1 00:00:06,960 --> 00:00:11,320 Speaker 1: Hello everyone, and welcome to Bloomberg Intelligence Talking Transports Podcasts. 2 00:00:11,400 --> 00:00:15,480 Speaker 1: I'm your host Lee Clasgow, Senior free transportation logistics analyst 3 00:00:15,760 --> 00:00:20,200 Speaker 1: at Bloomberg Intelligence, Bloomberg's in house research arm. We're delighted 4 00:00:20,239 --> 00:00:24,599 Speaker 1: to have Canadian Nationals President and CEO Tracy Robinson on 5 00:00:24,680 --> 00:00:28,360 Speaker 1: the podcast today. Tracy was appointed President and CEO of 6 00:00:28,440 --> 00:00:32,280 Speaker 1: CN in February of twenty twenty two and and is 7 00:00:32,320 --> 00:00:37,000 Speaker 1: responsible for SAN strategic direction and leadership. Prior to joining CN, 8 00:00:37,120 --> 00:00:41,240 Speaker 1: Tracy held senior leadership roles at trans Canada. Tracy's deep 9 00:00:41,240 --> 00:00:44,600 Speaker 1: experience in the railroad industry stems from her twenty seven 10 00:00:44,680 --> 00:00:49,040 Speaker 1: years at Canadian Pacific. There, she served in executive roles 11 00:00:49,080 --> 00:00:54,360 Speaker 1: in the commercial, finance and operational functions, including as General 12 00:00:54,360 --> 00:00:58,600 Speaker 1: manager of Transportation Services, Vice President and Treasurer, and Vice 13 00:00:58,640 --> 00:01:03,160 Speaker 1: President Marketing and Sales. She's also the vice chair of 14 00:01:03,240 --> 00:01:07,080 Speaker 1: the board of a Business Council of Canada. She's also 15 00:01:07,120 --> 00:01:10,479 Speaker 1: a member of the Campaign Committee and the Dean's Advisory 16 00:01:10,840 --> 00:01:14,640 Speaker 1: Council at the Edwards School of Business at the University 17 00:01:14,760 --> 00:01:19,920 Speaker 1: of Saskatchewan. She holds a Master's of Business Administration from 18 00:01:19,959 --> 00:01:23,560 Speaker 1: the University of Pennsylvania's Wharton's School of Business and a 19 00:01:23,600 --> 00:01:27,680 Speaker 1: bachelor's of Commerce from the University of Saskatchewan. She received 20 00:01:27,680 --> 00:01:32,399 Speaker 1: her Institute of Corporate Directors designation in twenty fifteen. Welcome 21 00:01:32,440 --> 00:01:35,440 Speaker 1: Tracy to the podcast. Thanks so much for joining us today. 22 00:01:35,880 --> 00:01:39,200 Speaker 1: So you've been at the Helm of CN since February 23 00:01:39,200 --> 00:01:40,160 Speaker 1: of twenty twenty two. 24 00:01:40,520 --> 00:01:43,240 Speaker 2: What's been the biggest challenge that you face so far? 25 00:01:43,640 --> 00:01:46,480 Speaker 3: Thanks, Lee. It's great to be back in the railroad industry. 26 00:01:46,520 --> 00:01:50,760 Speaker 3: It's been a fantastic eighteen months. We've got this railroad running. 27 00:01:50,800 --> 00:01:54,240 Speaker 3: We were hitting levels of operating efficiency and customer service 28 00:01:54,280 --> 00:01:57,120 Speaker 3: that we haven't seen in some time, which is exactly 29 00:01:57,600 --> 00:02:00,480 Speaker 3: where we want to be as we look into the 30 00:02:00,520 --> 00:02:05,240 Speaker 3: future and think about things like growth and economic growth 31 00:02:05,240 --> 00:02:09,440 Speaker 3: for the continent and growth for our customers. Right now, 32 00:02:09,560 --> 00:02:12,400 Speaker 3: as we look forward in the immediate future, you know, 33 00:02:12,400 --> 00:02:15,359 Speaker 3: there's a couple of challenges. One is getting the right 34 00:02:15,440 --> 00:02:19,480 Speaker 3: talent in our organization. We're pretty serious about the way 35 00:02:19,520 --> 00:02:22,200 Speaker 3: we run the operation in the railroad. We need the 36 00:02:22,320 --> 00:02:24,560 Speaker 3: right talent, whether it be in the front line the 37 00:02:24,600 --> 00:02:28,200 Speaker 3: twenty four to seven operations. We're an outdoor sport, whether 38 00:02:28,200 --> 00:02:30,040 Speaker 3: it be the talent that's out there running trains and 39 00:02:30,840 --> 00:02:34,720 Speaker 3: working on locomotives and fixing track or here in head office, 40 00:02:35,080 --> 00:02:38,720 Speaker 3: and you know that's coming along well as well. That's 41 00:02:38,760 --> 00:02:41,000 Speaker 3: going to be a long term effort as we look forward. 42 00:02:41,520 --> 00:02:44,120 Speaker 3: The second challenge, of course, is a long term one 43 00:02:44,240 --> 00:02:47,560 Speaker 3: is that is around you know, safety, and that takes 44 00:02:48,480 --> 00:02:52,600 Speaker 3: investments in technology, and it takes leadership, and really it 45 00:02:52,639 --> 00:02:54,560 Speaker 3: comes down at the end of the day to people 46 00:02:54,600 --> 00:02:58,840 Speaker 3: as well. We aspire in our company to have zero 47 00:02:58,880 --> 00:03:04,160 Speaker 3: harm and that means zero serious injuries, it means zero fatalities, 48 00:03:04,160 --> 00:03:08,720 Speaker 3: it means zero impact on communities, it means an ever 49 00:03:08,880 --> 00:03:13,639 Speaker 3: kind of reducing impact on the environment. And so it's 50 00:03:13,680 --> 00:03:16,080 Speaker 3: actually been a tremendous success story in the eight years 51 00:03:16,120 --> 00:03:18,280 Speaker 3: I was out of the industry. This is one of 52 00:03:18,280 --> 00:03:21,360 Speaker 3: the things I noticed mostly when I came back, was 53 00:03:21,440 --> 00:03:26,400 Speaker 3: the investment in technology around safety, whether it's the cars 54 00:03:26,400 --> 00:03:28,799 Speaker 3: that run across the network that are constantly detecting the 55 00:03:28,840 --> 00:03:32,200 Speaker 3: conditions of track, whether it's the waist side detection that 56 00:03:32,360 --> 00:03:35,480 Speaker 3: is looking you know, at the quality of the cars 57 00:03:35,480 --> 00:03:38,320 Speaker 3: and the locomotives that run over the track. You know, 58 00:03:38,360 --> 00:03:41,960 Speaker 3: it's been incredibly effective. Our drolments of down ninety percent 59 00:03:41,960 --> 00:03:44,840 Speaker 3: of the last ten years, and you know, we're continuing 60 00:03:44,880 --> 00:03:47,839 Speaker 3: to make in progress on that. It's an exciting part 61 00:03:47,840 --> 00:03:50,160 Speaker 3: of the business. 62 00:03:49,680 --> 00:03:52,560 Speaker 1: Right and you know, you keep on mentioning operations and 63 00:03:53,120 --> 00:03:56,920 Speaker 1: Canadian National just recently announced a change in the management 64 00:03:56,960 --> 00:04:00,160 Speaker 1: on the operation side, long term or the long term 65 00:04:00,240 --> 00:04:03,200 Speaker 1: railroader and kind of legendary at Harris is stepping away 66 00:04:03,640 --> 00:04:07,400 Speaker 1: and you're elevating two of your executives to EVPs. Can 67 00:04:07,440 --> 00:04:09,560 Speaker 1: you talk a little bit about those changes and what 68 00:04:09,600 --> 00:04:11,240 Speaker 1: that means for the railroad going forward. 69 00:04:11,440 --> 00:04:17,039 Speaker 3: Yeah. Absolutely, So we a early on reverted back to 70 00:04:18,160 --> 00:04:20,840 Speaker 3: what we call scheduled operating plan and this is the 71 00:04:20,880 --> 00:04:24,720 Speaker 3: core of our operating philosophy. We launched it in April 72 00:04:24,760 --> 00:04:27,600 Speaker 3: of twenty twenty two. It's not the first time this 73 00:04:27,640 --> 00:04:31,400 Speaker 3: company is operated under that plan, but it's just it's 74 00:04:31,400 --> 00:04:34,320 Speaker 3: a fairly simple thing. It's based on our having a 75 00:04:34,360 --> 00:04:37,760 Speaker 3: plan that is built at the center, that considers the 76 00:04:37,839 --> 00:04:41,000 Speaker 3: volumes across the network and creates a plan that optimizes 77 00:04:41,480 --> 00:04:44,080 Speaker 3: to the network as opposed to the different pieces on 78 00:04:44,160 --> 00:04:47,960 Speaker 3: the network. And then you know, it's a rigorous, disciplined 79 00:04:48,320 --> 00:04:52,039 Speaker 3: execution of that plan. And then it's from a commercial perspective, 80 00:04:52,080 --> 00:04:54,479 Speaker 3: you sell the capacity that's embedded in that plan. And 81 00:04:54,480 --> 00:04:57,120 Speaker 3: if you do all of those things well, you end 82 00:04:57,200 --> 00:04:59,520 Speaker 3: up with great operating efficiency, you end up with a 83 00:04:59,640 --> 00:05:05,120 Speaker 3: reszililliant operation, and you end up with very strong customer service. 