Gemma Queralt

CANADIAN PACIFIC RAILWAY SUMMARY

Canadian Pacific Railway was the first coast-to-coast transcontinental

railway and worked efficiently until approximately mid-90 when their
situation turned to be very problematic and the strategy they had been
using since their beginnings started to cause them struggles because of high
costs, low profitability, and many new customer-service requirements.
Knowing these, the company decided to make a radical change in their
strategies and philosophy regarding operation and management to
relaunch it from an imminent “disaster”.

During the first century, CPR based its operations in a tonnage-based

approach which means they would only launch trains filled in their
maximum capacity and if the train wasn’t filled enough, it would’ve been
delayed or even cancelled. In theory, this approach seemed to be optimal
to minimize costs and maximize trains capacity but, it caused many
problems such as annoyed costumers, greater storage yards requirement….
As a solution for that problem, they decided to apply a schedule-based
approach which is basically orientated to develope planned schedules
based on forecasting traffic levels, customers demand and trains tonnage,
this means that even if the trains weren’t completely full, they would be
forced to run as schedule. So, at that point, they won’t focus on tonnage
anymore but in trains designing and schedules.

In collaboration with MultiRail Applied Systems they implemented the new

approach (scheduled-based) using MultiRail software and named the plan
the Integrated Operating Plan (IOP). The Integrated Operating Plan was
designed to achieve some competitive goals such as reducing the number
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of trains by implementing blocking plans (groups of railcars that share some

portions of their routes) because, among other reasons, they realized this
would turn to a more efficient use of terminals, tracks, and yard resources.
For the implementation they created a trip plan which specified how the
trains should move and the specific block requirements to move a shipment
correctly from origin to destination. As CPR predicted, this approach/new
plan, resulted on; saving almost 50% of the total transit time what could be
used to reduce time speeds thus reduce fuel consumption, improving
reliability and reducing transit times thanks to an increase in departure
frequencies which also helped on yards optimization.

On doing all those improvements and implementing new approaches and

new plans, CPR made a wholesome change regarding operations which
resulted on a maximization of their profit and a more efficient usage of their
resources.

Furthermore, CPR not only has been rewarded for its service excellence and
safe product handling by a bunch of shipping organizations and customers
but also, at least two other major North American railways, had
implemented similar operating plans and have begun using similar
approaches. That’s why we can state that CPR decision on changing to a
new game plan, as Robert Richie, President and CEO of CPR said, resulted
on a success for the company which has become a referent for many other
railroads across the American continent.