Junctionfan [snipped] . . . NS runs tons of roadrailers . . . Why are they having capacity issues? Why are they not embarking more on projects that involve government investment such as the private and public partnerships NS and CSX have been getting with their new intermodal facilities and tunnel clearence projects?
CP has also been pretty aggressive in negotiating "directional running" agreements - mostly with CN - and trackage rights to expand its capacity and extend its reach cheaply. There's a long-standing DR arrangement for about 75 or 100 miles from Sudbury to Parry Sound, and a few years ago the one along the Fraser River Canyon was implemented. I know CP acquired (via D&H, dating back to the 1976 ConRail formation) rights into Allentown, Harrisburg, and Philadelphia, PA, Washington, D.C. and I believe also into northern New Jersey. WIthin the last few years (if my memory is right) into eastern Long Island - from or with CSX, as a reciprocal for the Syracuse - Montreal route.
- Paul North.
Well CN is basically scheduled but also the US based railroads have more trains running around and often run a lot of unscheduled "as needed" or "when ever it is ready" trains (ie ethanol, steel, coal) so it has a tendency to mess up flow somewhere along the line. However, if CSX for example was more scheduled and routed intermodals down the Canada Southern ie (had they purchased it from Conrail while Chessie System) I wonder what their Terminal Dwell times would be. Also, what is available crew capacity like for the railroads if that makes sense? Are they 100 percent capacity; do they need more crews and how many more or do they have surpluss crews etc-that will make a difference too.
As far as the current hours go, how come customers with the US railroads seem more satisfied than customers from Canadian railroads? What is going on there?
Ulrich CN then wasn't built by taxpayers either; after all CN was initially the conglomeration of a number of private lines including the National Transcontinental, the Intercolonial, the Canadian Nothern, the Grand Trunk and Grand Trunk Pacific. The railways in Canada were overbuilt by the beginning of the last century , and the formation of CN was for the most part an attempt to rationalize and to make sense of railways that by themselves had no hope of becoming profitable. The fact that CN does so well today is testament to the fact that the Company was reasonably well managed in its last decades as a Crown Corporation and of course since its privatization in 1995.
CN then wasn't built by taxpayers either; after all CN was initially the conglomeration of a number of private lines including the National Transcontinental, the Intercolonial, the Canadian Nothern, the Grand Trunk and Grand Trunk Pacific. The railways in Canada were overbuilt by the beginning of the last century , and the formation of CN was for the most part an attempt to rationalize and to make sense of railways that by themselves had no hope of becoming profitable. The fact that CN does so well today is testament to the fact that the Company was reasonably well managed in its last decades as a Crown Corporation and of course since its privatization in 1995.
The reality is both railways had taxpayer assistance over the construction period. The Onderdonk section through the Fraser canyon was government built and turned over to CPR, as was a second portion of the original main line east of North Bay in Ontario. I believe there was a cash subsidy as well as the land grants to CPR, but it is arguably the best investment in economic development ever made. The CNR constituents also received grants and subsidies to enable construction, as well as government guaranteeing bonds. The GTR had to be bailed out several times in the 19th century, mostly by the governments of the time absorbing the loss. As the CNoR and GTR descended into bankruptcy around the time of WW1, guess who had to foot the bill (again).
The National Transcontinental was in fact built by the government, and the GTR had foolishly agreed beforehand to lease it with the payment to be based on a percentage of the construction cost. That went way over estimate and potential traffic was scarce. The Intercolonial Railway was built and owned by the government, and was never a private line.
My understanding is that in its 70-odd years as a Crown Corporation CNR was recapitalised more than once. I think that basically meant writing off more taxpayer dollars that had been invested to make the ongoing books look better. CPR had to pay its way after the initial construction of the main line, The additional branches that followed also often had some initial assistance. Financing ongoing improvements was limited by what shareholders were willing to reinvest and the capital markets willing to lend. CN had only one shareholder, the federal government, who could at times be a very forgiving banker, especially if the project had political benefits.