84 00:05:05,680 --> 00:05:09,159 Speaker 3: So as we were making we were launching this plan 85 00:05:09,240 --> 00:05:11,640 Speaker 3: in April, it occurred to me that we could use 86 00:05:11,680 --> 00:05:14,880 Speaker 3: some help from outside from someone who knew the railroad 87 00:05:14,920 --> 00:05:17,200 Speaker 3: well and who had done that the scheduled operating plan 88 00:05:17,240 --> 00:05:19,800 Speaker 3: on this railroad before, and that was Ed Harris. And 89 00:05:19,920 --> 00:05:21,839 Speaker 3: Ed agreed to come in to do a couple of things. 90 00:05:22,200 --> 00:05:27,159 Speaker 3: One is to help us launch the new operating model 91 00:05:27,240 --> 00:05:29,640 Speaker 3: and to get it running well. And the second one 92 00:05:29,640 --> 00:05:31,120 Speaker 3: was to spend a little bit of time with me 93 00:05:31,200 --> 00:05:34,400 Speaker 3: in assessing the talent from an operations perspective. We had 94 00:05:34,400 --> 00:05:37,680 Speaker 3: a couple of folks in our organization that we'd had 95 00:05:37,680 --> 00:05:40,640 Speaker 3: our eye on, and Ed's job was to mentor them 96 00:05:40,640 --> 00:05:42,960 Speaker 3: and make sure that they were ready, and they were. 97 00:05:43,480 --> 00:05:46,760 Speaker 3: So we've just as you say, recently announced that we've 98 00:05:46,760 --> 00:05:51,279 Speaker 3: put Pat Whitehead in our Chief Network Operations Officer role 99 00:05:51,720 --> 00:05:55,040 Speaker 3: and Derek Taylor in our Chief Field Operations Officer role. 100 00:05:55,080 --> 00:05:58,800 Speaker 3: And this is a case of structure following strategy. So 101 00:05:58,920 --> 00:06:02,040 Speaker 3: if we want, you know, our mantras, you build the plan, 102 00:06:02,600 --> 00:06:04,680 Speaker 3: then you run the plan, and you sell into the plan, 103 00:06:04,760 --> 00:06:07,440 Speaker 3: and the plan is sacred. Pat's role is to build 104 00:06:07,440 --> 00:06:10,960 Speaker 3: the plan, so he's head up looking forward, what volumes 105 00:06:11,000 --> 00:06:13,440 Speaker 3: that we're going to have, what locomotives we're going to need, 106 00:06:14,120 --> 00:06:17,560 Speaker 3: what kind of track conditions we're going to need in capacity, 107 00:06:17,839 --> 00:06:21,839 Speaker 3: and he's building that plan to optimize that the whole 108 00:06:22,080 --> 00:06:24,320 Speaker 3: and to build into our future. Derek's job is to 109 00:06:24,400 --> 00:06:26,560 Speaker 3: run it every day. It's twenty four to seven. He 110 00:06:26,640 --> 00:06:31,160 Speaker 3: runs it every day, and our commercial team is their 111 00:06:31,240 --> 00:06:34,240 Speaker 3: job is to sell into it. So that works for us. 112 00:06:34,320 --> 00:06:37,800 Speaker 3: It's our strategy and it's now the structure, and we 113 00:06:37,800 --> 00:06:39,600 Speaker 3: could be more excited about where we think it's going 114 00:06:39,640 --> 00:06:40,560 Speaker 3: to take us. 115 00:06:41,120 --> 00:06:43,279 Speaker 1: Okay, so a lot of people that might be listening 116 00:06:43,320 --> 00:06:47,039 Speaker 1: in might not really know Canadian National or know its network. 117 00:06:47,080 --> 00:06:48,440 Speaker 2: You know as a pretty unique network. 118 00:06:48,480 --> 00:06:51,599 Speaker 1: It's like a tea network up and down the Mississippi 119 00:06:51,800 --> 00:06:55,640 Speaker 1: and connects the east and west coast of Canada. 120 00:06:55,800 --> 00:06:57,880 Speaker 2: Can you talk about some of the other. 121 00:06:57,760 --> 00:07:00,880 Speaker 1: Aspects of CN that make it very unique and give 122 00:07:00,920 --> 00:07:05,200 Speaker 1: you guys an advantage over whether it's your competitors or 123 00:07:05,240 --> 00:07:05,920 Speaker 1: other modes. 124 00:07:06,560 --> 00:07:08,640 Speaker 3: Yeah, you know, you've made a good point around it 125 00:07:08,680 --> 00:07:11,920 Speaker 3: being a team network. But I got to know this 126 00:07:12,000 --> 00:07:15,160 Speaker 3: network for a lot of years when I was working 127 00:07:15,160 --> 00:07:19,160 Speaker 3: across the street, and it has some considerable strengths, and 128 00:07:19,200 --> 00:07:21,239 Speaker 3: over the last eighteen months, I've had the chance to 129 00:07:21,520 --> 00:07:23,520 Speaker 3: get to know it from the inside as well as 130 00:07:23,520 --> 00:07:25,880 Speaker 3: get to know the operating team. So it has that 131 00:07:26,000 --> 00:07:30,920 Speaker 3: tri coastal access. So for our customers, we offer them 132 00:07:32,080 --> 00:07:36,200 Speaker 3: global port access on all three coasts. In the West 133 00:07:36,200 --> 00:07:39,000 Speaker 3: coast it's Vancouver and Port Prince Rupert, In the East 134 00:07:39,040 --> 00:07:42,320 Speaker 3: it's Montreal, Halifax and Saint John, And in the South 135 00:07:42,360 --> 00:07:44,760 Speaker 3: it's Mobile and New Orleans. And we think that kind 136 00:07:44,800 --> 00:07:50,360 Speaker 3: of optionality is really critical as markets move quickly. If 137 00:07:50,360 --> 00:07:53,360 Speaker 3: you look at twenty five percent of the nation's freight 138 00:07:53,440 --> 00:07:56,000 Speaker 3: a Reil freight goes to Chicago, and a number of 139 00:07:56,120 --> 00:07:58,680 Speaker 3: years ago we bought the EGN E, which is essentially 140 00:07:58,760 --> 00:08:03,120 Speaker 3: a bypass around Chicago that allows us to transit through 141 00:08:03,160 --> 00:08:05,800 Speaker 3: that part of the network very very quickly and provide 142 00:08:05,840 --> 00:08:10,320 Speaker 3: that level of service to our customers. We have, you know, 143 00:08:10,360 --> 00:08:13,560 Speaker 3: a great northern access in Canada, So if you think 144 00:08:13,600 --> 00:08:17,760 Speaker 3: about you know, the resource rich and energy rich northern 145 00:08:17,800 --> 00:08:21,400 Speaker 3: Alberta and British Columbia and Saskatchewan. You think about the 146 00:08:21,440 --> 00:08:24,280 Speaker 3: precious minerals that are in the northern part of Eastern Canada, 147 00:08:24,680 --> 00:08:26,760 Speaker 3: those are all approximate to our lines. So we think 148 00:08:26,800 --> 00:08:30,720 Speaker 3: it's We think it's a great network that allows us 149 00:08:30,720 --> 00:08:34,640 Speaker 3: to offer some pretty cool services to our customers and 150 00:08:34,720 --> 00:08:37,040 Speaker 3: some unique growth opportunities. 151 00:08:38,040 --> 00:08:41,319 Speaker 2: Are shareholders on that growth opportunity? 152 00:08:41,400 --> 00:08:44,160 Speaker 1: You know, when I think of the part of Prince Rupert, 153 00:08:45,000 --> 00:08:47,680 Speaker 1: it's pretty unique. I had the opportunity to go up 154 00:08:47,720 --> 00:08:51,520 Speaker 1: there twice. Since I've been covering you guys for a 155 00:08:51,559 --> 00:08:53,000 Speaker 1: long time. I don't want to tell me how many 156 00:08:53,040 --> 00:08:57,839 Speaker 1: years it's been, but it's a pretty interesting port. Can 157 00:08:57,880 --> 00:09:01,200 Speaker 1: you talk about the opportun coctunities that you have, whether 158 00:09:01,200 --> 00:09:05,280 Speaker 1: it's import or export, whether it's intermodal or commodities going 159 00:09:05,280 --> 00:09:06,520 Speaker 1: in and out of that port, and kind of the 160 00:09:06,559 --> 00:09:10,640 Speaker 1: investments I that CN is making with that gateway. 