The two transportation arteries that tie the country’s economy together are up against some serious operational challenges, and when Canadian Pacific (CP) and Canadian National (CN) railways have challenges, so does Canada.
CP is awaiting the results of a ratification vote on its final contract offer to unionized workers.
A rejection of that offer and subsequent interruption in CP rail service would disrupt the vital outbound flow of grain and other exports and the inbound movement of imports to domestic markets.
CN, meanwhile, is coming off a disappointing first quarter in which its net income was down 16% compared with the same quarter in 2017.
The railway’s outlook for 2018 has also been downgraded due to weaker-than-expected demand and a longer-than-anticipated construction period for major infrastructure projects. The narrative accompanying the first-quarter results also underscored management issues in the railway’s executive ranks.
Jean-Jacques Ruest, CN’s interim president and CEO, noted in a statement accompanying the first-quarter financial results that the “railway’s entire team [is] focused on restoring operational and service excellence for all [its] customers.” The admission that CN has been falling short on that service follows the March 5 departure of CEO Luc Jobin. In announcing the replacement of Jobin with Ruest, the company’s board of directors made a point of recognizing the “immediate operational and customer service challenges the company has been facing since fall 2017.” Ruest later apologized on behalf of CN for “not meeting the expectations of our grain customers, nor our own high standards.”
Canada’s railways remain one of the country’s competitive advantages in the North American marketplace, in part because, unlike their American counterparts, they have transcontinental rail lines. Their efficiency and consistency, which for the most part are well regarded in the wider world, are critical to the country’s economic health.
Keeping them on the right track is in everyone’s interest.
