Railway Series: Interview with Michael Bourque

May 17, 2012 8:39 am
Pg47_MICHAEL BOURQUE_courtesyRAC

Ottawa Life interviewed Michael Bourquethe new President & Chief Executive Officer of the Railway Association of Canada. Here is what he had to share.

Why is this a very exciting time for Canada’s rail sector?

Michael Bourque: Well, it’s clear that we’re going to continue producing a lot of goods in this country from our vast natural resources… we’re going to keep manufacturing products. Even through the recession, in the last several challenging years of the rising dollar, increasing manufacturing competition from other countries and high energy costs, we still have a great many manufacturers in this country who are globally competitive. We have vast resources: we’re exporting bitumen, potash, mining products, forest products… and the list goes on. And we’re going to keep doing that. Examples like Quebec’s Plan Nord (the Northern Plan) demonstrate that we’ll be opening up new production, creating new communities, and putting in railways so companies can ship their product to market in a competitive manner. So there’s a renaissance going on, based on the fact that the country and the economy are continuing to grow and we’re continuing to export. You can couple that with the fact that the government and the Prime Minister are signing trade agreements with many new countries and markets. The vulnerability that companies felt from the downturn in the U.S. has really caused Canadian companies to focus their exports on new customers around the world. This means that we have to be able to provide a service that will allow them to get their products to market in a very competitive way… and that’s what is happening.

So are trucks taking a back seat, so to speak, to rail?

Michael Bourque: I can’t really speak for trucking, but you will probably find that they are also struggling to keep up with demand in many cases. I’ve read that they have pretty significant driver shortages. That’s because they are busy and they are part of the supply infrastructure that allows Canadian producers to get goods to market. Trucking still plays a very important role in delivering goods. The difference between trucking and rail is that we obviously have much more capacity, and probably the most important aspect is on the sustainability side where rail pretty much moves more than 70 per cent of everything in this country for about 3 per cent of the emissions. So the sustainability story is significant. We’re able to move very large quantities of products for a lower price than trucking, while using less infrastructure that is paid for by the public, because the rail system is a privately owned, managed and operated, paid-for and even policed operation. It doesn’t require government funding to keep the rail lines open.

 What are the rail sector’s human resources challenges?

Michael Bourque: We’re going to be hiring 12 to 15 thousand people in the next four to five years, based on two trends: demographics where a number of people will be retiring from the industry, and growth in the industry. We currently have a number of programs to train new conductors, train new workers into the business and we’re working on building awareness around the rail sector as an exciting, future-oriented employer. The salaries are excellent with an average of about $80,000 a year. There are jobs from coast-to-coast and into new communities in the north. A locomotive today is far more technologically advanced than it used to be, so the training required for these positions is obviously more technologically-oriented nowadays.

What are some of the infrastructure challenges facing rail? 

Photo courtesy of RAC

Trains today are actually higher. We’re talking about intermodal, so a lot of these trains carry containers that are stacked higher and this causes demand for infrastructure changes. For example, there’s a project in Windsor-Detroit to build a new tunnel to replace one that’s about 100 years old, with a bigger and deeper tunnel that needs to accommodate these trains that are significantly higher. Again, this is just another way of taking advantage of what’s already there, making better use of existing railways. There’s a lot going on in terms of car changing, double-stacking cars.

The most significant challenge for the future is how we make sure that our infrastructure – not just for rail but for the whole supply chain – is up to the task that we’re going to require. If we’re developing new resources from mines, whether it’s in the Ring of Fire in northern Ontario or in northern Quebec or in northern Canada where there are many mining operations, or if you look at shale gas and shale oil developments, you look at the amount of demand that there is globally for potash, for specialty crops like pulse crops (a group of more than 60 different grain legume crops grown around the world – Ed.), the fact is that there is much more demand on the supply chain and this means that rail has to work really effectively with ports and terminals and trucking and shipping. Whenever you talk about the integration of these modes, you’re also talking about passenger rail, because freight trains go through cities and you want to be able to make sure that your freight trains move freely through urban areas without being held up and without holding up passengers who are shunted off the main line until the freight train passes by. The biggest challenge will be infrastructure. How do we continue to build it? How do we collaborate with all of these different actors to make sure we build the most advanced, integrated supply chain infrastructure in the world so our customers can remain globally competitive? That’s really what it’s all about. How do we work to ensure that our customers can remain globally competitive? Because if they’re not, we don’t have customers and we’re not in business.