161 00:09:11,040 --> 00:09:13,360 Speaker 3: If you're up they've been up early, you would have 162 00:09:13,440 --> 00:09:15,520 Speaker 3: noticed a couple of things. It's a pretty special place 163 00:09:16,080 --> 00:09:18,280 Speaker 3: and there's a lot of investment going in and has 164 00:09:18,320 --> 00:09:20,959 Speaker 3: been going in over the last few years. We think 165 00:09:21,480 --> 00:09:25,560 Speaker 3: you know, it offers current customers and those that we 166 00:09:25,600 --> 00:09:28,760 Speaker 3: imagine in the future considerable advantages. If you're a container 167 00:09:28,800 --> 00:09:31,600 Speaker 3: in China and you're looking to get to the Mid Continent, 168 00:09:32,440 --> 00:09:34,880 Speaker 3: we can get you there two days faster. Rupert's the 169 00:09:34,880 --> 00:09:37,520 Speaker 3: closest kind of sailing point to Asia, and we have 170 00:09:37,559 --> 00:09:39,760 Speaker 3: a premium service out of Rupert right end to the 171 00:09:39,760 --> 00:09:43,959 Speaker 3: Mid Continent or into Toronto, Montreal. They recently announced you 172 00:09:44,000 --> 00:09:47,400 Speaker 3: would have heard, the Ridley Island Export Logistics Park. That's 173 00:09:47,440 --> 00:09:52,040 Speaker 3: going to allow us to transload various commodities and allow 174 00:09:52,080 --> 00:09:56,160 Speaker 3: those containers to go back across loaded, whether it's plastics 175 00:09:56,240 --> 00:09:59,520 Speaker 3: or grain products or wood pellets. So we're building that. 176 00:09:59,559 --> 00:10:05,080 Speaker 3: The import facility is under construction as well. So it's 177 00:10:05,360 --> 00:10:09,600 Speaker 3: long been a strategic part of our intermotive strategy, but 178 00:10:09,720 --> 00:10:12,360 Speaker 3: right now it's growing across the liquids as well. We 179 00:10:13,040 --> 00:10:16,800 Speaker 3: exported with a customer a record amount of propane Rupert 180 00:10:16,880 --> 00:10:19,280 Speaker 3: last year and we've just signed a new agreement with ALTA. 181 00:10:19,320 --> 00:10:21,960 Speaker 3: Guess that's going to see that volume continue to grow. 182 00:10:22,720 --> 00:10:25,880 Speaker 3: It is a main export point for a number of 183 00:10:25,880 --> 00:10:30,000 Speaker 3: our bulk commodities as well, so would say great diversified 184 00:10:31,880 --> 00:10:35,880 Speaker 3: asset for CN and for our customers. 185 00:10:36,920 --> 00:10:38,520 Speaker 1: All right, great, And you know, and when I do 186 00:10:38,600 --> 00:10:40,920 Speaker 1: think as CM relative to maybe some of your peers, 187 00:10:40,960 --> 00:10:45,120 Speaker 1: you know, the network has a lot of growth opportunities, 188 00:10:45,600 --> 00:10:49,680 Speaker 1: whether it's bulk or intermodal outside of Rupert. Can you 189 00:10:49,720 --> 00:10:51,959 Speaker 1: talk about some of the other growth opportunities that you're 190 00:10:52,000 --> 00:10:53,760 Speaker 1: looking to develop on the network. 191 00:10:53,840 --> 00:10:55,720 Speaker 3: One of the great things about this railroad is we 192 00:10:55,760 --> 00:11:01,000 Speaker 3: have a very diversified portfolio. So Rupert is key to 193 00:11:01,120 --> 00:11:04,960 Speaker 3: our growth when it comes to container business, when it 194 00:11:05,000 --> 00:11:09,079 Speaker 3: comes to some of the liquid's business and the bulk business. 195 00:11:09,640 --> 00:11:13,359 Speaker 3: But we see that across our network. We're positioning Halifax 196 00:11:13,480 --> 00:11:15,560 Speaker 3: and some of our East Coast ports to be the 197 00:11:15,600 --> 00:11:19,120 Speaker 3: North American ports of entry for business coming from Europe 198 00:11:19,120 --> 00:11:22,760 Speaker 3: and through Southeast Asia through the Suez Canal. We are 199 00:11:23,600 --> 00:11:27,360 Speaker 3: leaning into the electric vehicle supply chain in Eastern Canada. 200 00:11:27,400 --> 00:11:31,320 Speaker 3: We're now moving lithium out of the North. We'll move 201 00:11:31,360 --> 00:11:34,120 Speaker 3: that some of the raw critical minerals, will move them 202 00:11:34,160 --> 00:11:38,000 Speaker 3: as processed into the battery factories, and then we'll participate 203 00:11:38,559 --> 00:11:42,600 Speaker 3: in the electric vehicle and whole value chain. We have 204 00:11:42,720 --> 00:11:48,760 Speaker 3: a tremendous growth in fuel distribution in Eastern Canada. We 205 00:11:48,840 --> 00:11:52,720 Speaker 3: have partnered with UP and the FXC to get trucks 206 00:11:52,760 --> 00:11:55,600 Speaker 3: off the road between Mexico, the United States and Canada, 207 00:11:55,640 --> 00:11:59,280 Speaker 3: and we're doing a number of those types of partnerships 208 00:11:59,280 --> 00:12:02,560 Speaker 3: as we look forward. So the growth is across all 209 00:12:02,600 --> 00:12:07,080 Speaker 3: of our commodity lines and it's about helping our customers 210 00:12:07,080 --> 00:12:09,360 Speaker 3: build their businesses as well and growing the economy. 211 00:12:11,000 --> 00:12:15,280 Speaker 1: Yeah, you mentioned that the Falcon service with CNUP and 212 00:12:15,360 --> 00:12:17,800 Speaker 1: Group of Mexico. Can you talk a little bit about 213 00:12:17,800 --> 00:12:20,839 Speaker 1: that exactly, what does it do, what's the benefit of 214 00:12:20,920 --> 00:12:25,920 Speaker 1: it for maybe your customers today or your customers for tomorrow. 215 00:12:25,920 --> 00:12:28,320 Speaker 3: Our challenge is forever has always been able to provide 216 00:12:28,360 --> 00:12:32,680 Speaker 3: the truck like service that moves consistently, It moves with 217 00:12:32,840 --> 00:12:35,160 Speaker 3: enough velocity, and it moves at the right price point 218 00:12:35,240 --> 00:12:38,960 Speaker 3: to make rail a real option to trucks, and that's 219 00:12:39,040 --> 00:12:42,200 Speaker 3: what the service is intended to do. The truck market 220 00:12:42,400 --> 00:12:45,680 Speaker 3: between Mexico and into the US and ultimately into Canada 221 00:12:45,800 --> 00:12:51,000 Speaker 3: across commodities is significant enough. You know, we're targeting one 222 00:12:51,040 --> 00:12:53,200 Speaker 3: to two trains a day in that service over the 223 00:12:53,240 --> 00:12:56,400 Speaker 3: longer term. That's what we think we can we can 224 00:12:56,440 --> 00:12:58,800 Speaker 3: grow it into. Now it means we've got to have 225 00:12:59,000 --> 00:13:05,480 Speaker 3: that consistent, fast service that can provide transits and local 226 00:13:05,520 --> 00:13:08,440 Speaker 3: delivery in a very truck like way. So what that's 227 00:13:08,480 --> 00:13:10,560 Speaker 3: going to mean is that the three railroads getting together's 228 00:13:10,600 --> 00:13:13,120 Speaker 3: got to act like one railroad. And we're doing that 229 00:13:13,240 --> 00:13:15,959 Speaker 3: right now. I'm pleased with the levels of service that 230 00:13:16,000 --> 00:13:18,240 Speaker 3: providing and volumes are starting to grow. 231 00:13:18,840 --> 00:13:24,599 Speaker 1: You know, you mentioned earlier leveraging technology can talk a 232 00:13:24,640 --> 00:13:27,280 Speaker 1: little maybe some specifics about what kind of technology you're 233 00:13:27,320 --> 00:13:30,920 Speaker 1: employing across the network, not only to make it more efficient, 234 00:13:30,960 --> 00:13:34,120 Speaker 1: but also to make it a safer operating environment. 235 00:13:34,400 --> 00:13:39,560 Speaker 3: Yeah. Technology is really focused on a couple of areas. One, 236 00:13:40,679 --> 00:13:43,400 Speaker 3: as you say, the operating efficiency and safety, and the 237 00:13:43,440 --> 00:13:45,800 Speaker 3: other is the way that we interact with our customers. 238 00:13:46,520 --> 00:13:51,240 Speaker 3: So on the operating efficiency and safety, the objective is 239 00:13:51,280 --> 00:13:54,040 Speaker 3: to keep the trains moving, to inspect them in as 240 00:13:54,120 --> 00:13:56,880 Speaker 3: much of an automated fashion as possible, and to have 241 00:13:57,040 --> 00:14:00,480 Speaker 3: them stop as seldom as possible for any kind of issues, 242 00:14:00,600 --> 00:14:04,040 Speaker 3: safety related or otherwise. And so the secret to that 243 00:14:04,400 --> 00:14:11,240 Speaker 3: is proactive and automated inspection of cars and of our infrastructure. 