John
Paul_D_North_Jr "OK, I think I have this figured out now - it goes like this: First, starting about 2007, Warren Buffett buys a similar 15% or so size portion of BNSF - then expands it, and in late 2009 decides to buy the whole thing. Then, starting about 2006 Bill Gates starts buying CN, and as of April 2011 owned a little over 10 % of it. Now we have another rich guy - Ackman - perhaps trying to emulate those 2 worthies by buying a 14% or so part of CP. But Ackman appears to have overlooked the part where they leave the present competent management in place and alone to run the railroad operation as they see fit - instead, he appears to be "pulling up the flowers to see how well they're growing". Time will tell . . . - Paul North.
"OK, I think I have this figured out now - it goes like this:
First, starting about 2007, Warren Buffett buys a similar 15% or so size portion of BNSF - then expands it, and in late 2009 decides to buy the whole thing.
Then, starting about 2006 Bill Gates starts buying CN, and as of April 2011 owned a little over 10 % of it.
Now we have another rich guy - Ackman - perhaps trying to emulate those 2 worthies by buying a 14% or so part of CP.
But Ackman appears to have overlooked the part where they leave the present competent management in place and alone to run the railroad operation as they see fit - instead, he appears to be "pulling up the flowers to see how well they're growing". Time will tell . . .
Paul:
Your analogy of Rich Guys buying railroads could be carried backward another step to include: Phillip J. Anschutz
Starting in 1984 when he bought Rio Grande Industries [parent of the DRG&WRR], four years later.
In 1988 his corporation bought Southern Pacific Railroad.,
In 1996 Southern Pacific and Union Pacific merged.
In 2007 he bought the corporation that owned the Grand Canyon Railway.
In 2008 he bought the Oklahoma Publishing Co which owned the
Maintou and Pikes Peak Railway.
There is another individual to add to the group of "Big Boys playing trains."
With regard to CP's operating performance, take a look at the "Railroad Performance Measures", at: http://www.railroadpm.org/Performance%20Reports/CP.aspx
For Dec. 2011 - selected because it's recent, but not as variable or volatile as a weekly figure - the "Terminal Dwell (Hours)" for the Entire Railroad was 18.3 Hours, and the "Train Speed (Miles per Hour)" for All Trains was 24.3 MPH; the corresponding figures for CN were 16.7 Hours and 27.6 MPH - somewhat better but not conclusively so, in my opinion.
Just for fun, the corresponding figures for the other Class I's were:
BNSF - 26.0 Hours, 24.8 MPH
UP - 27.4 Hours, 25.9 MPH
KCS - 20.6 Hours, 27.7 MPH
CSX - 25.6 Hours, 22.4 MPH
NS - 24.3 Hours, 22.3 MPH
Although these numbers are not supposed to be used to directly compare one railroad with another, nevertheless it's still interesting to observe that little KCS clearly has the best figures for a US railroad; but either Canadian railroad beats all US railroads for shorter Terminal Dwell time, and are not far off the pace for Train Speed, either.
Thing I don't understand with Canadian Railroading, is why can't they seem to understand operating principles as the US does which is ironic considering a lot of management in the Canadian companies are American.
I just don't get what is the difference between the likes of CP and CN vs NS, CSX, UP and BNSF with the exception of course of more customers due to higher population of course. But on a more micro scale, it seems Canadians can't get railroad operations right vs the US.
If CP wants to increase revenues, why don't they answer the demand of trash trains? Toronto and other municipalities are practically begging for someone either CN or CP to answer their call and yet nobody answers; all other Class 1 railroads in the US run unit trash trains. CSX/UP runs produce trains, NS runs tons of roadrailers, CSX runs Tropicana unit trains, UP and CSX have partnership runs via intermodal (Stax); how come CN or CP can get something going with another Class 1 railroad or get big customers and run extra trains? Why are they having capacity issues? Why are they not embarking more on projects that involve government investment such as the private and public partnerships NS and CSX have been getting with their new intermodal facilities and tunnel clearence projects? Why didn't CN or CP do anything with the Canada Southern Line since they bought the thing? Why does CP run trains with 5 SD40-2s and only only 20 cars max LOL; can't always be a power move?
