many things that we are prepared to spend the money to continue to do, whether it's to close the gap or to improve the overall reliability of the service and the supply chains that we're in. That will continue for us.

9:15 a.m.

Executive Vice President Corporate Services and Chief Legal Officer, Canadian National Railway Company

Sean Finn

Maybe just to add to that, what is not well understood is that in the last 10 years, there's been $21 billion of capital investment over an eight-year period, with $3.5 billion this year. I'll come back to a very important number. For every dollar we earn, 25¢ goes back into the property and capital improvements, both for safety purposes and for overall customer service.

We don't see that coming down. In the years to come, the runway may be a bit lower, but $3.5 billion is a record amount for us and it's outside the norm for the North American rail industry, which is between 16% and 17% on the average. We're a bit of an outlier, but we did so because we realize it's important to invest due to our plans in Canada to export such great amounts of product going forward.

9:15 a.m.

Chief Operating Officer and Executive Vice-President, Canadian National Railway Company

Michael Cory

We see the growth opportunities. We'll always be aligned with whatever there is to grow and provide a better service.

9:15 a.m.

NDP

Alistair MacGregor NDP Cowichan—Malahat—Langford, BC

A big part of this capacity building, of course, is human resources. You've mentioned the number of hires that you have made.

A big issue over recent years has been fatigue of people operating the locomotives. I can only imagine that, through the winter season when they are under strain to move these volumes, this is a recurring issue. I was wondering if I could hear from both CN and CP on this. To what extent has fatigue played a role in delays of shipments? Can you talk about some of the measures that you're putting in place to address it?

9:15 a.m.

Chief Operating Officer and Executive Vice-President, Canadian National Railway Company

Michael Cory

Do you want me to start, Joan?

9:15 a.m.

Vice-President, Sales and Marketing, Grain and Fertilizers, Canadian Pacific Railway

Joan Hardy

Sure. Go ahead, Mike.

November 27th, 2018 / 9:15 a.m.

Chief Operating Officer and Executive Vice-President, Canadian National Railway Company

Michael Cory

I can't put a number on how many trains or what kind of commodity has been delayed as a result. However, it is an extremely important part of our safety focus. We have undertaken various pilots with our operating unions, not just pilot projects but scheduling schemes in various major terminals to start to get regularity of service so an employee knows when they're going to work. They can better prepare and better plan. We started that almost two years ago and continue to roll it out throughout our system.

For both railways, and I speak on behalf of CP, fatigue and safety are of the utmost importance for us.

9:15 a.m.

NDP

Alistair MacGregor NDP Cowichan—Malahat—Langford, BC

Ms. Hardy.

9:15 a.m.

Vice-President, Sales and Marketing, Grain and Fertilizers, Canadian Pacific Railway

Joan Hardy

Yes, as Mike said, safety is the absolute most important component when we're dealing with our employees. We're very cognizant of the limitations on hours of work that they can put in.

We have a 7% increase year over year in our total labour force, so we have increased the number of people we have available to work, which allows us to, obviously, handle more volume than we handled in the past, but we are certainly always focused on safety.

9:15 a.m.

NDP

Alistair MacGregor NDP Cowichan—Malahat—Langford, BC

That's good to hear.

I'd also like both companies to comment on the next question.

You've both talked about the growing stock of private cars. What does this do in terms of your ability to forecast what your own network should be? If there's growing use of private cars, how are you staying on top of how many are in the system? How does that impact your own company's ability to forecast what you need to build? You've talked about investing in the new hopper cars and so on. I'd like some comment from both of you on the impact the private cars are having on your various networks.

9:15 a.m.

Vice-President, Sales and Marketing, Grain and Fertilizers, Canadian Pacific Railway

Joan Hardy

Sure. I'm happy to do that.

First of all, when private cars come into our network, they're coming in with our being aware of it in advance. They're not just showing up unexpectedly. We're working with our shippers as they bring on their fleet. Typically in CP's network, when they're bringing on private cars, it's because they have a specific commodity to move, and it's best to have it in unique equipment. It allows those shippers to manage their own pipelines with their own equipment.

We continue at CP to provide a common fleet for the movement of grain, so these new hopper cars that are coming into our fleet are there for the movement of all of our grain shippers who are moving from grain elevators.

The private cars, in our case, are used primarily for grain products, processed products like canola meal and processed oats.

9:15 a.m.

NDP

Alistair MacGregor NDP Cowichan—Malahat—Langford, BC

You can comment in my last 30 seconds.

9:15 a.m.

Chief Operating Officer and Executive Vice-President, Canadian National Railway Company

Michael Cory

Whether it's LPG or other chemicals, we work extremely closely with our customers to get the proper forecast, because that goes back into building the right infrastructure and hiring the right number of people.

Nothing comes on as a surprise necessarily. We work very hard, though, with some commodity groups, because during the winter period, they feel they need more cars and really it hampers the system at times, the velocity of the network, but it's pretty much what Joan said. It's not a surprise.