244 00:14:11,840 --> 00:14:14,000 Speaker 3: So we have a car called an a tip car, 245 00:14:14,200 --> 00:14:17,199 Speaker 3: a number of them that move across the territory are 246 00:14:17,320 --> 00:14:21,320 Speaker 3: full network on trains every day and those are monitoring 247 00:14:21,360 --> 00:14:25,240 Speaker 3: the quality of the track infrastructure, looking for early signs 248 00:14:25,240 --> 00:14:30,160 Speaker 3: of defects, and our engineering forces go in in advance 249 00:14:30,480 --> 00:14:33,320 Speaker 3: and address those issues. If you think about the quality 250 00:14:33,360 --> 00:14:37,840 Speaker 3: of the equipment that runs on the tracks, we've got 251 00:14:37,880 --> 00:14:42,440 Speaker 3: wayside detection that looks at you know, either visual or 252 00:14:42,520 --> 00:14:46,960 Speaker 3: audio or temperature. It's always sensing of whether there's issues 253 00:14:46,960 --> 00:14:50,160 Speaker 3: that could cause you know, a slow down or stop 254 00:14:50,200 --> 00:14:53,840 Speaker 3: of a train. And you know that's progressing as well. 255 00:14:54,080 --> 00:14:58,080 Speaker 3: As I said, number of derailments fall about ninety percent 256 00:14:58,120 --> 00:15:00,640 Speaker 3: of the last ten years and that's pretty impactful. So 257 00:15:00,720 --> 00:15:04,320 Speaker 3: that helps our velocity, it helps our on time trained performance, 258 00:15:04,680 --> 00:15:08,760 Speaker 3: and it certainly keeps our communities and our employees much safer. 259 00:15:09,560 --> 00:15:12,880 Speaker 3: From a customer perspective, you know, we want to lean 260 00:15:12,920 --> 00:15:16,680 Speaker 3: into as much automated service levels for our customers as possible, 261 00:15:16,680 --> 00:15:21,400 Speaker 3: and we think that there's great potential you know, things 262 00:15:21,520 --> 00:15:25,640 Speaker 3: like AI generative AI to make that system and that 263 00:15:25,720 --> 00:15:30,440 Speaker 3: process much more effective. Ultimately, that needs to run across 264 00:15:30,480 --> 00:15:33,040 Speaker 3: supply chains. The opportunity is not just to do well 265 00:15:33,040 --> 00:15:35,600 Speaker 3: with your customers on the railroad. You know, if you're 266 00:15:35,640 --> 00:15:38,760 Speaker 3: a container, or if you're a car load of potash, 267 00:15:38,960 --> 00:15:43,400 Speaker 3: or if you are an autoack with vehicles in it. 268 00:15:43,640 --> 00:15:46,880 Speaker 3: We want our customers to know where their shipment is 269 00:15:47,200 --> 00:15:49,640 Speaker 3: across our railroad bit, across the full supply chain, whether 270 00:15:49,640 --> 00:15:53,080 Speaker 3: it's terminals or vessels. That's the opportunity in the future 271 00:15:53,440 --> 00:15:55,800 Speaker 3: to help the full supply chains run in a more 272 00:15:55,840 --> 00:15:57,440 Speaker 3: effective and efficient way. 273 00:15:58,720 --> 00:16:01,600 Speaker 1: In addition to these sort of technologies, obviously CN and 274 00:16:02,400 --> 00:16:05,240 Speaker 1: the greater industry or making investments in different kind of 275 00:16:05,320 --> 00:16:09,240 Speaker 1: locomotives with the end goal of reducing carbon Can you 276 00:16:09,280 --> 00:16:11,000 Speaker 1: talk about what CN's doing on that end. 277 00:16:11,320 --> 00:16:13,160 Speaker 3: Yeah, you know, I I got to tell you there's 278 00:16:13,200 --> 00:16:17,560 Speaker 3: no denying that. You know, our climate is changing. We 279 00:16:17,600 --> 00:16:21,440 Speaker 3: live with that impact every day. You know, we operated 280 00:16:21,480 --> 00:16:27,240 Speaker 3: through Canada's worst forest fire season in history and some 281 00:16:27,280 --> 00:16:30,360 Speaker 3: of the floods that resulted from it, and you know 282 00:16:30,440 --> 00:16:33,640 Speaker 3: that impact is significant to both our operation but also 283 00:16:33,680 --> 00:16:37,600 Speaker 3: the operation of our customers. So it's not something we 284 00:16:37,640 --> 00:16:40,000 Speaker 3: want to just adapt to. It's something that we want 285 00:16:40,000 --> 00:16:43,280 Speaker 3: to play our role in creating a very different future. 286 00:16:44,640 --> 00:16:47,840 Speaker 3: And so it starts at the first baseline and that 287 00:16:48,080 --> 00:16:51,640 Speaker 3: is the role that companies like ours can play in 288 00:16:52,240 --> 00:16:56,760 Speaker 3: offering carbon efission transportation. So you're you're if you're moving 289 00:16:56,920 --> 00:17:00,960 Speaker 3: via rail versus by truck, you're reducing yours by seventy 290 00:17:01,000 --> 00:17:04,080 Speaker 3: five percent right off the start. From there, it's how 291 00:17:04,119 --> 00:17:07,760 Speaker 3: do we consume as little as fuel as possible to 292 00:17:07,800 --> 00:17:11,919 Speaker 3: move every pound of freight that we're moving. And you know, 293 00:17:12,040 --> 00:17:15,040 Speaker 3: we have eighty five percent of our emissions come from locomotives, 294 00:17:15,080 --> 00:17:18,240 Speaker 3: So this is about fuel efficiency. It's about the way 295 00:17:18,240 --> 00:17:22,439 Speaker 3: that we operate our locomotives, in the handling of the locomotives. 296 00:17:22,440 --> 00:17:26,560 Speaker 3: It's about technology on the locomotives, and we are now 297 00:17:26,680 --> 00:17:30,000 Speaker 3: about fifteen percent more fuel efficient than even the average 298 00:17:30,000 --> 00:17:33,960 Speaker 3: of the North American railroads, so that's good progress. From there, 299 00:17:34,200 --> 00:17:38,879 Speaker 3: we have leaned into fuel blending, so we blend renewable 300 00:17:38,920 --> 00:17:42,879 Speaker 3: and biodiesel into our diesel and locomotives. That reduces emissions. 301 00:17:43,280 --> 00:17:46,840 Speaker 3: And ultimately, though, you know, the future is going to 302 00:17:46,880 --> 00:17:49,919 Speaker 3: involve a different kind of locomotive, a different kind of propulsion, 303 00:17:50,560 --> 00:17:54,320 Speaker 3: and that our industry is doing a lot of work 304 00:17:54,359 --> 00:17:56,280 Speaker 3: on as to what that's going to look like, whether 305 00:17:56,320 --> 00:18:00,320 Speaker 3: it's electric, whether it's a hybrid, or what the future 306 00:18:00,320 --> 00:18:03,200 Speaker 3: of locomotives is going to be So that's pretty critical 307 00:18:03,240 --> 00:18:05,840 Speaker 3: part of our path forward. You know, on the edges, 308 00:18:05,880 --> 00:18:09,399 Speaker 3: on the other fifteen percent, we're working there to make 309 00:18:09,440 --> 00:18:12,400 Speaker 3: sure our missions continue to reduce. We have a partnership 310 00:18:12,400 --> 00:18:16,800 Speaker 3: with Line Trucks on some of our truck business, and 311 00:18:17,240 --> 00:18:19,840 Speaker 3: you know, we're looking at all of our operations to 312 00:18:19,920 --> 00:18:22,680 Speaker 3: electrify and to reduce emissions. So it's a big part 313 00:18:23,359 --> 00:18:25,880 Speaker 3: of the day to day business of this railroad right now. 314 00:18:27,160 --> 00:18:31,320 Speaker 1: Right and all these technologies you know, require. 315 00:18:32,640 --> 00:18:33,200 Speaker 2: Financing. 316 00:18:33,240 --> 00:18:36,280 Speaker 1: And so can you talk about your your cap X 317 00:18:36,320 --> 00:18:40,240 Speaker 1: plans that I know you've announced some longer term plans 318 00:18:40,320 --> 00:18:43,440 Speaker 1: during your last analyst day. Can you talk about, you know, 319 00:18:43,720 --> 00:18:46,240 Speaker 1: the breakout of what you're spending your capital on. 320 00:18:48,400 --> 00:18:50,280 Speaker 3: We talked a lot about a capital plan when we 321 00:18:51,280 --> 00:18:55,280 Speaker 3: unveiled our three year program to our investors earlier this year. 322 00:18:55,840 --> 00:18:59,840 Speaker 3: Are spend on capital is always going to start first 323 00:19:00,000 --> 00:19:03,760 Speaker 3: and foremost on our network, with our ability to maintain 324 00:19:03,800 --> 00:19:06,399 Speaker 3: it and to replace it as we consume it, but 325 00:19:06,600 --> 00:19:09,800 Speaker 3: also to invest in our growth. We've got lots of 326 00:19:10,119 --> 00:19:12,520 Speaker 3: volume growth that's targeted at parts of our network that 327 00:19:12,520 --> 00:19:16,240 Speaker 3: don't need capital or expansion capital. But we have lots 328 00:19:16,280 --> 00:19:18,959 Speaker 3: of great opportunities with our customers where we will invest 329 00:19:18,960 --> 00:19:21,840 Speaker 3: with them as well to grow. So that's always the foundation. 