I just don't get the impression that railroad management in Canada seems to know how to run a railroad the same as the others and the others in the US seem to have the support of its shareholders yet now people are complaining about CPs.
Having spent 24 years at SOO/CP, I was able to observe CP going from a quiet couple seats on SOO's board, to fighting CNW for the first the Spine Line and then the Milwaukee Road (won one, lost one), to creating an internal short line of the Wisconsin portion of the former SOO while they tried to decide whether to sell it all or make it employee owned and then finally buying the remaining 44% they didn't own, to selling the internal short line (that is now part of CN), to selling off the former Milwaukee lines in Iowa and to KC. Since I left 8 years ago, they have now bought back the Iowa and KC lines plus more.
I always felt that CP corporate could never really make up their mind about the stuff south of the border. They started a program to extend sidings on the Mpls to Portal line but didn't want to take the next step of putting in signals west of Glenwood and across the border to Moose Jaw.
They have what could be a competitive route from Vancouver to Chicago but haven't improved it sufficiently to compete with BNSF from Seattle.
It is interesting to watch Ackman stir up Calgary. It is an intersting "club" there. While a lot of Canadians moved south to work on the US side of the property, very few Americans went north. Hunter (an American) among the Canadian pigeons again could be a site.
The railroad cultures have some differences and I did not see a lot of "American" taking hold in the north, but a fair amount of "Canadian" taking hold in the south.
Is this a chance to take some north? Should I send Hunter my resume? We'll see. As Bette Davis said, "Fasten your seat belts, its going to be a bumpy ride"
I read on googlefinance that Hunter has responded and that he is interested and will be there for as long as he is needed...Will be interesting to see how this plays out.
BaltACD Ackman is a Hedge Fund operator - as such they have no intent in running the business they invest in for the long term benefit of the business - just the short term wherein they can squeeze all the finances possible out of the company, they they will dump the stock and move on to the next victim bragging about all the 'profits' they were able to get out of the smoldering hulk of their most recent victim after having run up the dividends and debt by almost equal amount. The hulk is left with the debt and without any earnings put back into the physical plant.
Ackman is a Hedge Fund operator - as such they have no intent in running the business they invest in for the long term benefit of the business - just the short term wherein they can squeeze all the finances possible out of the company, they they will dump the stock and move on to the next victim bragging about all the 'profits' they were able to get out of the smoldering hulk of their most recent victim after having run up the dividends and debt by almost equal amount. The hulk is left with the debt and without any earnings put back into the physical plant.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Ackmann isn't going to get very far if most of the large stockholders are in for the long haul.
Paul_D_North_Jr OK, I think I have this figured out now - it goes like this: First, starting about 2007, Warren Buffett buys a similar 15% or so size portion of BNSF - then expands it, and in late 2009 decides to buy the whole thing. Then, starting about 2006 Bill Gates starts buying CN, and as of April 2011 owned a little over 10 % of it. Now we have another rich guy - Ackman - perhaps trying to emulate those 2 worthies by buying a 14% or so part of CP. But Ackman appears to have overlooked the part where they leave the present competent management in place and alone to run the railroad operation as they see fit - instead, he appears to be "pulling up the flowers to see how well they're growing". Time will tell . . . - Paul North.
OK, I think I have this figured out now - it goes like this:
Never too old to have a happy childhood!
Paul_D_North_Jr AgentKid: We've seen various stories in the media, but I thought I would link in CP's open letter to shareholders posted on the CPR website. http://www.cpr.ca/en/news-and-media/news/Pages/open-letter-to-shareholders.aspx In the letter I found the tenth, eleventh and most importantly the thirteenth paragraphs very interesting. I'm not sure EHH's bull-in-a-china-shop methods would be appropriate for dealing with the issues raised in the last paragraph I cited. I will leave you to draw your own conclusions. Bruce Bruce, thanks much for posting the link to that letter and your guidance as to the most interesting paragraphs ! (I concur). A couple other factual points to consider: CP's "long train strategy" is mentioned several times in that letter. According to an article in the August 2011 edition of Railway Age on Distributed Power ("DP") operations (pgs. 14 - 18), CP now routinely runs 14,000 ft. long trains and is planning to go longer, whereas CN presently limits its train lengths to 8,500 ft. (39% shorter) since a March 2009 derailment at Brighton, Ontario as a result of excessive in-train forces. See an on-line version of that article at: http://www.railwayage.com/in-this-issue/the-long-and-the-short-of-distributed-power-august-2011-3660.html But I do think that CP's relinquishment of its lines and operations east of Montreal 2 decades or so ago was a strategic mistake - someday those routes will be worth having again . . . - Paul North. Further, for those who think CP wasn't reinvesting in its franchise, remember that in the mid-1980's several hundred million dollars CDN were invested in the new Rogers Pass tunnel and bridges as part of that additional line and capacity project.
