HALIFAX, NS – The future success for railroads in Canada will hinge on their ability to provide more innovative offerings and improve customer service rather than provide low pricing, according to Jean Jacques Ruest, executive vice president & chief marketing officer, CN Rail.
Ruest made his comments at CITT’s Multi-Modal C-Suite Panel in Halifax yesterday.
Traditionally it was commonly accepted that the economics of rail surpassed the economics of trucking services at around the 750-mile mark. During the discussion of the C-Suite Panel, however, it was revealed that may have shifted down to 500 miles, with many motor carriers themselves using rail services. And, in some cases, rail service could be viable at as low as a 350-mile distance as a way to avoid congested corridors such as Toronto to Montreal.
Ruest, however, emphasized that rail has to do a better job at addressing service concerns to seize on such opportunities.
“Even though we have lower-cost solutions, in too many cases customers can’t use us because of the service we provide. Rail needs to address better service. It’s not the cost of the service; it’s if we can provide a service the customer can live with…We need to be more innovative and creative with our services. We need to be faster to get services to market.”
Ruest explained that railroads became inward focused during the 1990s when they were in financial difficulties and had to cut costs. But today railroads are the darlings of Bay St. thanks to their financial performance and need to pivot their focus. They need to define how they will fit into and contribute to the overall supply chain.
“We need to provide rail service that is connected rather than disconnected to the whole supply chain,” Ruest said.
He pointed to the example of the coal terminal at Prince Rupert where all stakeholders must work closely and collaboratively in order to provide a customer experience that is competitive with what customers can receive from competitors in other countries.
But Ruest said there is still a need to remain vigilant on costs, energy in particular, with an eye towards more cost-effective alternatives.
“Today the fuel of choice is diesel. That does not mean it will always be that way. Natural gas may be a viable alternative,” he said, pointing out there are already experiments with LNG-powered locomotives.
Ruest was joined on the blue-chip panel by Doug Harrison, COO of Day and Ross Transportation Group; Jeff Cullen, CEO Bellville Rodair; Neil McKenna, vice president, transportation, Canadian Tire; Lise Marie Turpin, vice president, Air Canada Cargo; and Rudy Mack, founder of Rudy Mack Associates.