330 00:19:22,800 --> 00:19:26,600 Speaker 3: When it comes to our shareholders, our plan has always 331 00:19:26,680 --> 00:19:29,160 Speaker 3: been and continues to be that our dividends will grow 332 00:19:29,240 --> 00:19:34,040 Speaker 3: roughly with their rings. We think that that's a good strategy. 333 00:19:34,680 --> 00:19:38,239 Speaker 3: It's been consistent and we get positive reaction from our 334 00:19:38,240 --> 00:19:42,480 Speaker 3: shareholders on that. Beyond that, we are looking to just 335 00:19:42,600 --> 00:19:45,240 Speaker 3: our leverage ratio up to about two point five debt 336 00:19:45,320 --> 00:19:49,560 Speaker 3: equity and we'll do that over time through share repurchases. 337 00:19:51,760 --> 00:19:54,720 Speaker 1: Okay, and you also during your analyst day you gave 338 00:19:54,880 --> 00:19:57,080 Speaker 1: a longer term outlook for ten to fifteen percent to 339 00:19:57,119 --> 00:20:01,159 Speaker 1: loot at EPs Kaeger. Obviously, twenty twenty three is not 340 00:20:01,240 --> 00:20:03,800 Speaker 1: turning out the way you probably thought it was going to, 341 00:20:04,400 --> 00:20:12,120 Speaker 1: given fires, flooding, strikes, bad demand. So is that target 342 00:20:12,359 --> 00:20:15,000 Speaker 1: still a good target? Is it a moving target? Does 343 00:20:15,080 --> 00:20:19,440 Speaker 1: the lower easier comfor twenty twenty from twenty twenty three 344 00:20:19,520 --> 00:20:21,080 Speaker 1: make it easier to. 345 00:20:21,000 --> 00:20:24,600 Speaker 3: Get to We're sticking with that target. When I came in, 346 00:20:24,680 --> 00:20:26,920 Speaker 3: we did a tremendous amount of work on what we 347 00:20:26,960 --> 00:20:31,400 Speaker 3: saw in the future, whether there is growth in railroad 348 00:20:31,400 --> 00:20:34,159 Speaker 3: out there, and we discovered that there was, and a 349 00:20:34,200 --> 00:20:36,480 Speaker 3: portion of this growth that we let out. We actually 350 00:20:36,480 --> 00:20:39,840 Speaker 3: have a five year plan with a softer ten year view, 351 00:20:40,600 --> 00:20:44,679 Speaker 3: and part of that lies is dependent upon the strength 352 00:20:44,720 --> 00:20:49,239 Speaker 3: of the economy, but part of it is separate from 353 00:20:49,280 --> 00:20:53,080 Speaker 3: the economy's customer initiatives, some of which we're working now, 354 00:20:53,160 --> 00:20:55,280 Speaker 3: some of which we see in the future around how 355 00:20:55,320 --> 00:20:59,800 Speaker 3: we drive growth specifically with our customers. So we put 356 00:20:59,840 --> 00:21:03,399 Speaker 3: all together, we combined it with the operating efficiencies that 357 00:21:03,440 --> 00:21:06,239 Speaker 3: we're delivering, and we came up with a ten to 358 00:21:06,240 --> 00:21:09,680 Speaker 3: fifteen percent earnings for share growth a cagre over the 359 00:21:09,760 --> 00:21:13,320 Speaker 3: next three years. And as we watch the economy hasn't 360 00:21:13,320 --> 00:21:15,520 Speaker 3: been what we expected. As you saw, we've had some 361 00:21:16,000 --> 00:21:21,080 Speaker 3: third party shocks this year. The operation has been wonderfully 362 00:21:21,080 --> 00:21:25,280 Speaker 3: resilient through that, and you know, our customer initiatives are 363 00:21:25,320 --> 00:21:28,840 Speaker 3: coming along on plan or ahead of plant. We've announced 364 00:21:29,760 --> 00:21:33,360 Speaker 3: a new deal with Altagas to increase our propane exports 365 00:21:33,400 --> 00:21:35,640 Speaker 3: on the West coast. We've got all the investment going 366 00:21:35,680 --> 00:21:37,960 Speaker 3: into the port of Prince Rupert. We have a fuel 367 00:21:38,000 --> 00:21:42,119 Speaker 3: facility that's opening up later this year that'll move considerable 368 00:21:42,160 --> 00:21:45,479 Speaker 3: volumes of fuel in eastern Canada. We are starting to 369 00:21:45,520 --> 00:21:48,359 Speaker 3: move that lithium that we talked about in the electric 370 00:21:48,400 --> 00:21:52,600 Speaker 3: vehicle supply chains. So our customer specific initiatives are unfolding 371 00:21:52,600 --> 00:21:55,040 Speaker 3: as we would expect. So yeah, it's going to be 372 00:21:55,040 --> 00:21:58,720 Speaker 3: a lower base year. We are watching the volume start 373 00:21:58,760 --> 00:22:01,800 Speaker 3: to grow and we are honor ahead of plan on 374 00:22:01,840 --> 00:22:03,880 Speaker 3: our customer specific initiatives. 375 00:22:04,520 --> 00:22:07,080 Speaker 1: Okay, well, consensus as you guys growing a just a 376 00:22:07,119 --> 00:22:09,639 Speaker 1: dps at eleven percent, so out of the gate, I 377 00:22:09,680 --> 00:22:13,040 Speaker 1: guess you're starting off within the range, which is which 378 00:22:13,080 --> 00:22:19,000 Speaker 1: is good news. Can you talk a little about you know, 379 00:22:19,080 --> 00:22:22,760 Speaker 1: we began the conversation about operations, Can you talk about 380 00:22:22,840 --> 00:22:23,760 Speaker 1: your service levels? 381 00:22:23,760 --> 00:22:24,000 Speaker 2: Now? 382 00:22:24,240 --> 00:22:27,359 Speaker 1: What metrics do you closely watch on a daily or 383 00:22:27,400 --> 00:22:30,640 Speaker 1: weekly basis to know that the network is running well 384 00:22:30,640 --> 00:22:31,840 Speaker 1: and it's and it's improving. 385 00:22:32,800 --> 00:22:35,639 Speaker 3: Yeah, I like the way this railroad is running. You know. 386 00:22:36,520 --> 00:22:39,280 Speaker 3: It all is on that foundation of a scheduled operating plan, 387 00:22:39,480 --> 00:22:42,240 Speaker 3: and what that means is that we're not optimizing into 388 00:22:42,320 --> 00:22:45,080 Speaker 3: any particular yard or any particular part of the network. 389 00:22:45,560 --> 00:22:48,280 Speaker 3: We have a central group, the network Operations team, that 390 00:22:48,359 --> 00:22:51,919 Speaker 3: puts together a plan that drives you know, velocity that 391 00:22:52,080 --> 00:22:55,680 Speaker 3: service to our customers and it optimizes for the full network. 392 00:22:56,400 --> 00:22:58,320 Speaker 3: So when I get up every morning, I look at 393 00:22:58,560 --> 00:23:01,120 Speaker 3: how well we are executing that plan. So I look 394 00:23:01,160 --> 00:23:05,160 Speaker 3: at on time train performance firstly, and we are year 395 00:23:05,200 --> 00:23:09,680 Speaker 3: to date in twenty twenty three about ninety percent, which 396 00:23:09,720 --> 00:23:11,639 Speaker 3: is up over about eighty percent last year. And we 397 00:23:11,680 --> 00:23:14,240 Speaker 3: made a lot of gains last year. So that's excellent 398 00:23:14,680 --> 00:23:18,400 Speaker 3: kind of year over year improvement in an environment as 399 00:23:18,440 --> 00:23:20,080 Speaker 3: you pointed out that we've been dealing with a lot 400 00:23:20,119 --> 00:23:24,600 Speaker 3: of fires and the West Coast strike. I'm really pleased 401 00:23:24,600 --> 00:23:27,639 Speaker 3: with that. Our car velocity, which is the number of 402 00:23:27,720 --> 00:23:30,840 Speaker 3: miles of car moves every day, is up ten percent 403 00:23:31,119 --> 00:23:34,000 Speaker 3: year over year. Our dwell which is how long how 404 00:23:34,040 --> 00:23:37,520 Speaker 3: many hours car spend sitting and not moving, is down 405 00:23:37,680 --> 00:23:41,440 Speaker 3: about ten percent, and so this is driving a consistency 406 00:23:41,480 --> 00:23:45,679 Speaker 3: and efficiency in the operations, but it's also what drives 407 00:23:46,119 --> 00:23:49,280 Speaker 3: the level of our customer service. So the on time 408 00:23:49,359 --> 00:23:53,040 Speaker 3: train performance combined with what we call first mile last 409 00:23:53,040 --> 00:23:55,760 Speaker 3: mile service, so the movement