AgentKid: We've seen various stories in the media, but I thought I would link in CP's open letter to shareholders posted on the CPR website. http://www.cpr.ca/en/news-and-media/news/Pages/open-letter-to-shareholders.aspx In the letter I found the tenth, eleventh and most importantly the thirteenth paragraphs very interesting. I'm not sure EHH's bull-in-a-china-shop methods would be appropriate for dealing with the issues raised in the last paragraph I cited. I will leave you to draw your own conclusions. Bruce
http://www.cpr.ca/en/news-and-media/news/Pages/open-letter-to-shareholders.aspx
In the letter I found the tenth, eleventh and most importantly the thirteenth paragraphs very interesting. I'm not sure EHH's bull-in-a-china-shop methods would be appropriate for dealing with the issues raised in the last paragraph I cited.
I will leave you to draw your own conclusions.
Bruce
Bruce, thanks much for posting the link to that letter and your guidance as to the most interesting paragraphs ! (I concur). A couple other factual points to consider:
CP's "long train strategy" is mentioned several times in that letter. According to an article in the August 2011 edition of Railway Age on Distributed Power ("DP") operations (pgs. 14 - 18), CP now routinely runs 14,000 ft. long trains and is planning to go longer, whereas CN presently limits its train lengths to 8,500 ft. (39% shorter) since a March 2009 derailment at Brighton, Ontario as a result of excessive in-train forces. See an on-line version of that article at: http://www.railwayage.com/in-this-issue/the-long-and-the-short-of-distributed-power-august-2011-3660.html
But I do think that CP's relinquishment of its lines and operations east of Montreal 2 decades or so ago was a strategic mistake - someday those routes will be worth having again . . .
Further, for those who think CP wasn't reinvesting in its franchise, remember that in the mid-1980's several hundred million dollars CDN were invested in the new Rogers Pass tunnel and bridges as part of that additional line and capacity project.
Maybe in Canada, but in the US they still run 11,000+ land barges.
Mechanical Department "No no that's fine shove that 20 pound set all around the yard... those shoes aren't hell and a half to change..."
The Missabe Road: Safety First
The one thing I think I can say without fear of contradiction.....
From here on out until the counting of the proxy ballots - it wll be charge and counter charge between Ackman and the existing CP Board mostly played out in the media.
AgentKid We've seen various stories in the media, but I thought I would link in CP's open letter to shareholders posted on the CPR website. http://www.cpr.ca/en/news-and-media/news/Pages/open-letter-to-shareholders.aspx In the letter I found the tenth, eleventh and most importantly the thirteenth paragraphs very interesting. I'm not sure EHH's bull-in-a-china-shop methods would be appropriate for dealing with the issues raised in the last paragraph I cited. I will leave you to draw your own conclusions. Bruce
[EDITED 12 Jan 2012 6:05 AM EST, only to fix misplaced paragraph . . . ] Further, for those who think CP wasn't reinvesting in its franchise, remember that in the mid-1980's several hundred million dollars CDN were invested in the new Rogers Pass tunnel and bridges as part of that additional line and capacity project.
It seems to me that it doesn't make any difference how the CP and CN got to where they are now. Harris suggested that with its greater double trackage and siding configuration, CN has an operational advantage over CP and that accounts for at least part of the better operating ratio.
At any rate, I don't buy the notion that that "Precision Scheduled Railroading" is a magic bullet that will automaticly knock 10 points off an operating ratio and at this point that seems to be the sum and substance of Ackerman's plan.