Some years ago, the Port of Vancouver and the whole gateway there was identified as a bottleneck and everybody worked together to eliminate that bottleneck. Traffic flow was improved, so the Vancouver experience showed that this could be done, but it has to be done in a collaborative fashion because, unlike the old days when governments would finance these expansions or upgrades, governments today don’t have the money to finance large infrastructure projects. Now what is required is a commercial basis for building and collaborating to create the infrastructure that is needed for all of the different parts to work together. I think what we’re seeing is a move toward more private-sector financing and public-private partnerships. We’re a private-sector enterprise. We’re not government-owned anymore. Government doesn’t pay for the track. We own all the track. We provide leasing on the track. We upgrade the track with a significant amount of capital investment every year. We even pay taxes on our rights-of-way, so we paying for our whole infrastructure. Therefore, we look at this as a business enterprise and the only way the advanced, integrated supply chain infrastructure can be built is through collaboration and commercial agreements with private-sector financing. And of course government will be at the table as one of the stakeholders, but it will increasingly become a commercial enterprise because governments simply don’t have the capital to invest in these projects.

How did Canada achieve the impressive feat of having one of the safest and most productive railways in the world?

Michael Bourque: It really comes down to innovation in the way that we work with customers, creating longer, higher, quicker cars. Safety inspections are done while freight trains are moving at a very slow pace. You can’t afford to have somebody walking around these very long freight trains; instead, the inspector monitors the train while it’s moving. The advantage is that the inspector will hear things and notice things that he wouldn’t necessarily detect if the train was at a standstill. And yet the net result is that the train is still moving and you’re increasing your efficiency. It’s really a story of innovation and persistence. I like to think that in this country, because of the seasonal and geographical challenges we face, that essentially it forces us to be smarter than everybody else!

Rail Trends: The Economic Spin-Offs Benefit all Canadians

May 16, 2012 8:39 am
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Canada’s rail sector has bounced back from the 2009 global economic downturn and is posting solid volume growth. The industry continues to invest significantly in increased capacity and efficiencies. The findings are outlined in Rail Trends 2011, an annual compendium of statistics about rail sector performance published by the Railway Association of Canada (RAC).

The rail mode moves over 70 million people and more than 70 per cent of all surface goods every year, relieving road congestion and helping to limit harmful emissions with only 3 per cent of transportation sector GHGs coming from (attributable to) rail. Rail is growing, innovative, safe and secure and provides access to national and international markets. Rail facilitates more than $75 billion in trade per year.

Canadian rail employs 32,000 people, pays $2.5 billion in wages, and creates 50,000 indirect rail supplier jobs.

Unlike other modes, rail builds and maintains its entire infrastructure and invests about 20 per cent of revenue (on average, every year) back into its network to improve transit time for customers. Rail is the most capital-intensive industry in Canada.

About RAC

The rail mode moves over 70 million people and more than 70 per cent of all surface goods every year.

The Railway Association of Canada (RAC) is an authority on issues concerning Canadian rail and the trusted body government consults in establishing regulations and standards. Headquartered in Ottawa, RAC counts among its members Class 1 freight railways, as well as passenger, short line and regional railways; tourist, commuter and intercity rail lines; and more than 60 associate member suppliers and partners. RAC’s members operate about 60,000 km of main line track.

This is an exciting time for the rail sector. The rail mode is enjoying a rediscovery, a renaissance. Historically, rail received considerable public subsidy. Beginning in the late 1980s and early 1990s, there was a progressive increase in awareness of the need to introduce more market forces in order to encourage self-sufficiency, competitiveness and efficiency. This awareness has been reflected in public policy changes to help facilitate market mechanisms that are conducive to private sector investment and to free management in order to establish a highly efficient, privately funded network stretching across North America.

A combination of changes in regulations, such as the National Transportation Act (1987) and Canada Transportation Act (1996), resulted in the cancellation of explicit transportation subsidies, and the privatization of CN Railway (1995). These changes, coupled with the 1994 North American Free Trade Agreement (NAFTA), opened the way for rail to take its rightful place as the backbone of Canada’s transportation network. There is a new strategic approach. The trunk line component, formerly concentrated on an east-west axis, has now become continental, with a strong and vibrant north-south focus. This framework is successfully fed by a dynamic short line and regional railway component that is an entrepreneurial, flexible, well-managed and customer-focused sector. This symbiosis has created the best rail system in North America, according to RAC.