of a customer's car from 410 00:23:55,760 --> 00:23:59,400 Speaker 3: a yard to their facility or the reverse, that's now 411 00:23:59,480 --> 00:24:02,040 Speaker 3: up over twenty percent for the last two cours. And 412 00:24:02,119 --> 00:24:05,239 Speaker 3: so our efficiency is running where we needed to be 413 00:24:05,840 --> 00:24:09,200 Speaker 3: and our on time service is operating at or head 414 00:24:09,240 --> 00:24:11,520 Speaker 3: of where I would have expected to be given what 415 00:24:11,520 --> 00:24:14,560 Speaker 3: we've gone through this summer. So the reverence running well. 416 00:24:16,119 --> 00:24:19,439 Speaker 1: And was there a lot of muscle memory in terms 417 00:24:19,440 --> 00:24:21,960 Speaker 1: of your the people that work at CN when you 418 00:24:22,000 --> 00:24:28,000 Speaker 1: pivoted back to PSR, because obviously CN is one of 419 00:24:28,000 --> 00:24:31,879 Speaker 1: the founders of PSR with Hunter Harrison, you know, so 420 00:24:32,119 --> 00:24:34,560 Speaker 1: just wondering since it was it seemed like it was 421 00:24:34,600 --> 00:24:38,280 Speaker 1: always under the surface. Was it easy to bring that back? 422 00:24:38,840 --> 00:24:41,800 Speaker 3: Yes, much easier than I thought. But let me say first, 423 00:24:41,920 --> 00:24:44,160 Speaker 3: I'm not sure what we don't call ours PSR. I'm 424 00:24:44,160 --> 00:24:46,720 Speaker 3: not sure anymore what PSR is. I don't think anybody. 425 00:24:47,080 --> 00:24:49,840 Speaker 3: Everybody I think believes it's something different. So what we're 426 00:24:49,920 --> 00:24:53,480 Speaker 3: running is a scheduled operation that we wanted to be 427 00:24:53,600 --> 00:24:57,719 Speaker 3: disciplined and focused. And you know, so when we launched 428 00:24:57,760 --> 00:25:01,000 Speaker 3: it last April, the first tension, and what we did 429 00:25:01,200 --> 00:25:03,240 Speaker 3: was launch it in phases because I thought it would 430 00:25:03,280 --> 00:25:07,199 Speaker 3: be difficult, and we launched that. Change is always difficult, 431 00:25:07,200 --> 00:25:09,679 Speaker 3: and this was big change. So we launched it first 432 00:25:09,680 --> 00:25:12,919 Speaker 3: at the four Humpyards cross the in and I was 433 00:25:13,000 --> 00:25:16,280 Speaker 3: stunned how quickly they picked up this concept. But you're 434 00:25:16,320 --> 00:25:19,000 Speaker 3: absolutely right. What turned out was we had enough people 435 00:25:19,040 --> 00:25:20,600 Speaker 3: they'd been here and when we used to do this, 436 00:25:21,080 --> 00:25:23,199 Speaker 3: and once they knew that this is the direction that 437 00:25:23,200 --> 00:25:26,040 Speaker 3: we were going, this just started to move. It happened 438 00:25:26,760 --> 00:25:29,760 Speaker 3: very very quickly, and the improvement is still coming. So 439 00:25:29,800 --> 00:25:32,919 Speaker 3: it is muscle memory. And I think that everybody Our 440 00:25:33,000 --> 00:25:35,040 Speaker 3: job as leaders is to make this plan as simple 441 00:25:35,040 --> 00:25:38,239 Speaker 3: as possible, so everybody understands it and everybody sees their 442 00:25:38,320 --> 00:25:41,840 Speaker 3: role in it. And everybody understands this plan. It's a 443 00:25:41,880 --> 00:25:44,320 Speaker 3: scheduled operating plan. They know what the metrics are, they 444 00:25:44,320 --> 00:25:46,240 Speaker 3: know what success looks like, and they know what their 445 00:25:46,320 --> 00:25:50,200 Speaker 3: job is every day when to do it. So it's 446 00:25:50,600 --> 00:25:51,400 Speaker 3: running very well. 447 00:25:52,440 --> 00:25:52,840 Speaker 2: Okay. 448 00:25:53,280 --> 00:25:55,800 Speaker 1: And then you know we were talking earlier about the 449 00:25:55,840 --> 00:25:57,879 Speaker 1: long term targets that you have the ten to fifteen 450 00:25:57,880 --> 00:26:02,480 Speaker 1: percent EPs growth through twenty twenty section twenty twenty four. 451 00:26:04,240 --> 00:26:09,760 Speaker 1: What percentage of that is relying on volume growth versus 452 00:26:10,160 --> 00:26:12,679 Speaker 1: what you guys are doing on the productivity side and 453 00:26:12,720 --> 00:26:17,200 Speaker 1: the operation side. Are you able to break out where 454 00:26:17,560 --> 00:26:18,960 Speaker 1: that growth is going to come from? 455 00:26:19,240 --> 00:26:21,480 Speaker 3: Well, here's what I how I'd like you to think 456 00:26:21,480 --> 00:26:22,920 Speaker 3: about it. We've done a lot of work in the 457 00:26:23,000 --> 00:26:28,080 Speaker 3: last year and a half getting our operation structured, optimized 458 00:26:28,160 --> 00:26:33,480 Speaker 3: and running well. And so we're maintaining that plan through 459 00:26:34,000 --> 00:26:38,119 Speaker 3: the freight slowdown. So we had an option of cutting 460 00:26:38,119 --> 00:26:40,879 Speaker 3: a lot of resources. We opted not to so that 461 00:26:40,920 --> 00:26:43,560 Speaker 3: we can maintain the integratory to the plan, We can 462 00:26:43,600 --> 00:26:46,200 Speaker 3: maintain the service level to our customers, and that we're 463 00:26:46,240 --> 00:26:50,000 Speaker 3: positioned as the volume starts to come back. So what 464 00:26:50,080 --> 00:26:52,960 Speaker 3: you see now is a railroad that's running well and 465 00:26:53,040 --> 00:26:56,359 Speaker 3: has the capacity to lift on the resources that are 466 00:26:56,359 --> 00:26:58,680 Speaker 3: in place to lift as soon as the volumes comes back. 467 00:26:58,720 --> 00:27:02,840 Speaker 3: So you're going to see that margin leverage really start 468 00:27:02,880 --> 00:27:04,520 Speaker 3: to lift as volumes return. 469 00:27:05,520 --> 00:27:09,120 Speaker 1: And you know, outside of the organic growth is CN 470 00:27:09,359 --> 00:27:12,840 Speaker 1: are you constantly looking for acquisitions, whether that be inside 471 00:27:12,920 --> 00:27:15,920 Speaker 1: or outside of the railroad industry. 472 00:27:16,400 --> 00:27:18,200 Speaker 3: Well, I would tell you we, you know, we look 473 00:27:18,280 --> 00:27:21,280 Speaker 3: at our business through the lens of how do we 474 00:27:21,440 --> 00:27:23,399 Speaker 3: power the economy and the growth of the economy, and 475 00:27:23,440 --> 00:27:27,480 Speaker 3: how would we partner with our customers to continue to 476 00:27:27,760 --> 00:27:30,720 Speaker 3: help them grow. And so that's the lens we'd look 477 00:27:30,720 --> 00:27:32,280 Speaker 3: at that through. If you look back in the history 478 00:27:32,280 --> 00:27:35,680 Speaker 3: of CN, the acquisitions of railroads has been a big 479 00:27:35,720 --> 00:27:38,560 Speaker 3: part of our growth story. Whether it was the Illinois 480 00:27:38,640 --> 00:27:40,840 Speaker 3: Central of the Wisconsin Center back in the nineteen nineties 481 00:27:40,840 --> 00:27:43,640 Speaker 3: early two thousands, whether it was you know, we bought 482 00:27:43,680 --> 00:27:47,480 Speaker 3: a number of short lines after that, more recently, the 483 00:27:48,359 --> 00:27:51,720 Speaker 3: you know, the railroad around Chicago. But the way that 484 00:27:51,720 --> 00:27:54,240 Speaker 3: we look at this is what are the opportunities for 485 00:27:54,320 --> 00:27:59,159 Speaker 3: us to provide better levels of service to our bigger 486 00:27:59,200 --> 00:28:02,520 Speaker 3: groups of customers, So we are open for business from 487 00:28:02,520 --> 00:28:05,160 Speaker 3: that perspective, We're doing a lot of partnering and we're 488 00:28:05,160 --> 00:28:08,119 Speaker 3: going to continue to lean into those partnerships in various ways. 489 00:28:08,119 --> 00:28:11,720 Speaker 3: We just did a deal on the cbnsset of g 490 00:28:12,200 --> 00:28:15,440 Speaker 3: W property in Eastern Canada that we think positions us 491 00:28:15,480 --> 00:28:18,280 Speaker 3: well for the future of growth in Eastern Canada. Those 492 00:28:18,359 --> 00:28:21,119 Speaker 3: are the types of things, whether it's a partnership like 493 00:28:21,160 --> 00:28:25,280 Speaker 3: the Falcon or whether it is an asset based partnership 494 00:28:25,840 --> 00:28:29,600 Speaker 3: like the GNW deal. We're looking at all kinds of 495 00:28:29,640 --> 00:28:35,119 Speaker 3: ways to add to the ability to partner with our customers. 