"We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics
I'm not sure I can agree with your assertion. I don't believe you can equate land grants in virgin unsettled territory, with actual expenditures by the Government of Canada. CP was financed and built by Donald Smith et all, with the hope of partially recouping their investments by reselling the land, and the rest with actual revenues from operations. Not continuing to operate by receiving yet more money from the Government of Canada.
So shovel the coal, let this rattler roll.
"A Train is a Place Going Somewhere" CP Rail Public Timetable
"O. S. Irricana"
. . . __ . ______
Sounds like Ed Harris has an axe to grind with CN...CP was also largely built by taxpayers.
We've seen various stories in the media, but I thought I would link in CP's open letter to shareholders posted on the CPR website.
Ackman's people will be lobbying the large institutional investors HARD to vote their shares his way. Remember institutional investors care nothing about the continued existence of CP as continuing railroad operation - all the care about is the $$$$$$$$$. Their decisions will be base upon the confidence they have or lack in Ackman's ability to deliver the results he is claiming.
AgentKid This is getting interesting as I don't recall ever hearing of a proxy fight among the shareholders in the history of the company. The word monolithic has been used to describe the Board of Directors and the Shareholders more than once. Most shares are held by institutional investors. With all the talk of Hunter Harrison joining the company, and then apparently not being able to, the share price moved a $1.07 in the $69-70 price range over the whole week. I think this will go one of two ways. Either (a) the die has already been cast, or will be soon, and the decision taken to replace Mr. Green or (b) Mr. Ackman's 14.2% along with maybe another 0.2-0.5% will vote for change, and the motion will be defeated. There are still a number of shares held by British institutions, some since the nineteenth century, so I don't think this fight is going to play out in the media like Mr. Ackman hopes. Mr. Ackman's correspondence to shareholders will no doubt be "leaked" to the media, but I don't expect we will hear anything from the other side publicly, as they will keep their usual stiff upper lip. This is going to shake out as a turning point in the company history in many ways. Bruce
This is getting interesting as I don't recall ever hearing of a proxy fight among the shareholders in the history of the company. The word monolithic has been used to describe the Board of Directors and the Shareholders more than once. Most shares are held by institutional investors. With all the talk of Hunter Harrison joining the company, and then apparently not being able to, the share price moved a $1.07 in the $69-70 price range over the whole week.
I think this will go one of two ways. Either (a) the die has already been cast, or will be soon, and the decision taken to replace Mr. Green or (b) Mr. Ackman's 14.2% along with maybe another 0.2-0.5% will vote for change, and the motion will be defeated. There are still a number of shares held by British institutions, some since the nineteenth century, so I don't think this fight is going to play out in the media like Mr. Ackman hopes. Mr. Ackman's correspondence to shareholders will no doubt be "leaked" to the media, but I don't expect we will hear anything from the other side publicly, as they will keep their usual stiff upper lip.
This is going to shake out as a turning point in the company history in many ways.
Ackman makes move to replace Board of Directors
Ackman Doesn't give up
This is reported to be a formal action of the Board of Directors. Asssuming that to be true, Round 1 goes to the incumbents.
Mac
Ackman rebuffed by CP Board
http://www.bloomberg.com/news/2012-01-09/ackman-rebuffed-as-canadian-pacific-says-ceo-green-will-stay-1-.html?cmpid=yhoo
Also starting to look as if Ackman isn't quite as prepared as he should have been if it turns out that Hunter is not available/not interested. Those things need to be worked out before they are made public or else all involved end up looking foolish and less than capable. Maybe CP's recent slide in stock price is a reflection of that.
Somehow, this is starting to look like Ackman is looking for a quick appreciation in the value of his CP holdings and not much else. Consider that he is not interested in a board seat and that he suggested E Hunter Harrison as a CEO candidate, even though it appears that Harrison may not be available.
Stock went down today though... maybe due the gong show performance between Cleghorn and Ackman..
Well the stock price shot up with the announcement, and Ackman has a TON of CP stock...I am sure he made millions already.
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