Rail in this country has vigorously responded to competitive challenges. Canada has some of the most successful railways in the world – critical to the competitiveness of our industrial sector and, by extension, to the standard of living of all Canadians.

Short Lines

A reinvigorated rail mode is constantly innovating.

Short line and regional railways represent those which “feed into and take away from” high-volume, trunk-line railways. Between 1996 and 1999, CN and CPR transferred more than 8,500 km of rail line to short line operators – over 80 per cent of the total identified for discontinuance over that period.

Short lines play a fundamental role in the industry as they provide a direct link to the Class 1 networks for shippers on branch lines. The traffic is collected by the short lines and generally interchanged with its main line partners who, on average, move the long-haul, high-volume traffic five times further to destination. They strive, in conjunction with their Class 1 partners, to provide seamless transportation service from points of origin to destination. Short lines originated 23 per cent of the carloads in 2010.

The success story is the excellent ‘fit’ between the long-haul, high-efficiency Class 1s and the local customer service and logistics capabilities of the short lines.

Innovation

A reinvigorated rail mode is constantly innovating. What are the rail sector’s innovation priorities?

According to Bruce R. Burrows, Vice-president, Public and Corporate Affairs at the RAC, one of the areas the rail sector is quite focused on is operating longer trains. “There’s a tremendous benefit from a safety perspective, an energy consumption perspective and a cost perspective, because the more goods we can handle with a given amount of power, the less cost that will ultimately be in terms of pricing to customers. This is more complicated than it sounds to be able to do it technically, but we’ve developed distributed power units through the length of the train. This has allowed us to run trains that are 30 per cent longer, if not more. We have found distributive power (or DP) trains put far less stress on track curves, for example, which allows the railways to extend the life of rail, ties and car wheels and to lower fuel consumption. This also means enhanced carrying capacity and customer service, while improving safety.

“Another area of innovation is better withstanding cold and erratic weather,” Burrows adds. “We’re doing a lot of research right now in cooperation with the National Research Council and the University of Alberta in Edmonton, looking at ways to better manage and handle varying weather conditions which could lead to avalanches or mudslides that wipe out operations for periods of time. It’s very disruptive to service and operations. We have also had success with the DP technology in maintaining proper brake pressure through a long train in cold temperatures; in the past, we have had to run shorter trains during the winter. Furthermore, new ‘quick start’ technology automatically shuts off the main diesel engine and allows it to remain warm in the wintertime when sitting in rail yards waiting for its next assignment. This is good for the environment because locomotives can be easily restarted and don’t have to be kept idling in cold weather, further reducing fuel consumption and emissions.”

A More Integrated Transport System

Canadian rail is building on its recent gains to make an important contribution to Canada’s future prosperity by assisting governments in achieving their public policy objectives.

How integrated is Canada’s intermodal transport system at the present time – and where does rail fit in?

“Rail is increasingly working on a very cooperative basis with the trucking sector,” Burrows says. “We have a very integrated port/rail network with Asian outsourcing and the vast increase in the number of containers moving across the Pacific Ocean into Canada to places like Vancouver and Prince Rupert, B.C., and there’s a lot of activity going in and out of these ports. The rail industry is now much more import-oriented and export-oriented. A lot of the domestic logistics patterns have changed, with many small regional manufacturing facilities being closed and replaced by big manufacturing clusters close to intermodal hubs for final delivery to the customer on a longer-haul basis. Chronic road congestion is pushing a lot of business back to the rail mode. So we have to be much more innovative in terms of the service we offer to our customers. And this is happening. We’re seeing a new golden age for Canadian rail!”

Canadian rail is building on its recent gains to make an important contribution to Canada’s future prosperity by assisting governments in achieving their public policy objectives. Rail has identified policy areas where it can assist: economic competitiveness, integration of the multi-modal transportation system, land-use planning, highway and urban congestion, the environment and public safety. The return of inner-city rail service to urban Canada will be explored in a later installment in this series.

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