496 00:28:35,000 --> 00:28:39,360 Speaker 1: Gotcha, and feeding the networks important. You know, all railroads 497 00:28:39,360 --> 00:28:43,160 Speaker 1: have a lot of stakeholders, whether it's shippers, employees, regulators, 498 00:28:43,440 --> 00:28:47,760 Speaker 1: or investors. How do you balance that all those different 499 00:28:47,800 --> 00:28:51,160 Speaker 1: interests while running a railroad. 500 00:28:51,320 --> 00:28:53,760 Speaker 3: Well, listen, I'd like to say that we're a stakeholder 501 00:28:53,760 --> 00:28:57,200 Speaker 3: company with a railroad attached to it. We operate through 502 00:28:57,280 --> 00:29:01,040 Speaker 3: hundreds of communities, you know, two countries, you know, lots 503 00:29:01,080 --> 00:29:07,720 Speaker 3: of provinces, and our stakeholders are becoming increasingly important to 504 00:29:07,840 --> 00:29:11,080 Speaker 3: our ability to imagine a future. And so as we 505 00:29:11,160 --> 00:29:13,280 Speaker 3: talk to them, you know, all of their issues on 506 00:29:13,320 --> 00:29:17,000 Speaker 3: the surface seem complex and seem unique to them, but 507 00:29:17,080 --> 00:29:19,800 Speaker 3: as you really get into it, I think that there's 508 00:29:20,760 --> 00:29:24,280 Speaker 3: a commonality across all. What everybody wants at the end 509 00:29:24,320 --> 00:29:29,200 Speaker 3: of the day is a strong economy and safe communities. 510 00:29:30,000 --> 00:29:32,080 Speaker 3: And if we can lock arms, it's going to take 511 00:29:32,880 --> 00:29:36,960 Speaker 3: partnership in some collaboration. But if we can understand this 512 00:29:37,160 --> 00:29:39,800 Speaker 3: and lock arms around how to do that, then I 513 00:29:39,840 --> 00:29:43,160 Speaker 3: think that, you know, we bring stakeholders together and we 514 00:29:43,200 --> 00:29:45,880 Speaker 3: get organized around how we do that and what each 515 00:29:45,880 --> 00:29:48,479 Speaker 3: of our role is on that. So if you think 516 00:29:48,520 --> 00:29:52,320 Speaker 3: about powering growth, it means you know not just how 517 00:29:52,320 --> 00:29:56,480 Speaker 3: the railroad performs, but it means how all parts of 518 00:29:56,520 --> 00:30:00,880 Speaker 3: the supply chain perform and perform together. Certainly watched through 519 00:30:00,880 --> 00:30:04,160 Speaker 3: COVID and the recovery from COVID, the importance of highly 520 00:30:04,200 --> 00:30:07,600 Speaker 3: performing supply chains that have the right level of capacity 521 00:30:07,600 --> 00:30:10,720 Speaker 3: when our customers in our communities needed. We need to 522 00:30:10,720 --> 00:30:13,480 Speaker 3: get better and better at that. And if we can 523 00:30:13,520 --> 00:30:18,560 Speaker 3: do that, I think our stakeholders become a lot happier. 524 00:30:19,160 --> 00:30:22,240 Speaker 3: If you look at you from a growth perspective, trade 525 00:30:22,280 --> 00:30:26,560 Speaker 3: flows that we are more impacted by the geopolitical landscape 526 00:30:27,640 --> 00:30:29,680 Speaker 3: when it comes to economy and volument that I think 527 00:30:29,720 --> 00:30:33,040 Speaker 3: we ever have been before. We need to understand where 528 00:30:33,040 --> 00:30:34,840 Speaker 3: all that potash is going to move or where the 529 00:30:34,880 --> 00:30:37,040 Speaker 3: new canola crush is going to want to move, so 530 00:30:37,080 --> 00:30:39,400 Speaker 3: we can have the capacity in place to do it. 531 00:30:39,480 --> 00:30:42,880 Speaker 3: If we work with stakeholders and our communities, well we 532 00:30:42,920 --> 00:30:45,560 Speaker 3: can do exactly that, but it's going to take some cooperation. 533 00:30:46,320 --> 00:30:49,480 Speaker 3: If you think about safety, as I said, our aspiration 534 00:30:49,640 --> 00:30:54,200 Speaker 3: is zero harm, injuries, zero fatalities, and zero impact on 535 00:30:54,240 --> 00:30:57,960 Speaker 3: the community, including a better and better emissions profile. So 536 00:30:58,000 --> 00:31:01,520 Speaker 3: I think at the end the day, our interests are 537 00:31:01,640 --> 00:31:05,400 Speaker 3: absolutely aligned, and if we're going to achieve our collective goals, 538 00:31:05,440 --> 00:31:07,840 Speaker 3: it's about working together, not working against each other. 539 00:31:09,280 --> 00:31:11,880 Speaker 1: Right on the regulation side, in the US, there's more 540 00:31:11,880 --> 00:31:15,680 Speaker 1: and more talk about reciprocal switching. I know that there's 541 00:31:15,680 --> 00:31:18,640 Speaker 1: something similar in Canada. Do you have any concerns about 542 00:31:18,640 --> 00:31:21,000 Speaker 1: it coming to the US. Do you have any thoughts 543 00:31:21,000 --> 00:31:22,080 Speaker 1: on reciprocal switching. 544 00:31:22,720 --> 00:31:25,840 Speaker 3: It's really it's incredibly important that we have the right 545 00:31:25,960 --> 00:31:29,960 Speaker 3: regulatory environment. We all need regulation, but what we want 546 00:31:30,040 --> 00:31:32,760 Speaker 3: is the right regulation, and where we're aligned with the 547 00:31:32,760 --> 00:31:35,960 Speaker 3: regulators is we want highly performing supply chains that have 548 00:31:36,040 --> 00:31:39,000 Speaker 3: that right amount of capacity where we need it, and 549 00:31:39,000 --> 00:31:41,080 Speaker 3: that we provide the right service to our customers. So 550 00:31:41,120 --> 00:31:42,800 Speaker 3: I think if we're providing the right service to our 551 00:31:42,840 --> 00:31:46,360 Speaker 3: customers and we're doing it in a safe manner, that 552 00:31:46,400 --> 00:31:49,040 Speaker 3: we're going to get the kind of regulation that we need. 553 00:31:49,480 --> 00:31:51,800 Speaker 3: We've had, as you say, levels of different kind of 554 00:31:51,880 --> 00:31:55,720 Speaker 3: extended inner switching in Canada over the years, and we've 555 00:31:55,800 --> 00:31:59,120 Speaker 3: learned from that that when done well, that kind of 556 00:31:59,160 --> 00:32:03,479 Speaker 3: regulation enhance the service to customers. When done poorly, what 557 00:32:03,520 --> 00:32:07,480 Speaker 3: it does is slow down supply chains. It means that 558 00:32:07,840 --> 00:32:11,360 Speaker 3: our cars move more slowly. It means that the supply 559 00:32:11,520 --> 00:32:16,920 Speaker 3: chain reduces in capacity, and it is a disincentive for investment. 560 00:32:17,360 --> 00:32:21,920 Speaker 3: So done well, it helps. Done poorly, it has unintended 561 00:32:21,920 --> 00:32:25,400 Speaker 3: consequences of diminishing the performance in the capacity of supply. 562 00:32:25,160 --> 00:32:29,440 Speaker 1: Chains, okay, and I just kind of a near term 563 00:32:29,520 --> 00:32:34,120 Speaker 1: question our volume so far in the fourth quarter. 564 00:32:34,920 --> 00:32:39,280 Speaker 3: Well, listen, we believe that we hit the bottom from 565 00:32:39,280 --> 00:32:42,560 Speaker 3: a volume's perspective this summer, and we've seen sequential growth 566 00:32:42,640 --> 00:32:46,080 Speaker 3: since say July, and so one of the benefits of 567 00:32:46,080 --> 00:32:51,440 Speaker 3: a diversified portfolio. Our bulk business is strong. We're moving potash, 568 00:32:51,920 --> 00:32:54,880 Speaker 3: I think record levels of potash. The grain crop is 569 00:32:54,920 --> 00:32:58,160 Speaker 3: all moving. Our metallurgical coal is going to move very 570 00:32:58,200 --> 00:33:00,760 Speaker 3: well through the remainder of this year. And if you 571 00:33:00,800 --> 00:33:03,520 Speaker 3: look at our merchandise or our car load commodities, we've 572 00:33:03,520 --> 00:33:08,000 Speaker 3: seen a bit of inflection. Certainly frakstands moving strongly. The 573 00:33:08,120 --> 00:33:11,760 Speaker 3: plastics and chemicals have started to pivot up. So that's 574 00:33:12,040 --> 00:33:15,040 Speaker 3: you know, we're starting to really see the firming of 575 00:33:15,160 --> 00:33:17,560 Speaker 3: that part of our business. It is the consumer section 576 00:33:18,880 --> 00:33:20,320 Speaker 3: of our business that it's got a bit of a 577 00:33:20,400 --> 00:33:23,680 Speaker 3: question mark. And if you look container business, it's been 578 00:33:23,720 --> 00:33:26,040 Speaker 3: impacted by a couple of things. As you know, there 579 00:33:26,080 --> 00:33:29,480 Speaker 3: was a flood of containers into the continent last summer, 580 00:33:29,520 --> 00:33:32,840 Speaker 3: and so we've been working through the retailers have been 581 00:33:32,880 --> 00:33:35,720 Speaker 3: working through that inventory. We think that inventory is getting 582 00:33:35,760 --> 00:33:38,840 Speaker 3: back down to roughly more normal levels. So the question 583 00:33:38,920 --> 00:33:42,600 Speaker 3: really becomes what consumer demand looks like as we look forward. 