Canadian National Railway Company (NYSE:CNI) Q4 2022 Earnings Call Transcript

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Edmond Harris: Well, I think one of the first things that I saw while I was consulting beginning in April was there wasn’t much adherence to an operating plan and the discipline that we put in beginning in April started leading into some savings right off the bat. And it was something as simple, Benoit, is running on time. From that, we looked at train length. We were running trains way too long, way out of slot, which just created a lot of havoc across the network and really killed our service offering. So we got trains back where they need to be. And lo and behold, our velocity jumps up significantly, probably, what, 10% or so looking at the team here, made all the difference in the world of getting across the railroad. So that’s the basis of the operating plan as we speak right now.

Train speed has come up very nicely. I’ve already mentioned about the progress we’ve made in a necessary expense behind dead heading and recrewing, tighter schedule adherence, and this is near and dear to my heart. We stay with the schedule 7 days a week, and we run the same schedule every day. And if the traffic is there, we’re going. If the traffic is not there, we’re going, whether it’s 120 cars or 40 cars, we’re leaving on time. That’s really the secret of the business, right? The way I was brought up, and that’s what we’ve been doing. We’re also going to reinstitute individual car trip plans. This is something that we started back in the early 2000s. You probably remember it, where we can actually see where the car falls off trip plan, we can isolate the location where it fell off trip plan, the reason why it fell off trip plan, and it was a daily correction exercise we went through.

Very impressive to a customer that wants to know why their car is not on time, and we can roll out exactly why it wasn’t on time and the reason for it when Doug sales force makes a call. So that’s just some of the plan that we’ve been addressing since I’ve been on board, and it’s a lot easier to do it as an active employee than it as a consultant. I don’t like suggesting anything. I like telling. So that’s where we’re at. And so far, so good. I’m very pleased with the results and the progress that we’ve made operationally.

Operator: The next question is from Cherilyn Radbourne from TD Securities.

Cherilyn Radbourne: I also had a question for Ed. So I guess I’m picking up on the last one. First of all, welcome back. Just curious now that you returned to CN after having had the opportunity to assist out a couple of other class ones operationally. Can you comment on what you think RCM’s particular strength from an operating perspective? And I think in your prepared remarks, you mentioned the company is moving back to 3 operating regions from 2. So maybe within that, you could outline the rationale for that in particular?

Edmond Harris: Well, I don’t like to compare ourselves to other carriers because all the networks are different to begin with. And I can tell you, I learned a lot in my time with other carriers. I learned different ways of doing the business. But quite frankly, as I said earlier, this is a simple process. I mean Mr. Harrison always just tell us it’s like checkers, keep them on the black squares and figure out that way around them. And that’s exactly what we’re doing here today. What I’m very pleased about this network is it’s solid. It’s linear, it’s easy to operate on, and it’s pretty easy to schedule when it comes right down to it. There’s not a lot of interference with cross traffic or other railroads and the acquisition, when I left CN to begin with, I wish I was part of it, the EJ&E acquisition, we fly through Chicago.

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