584 00:33:43,120 --> 00:33:45,440 Speaker 3: And then, of course we had the West Coast port 585 00:33:45,480 --> 00:33:48,400 Speaker 3: strike in Canada here that took the port down for 586 00:33:48,440 --> 00:33:52,920 Speaker 3: a couple of weeks that had a unfortunate impact on 587 00:33:53,000 --> 00:33:55,280 Speaker 3: the container business coming in through the West Coast. We 588 00:33:55,400 --> 00:33:59,680 Speaker 3: positioned rupert as the port of access for not only 589 00:33:59,720 --> 00:34:03,160 Speaker 3: can but also the United States in particular, and so 590 00:34:03,240 --> 00:34:08,120 Speaker 3: that volume has reverted to US ports of entry for 591 00:34:08,200 --> 00:34:10,880 Speaker 3: right now. We're working hard to get that back, but 592 00:34:11,040 --> 00:34:13,200 Speaker 3: you know, we think that it'll come gradually over the 593 00:34:13,200 --> 00:34:15,319 Speaker 3: course of the next year. So it's a mixed bag, 594 00:34:15,400 --> 00:34:20,680 Speaker 3: a diversified portfolio on an overall basis strengthening and that 595 00:34:20,800 --> 00:34:22,200 Speaker 3: is very good news. 596 00:34:23,200 --> 00:34:26,560 Speaker 1: And is the is the domestic intermodal as weak as 597 00:34:26,600 --> 00:34:27,880 Speaker 1: the international intermodial. 598 00:34:28,120 --> 00:34:32,200 Speaker 3: Domestic innermodial actually states stronger longer, and we're starting to 599 00:34:32,239 --> 00:34:36,040 Speaker 3: see it firm up earlier as we as we look forward. 600 00:34:36,160 --> 00:34:38,520 Speaker 3: So but the two of them are tied together. You 601 00:34:38,560 --> 00:34:42,520 Speaker 3: think the international volumes come in, the domestic program plays 602 00:34:42,520 --> 00:34:44,480 Speaker 3: a role in making sure they get to the right places. 603 00:34:45,120 --> 00:34:47,000 Speaker 3: So we expect to see as I say it lived 604 00:34:47,080 --> 00:34:52,279 Speaker 3: through through next year. We called it wrong last year 605 00:34:52,320 --> 00:34:54,040 Speaker 3: for what would happen this year. So I'm a little 606 00:34:54,040 --> 00:34:59,800 Speaker 3: bit cautious about you know, specific projections, but we believe 607 00:34:59,800 --> 00:35:01,359 Speaker 3: it come over the course of next year. 608 00:35:02,440 --> 00:35:05,319 Speaker 1: And then also, you know, egg has been was a 609 00:35:05,360 --> 00:35:08,799 Speaker 1: great growth driver for CN help mitigate some of the 610 00:35:08,840 --> 00:35:14,080 Speaker 1: weakness that you guys had in volumes. Are what's twenty 611 00:35:14,120 --> 00:35:15,880 Speaker 1: twenty four looking like, because I mean, you're going to 612 00:35:15,920 --> 00:35:17,360 Speaker 1: have very difficult comps. 613 00:35:18,360 --> 00:35:20,600 Speaker 2: Are you able to grow that business next year? 614 00:35:21,360 --> 00:35:23,640 Speaker 3: I had to tell you, you know, egg is going 615 00:35:23,680 --> 00:35:26,760 Speaker 3: to be a continued growth story. If you think across 616 00:35:26,840 --> 00:35:30,600 Speaker 3: the broad market sector, the yields continue to grow up 617 00:35:30,600 --> 00:35:33,479 Speaker 3: on grain. Egg is going to play a big role 618 00:35:34,160 --> 00:35:36,640 Speaker 3: in the new fuels if you think about the canola 619 00:35:36,719 --> 00:35:40,600 Speaker 3: crush that goes into some of the new fuel production. 620 00:35:41,239 --> 00:35:44,480 Speaker 3: I think about potash that's being produced in Canada to 621 00:35:44,800 --> 00:35:48,520 Speaker 3: help the egg sector, you know, grow those yields. So 622 00:35:49,680 --> 00:35:51,440 Speaker 3: you know, when you get right down to it, this 623 00:35:51,560 --> 00:35:55,400 Speaker 3: year we're moving a lot of potash. The grain crop 624 00:35:55,440 --> 00:35:57,759 Speaker 3: is not quite as big as last year, and the 625 00:35:57,840 --> 00:36:00,759 Speaker 3: risk is a course for twenty twenty four that it 626 00:36:01,040 --> 00:36:02,960 Speaker 3: will run out of the crop a little bit earlier. 627 00:36:03,000 --> 00:36:05,400 Speaker 3: To move and then from there it gets you know, 628 00:36:05,560 --> 00:36:08,000 Speaker 3: it depends on how the crop turns out in twenty 629 00:36:08,040 --> 00:36:10,960 Speaker 3: twenty four, but I think that you know, separate from 630 00:36:10,960 --> 00:36:13,919 Speaker 3: the puts and takes of any specific crop or any 631 00:36:13,920 --> 00:36:17,360 Speaker 3: given year, this is a longer term growth story. 632 00:36:18,160 --> 00:36:21,160 Speaker 1: Okay, and then I guess can you maybe just maybe 633 00:36:21,160 --> 00:36:22,560 Speaker 1: one more question before we go? 634 00:36:22,640 --> 00:36:25,120 Speaker 2: Can you talk about the auto industry? 635 00:36:25,239 --> 00:36:29,480 Speaker 1: And you know, from my perspective, it's a long term 636 00:36:29,520 --> 00:36:31,920 Speaker 1: growth driver for CN, can you talk about where that 637 00:36:31,960 --> 00:36:32,920 Speaker 1: growth is coming from. 638 00:36:33,480 --> 00:36:36,239 Speaker 3: I would tell you that the auto sector has been 639 00:36:36,560 --> 00:36:40,600 Speaker 3: surprisingly strong as we've gone through this year, and we 640 00:36:40,640 --> 00:36:43,200 Speaker 3: don't see that abating at all. I think there's still 641 00:36:43,239 --> 00:36:46,600 Speaker 3: some inventory issues that are being adjusted, but as we 642 00:36:46,640 --> 00:36:49,319 Speaker 3: look forward, the transition to electric vehicles and where those 643 00:36:49,320 --> 00:36:52,600 Speaker 3: investments have been made is going certainly part of our 644 00:36:52,640 --> 00:36:55,600 Speaker 3: growth strategy. We look at it through the whole cycle, 645 00:36:55,680 --> 00:36:58,360 Speaker 3: the whole supply chain, right from kind of the critical 646 00:36:58,400 --> 00:37:00,480 Speaker 3: minerals that are going to go into that to the 647 00:37:00,520 --> 00:37:04,520 Speaker 3: batteries into the vehicles, and then the movement of vehicles, 648 00:37:05,040 --> 00:37:07,319 Speaker 3: and so we're pretty excited about that future. We're glad 649 00:37:07,320 --> 00:37:09,160 Speaker 3: to see some of the labor issues that they've had 650 00:37:09,200 --> 00:37:12,880 Speaker 3: there be resolved, and you know it's going to be 651 00:37:13,560 --> 00:37:15,960 Speaker 3: growth for the continent, but certainly growth on our network 652 00:37:16,000 --> 00:37:16,319 Speaker 3: as well. 653 00:37:17,520 --> 00:37:20,080 Speaker 1: All Right, great, fantastic. Well I think we're going to 654 00:37:20,120 --> 00:37:22,520 Speaker 1: wrap it up here, Tracy. I really want to thank 655 00:37:22,560 --> 00:37:25,719 Speaker 1: your time. I learned a lot about CN and railroading, 656 00:37:26,480 --> 00:37:28,560 Speaker 1: and I want to thank everyone for joining us on 657 00:37:28,600 --> 00:37:32,239 Speaker 1: the podcast. If you like what you heard, please subscribe 658 00:37:32,320 --> 00:37:36,840 Speaker 1: and please rate the podcast. Until next time, have a 659 00:37:36,840 --> 00:37:43,200 Speaker 1: great day, everybody.