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Mar. 17, 2014

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SURFACE & DOMESTIC TRANSPORTATION www.joc.com THE JOURNAL OF COMMERCE 47 MARK SZAKONYI: Following an 8.6 percent jump in fourth quarter intermodal traffic, how is 2014 looking? CLAUDE MONGEAU: We see good potential for growth. Our agenda of supply chain collaboration is resonating with custom- ers. If the economy continues to hold, we are hoping for growth. Now, we've had a very difficult start to the year with a win- ter that is extremely challenging, so that's putting a damper on growth at least in the first few months. We are focusing on pro- tecting service and minimizing impact to our customer base. As soon as spring comes, and I'm hoping it's soon, we will be getting back on track with solid growth. We are looking at growth across all our key corridors, but mostly westbound traf- fic on the West Coast is where we see the most potential for growth in 2014. SZAKONYI: CN has been one of, if not the, most aggressive Class I railroads in pro- viding match-backing to shippers. How has the railroad done this? MONGEAU: First, it's our agenda to be a sup- ply chain enabler. When you are a supply chain enabler, you are thinking round trip and you are thinking match-back and you are looking at ways to create the opportuni- ties for your customers, whether it's lumber exports to Asia using containers coming back to the U.S. or it's stuffing grain into the prairies, or whether it's using the boxes of our shipping line customer. The other element is we do have a retail intermo- dal franchise that controls the door-to-door relationship. That allows us to organize everything. For instance, when we use a shipping line box say from Detroit to Calgary, we have a trucking arm that does the delivery. The fact that we are more of a door-to-door intermodal player is certainly helping us differentiate our service and connect the dots in a way that may be helping us grow a little faster. SZAKONYI: Considering ocean lines are reluctant to let their containers go too far inland and there are geographic chal- lenges in getting equipment for export into rural areas, how much more potential is there for match-backing? M O N G E A U : There i s more a nd more northbound traffic. The U.S. is starting to export more. The markets are becom- ing more integrated. Canadian lumber producers wa nt to g row t heir A sia n market, so we see a two-way trade as a thing of the future. How we organize our services to be able to help our customers win in their ma rket using round-trip e conom ic s a nd m atch- backs is our core strateg y. I see that having legs for many years to come. SZAKONYI: For the majority of agriculture exports, the 20-foot container is ideal because loads often weigh out before they cube out when shipped via a 40-foot con- tainer. What can be done to make those 20-foot containers more accessible to agri- culture exporters? MONGEAU: It's really one box at a time. It's convincing (the container lines that) we can give them visibility on their box. We've developed tools that allow them to see their box as opposed to not know- ing where they are and we promise to get them back in a certain amount of days but they don't know where they are. Now, we give them more visibility. SZAKONYI: Domestic intermodal growth in North America has consistently out- paced international intermodal gains in the last year. Are you seeing the same on the CN network? MONGEAU: No. In our case, the overseas business has been growing faster than domestic. It's been the case for the last couple of years. I think that should be the same in 2014. SZAKONYI: Target, one of your customers, has reportedly stumbled in entering the Canadian market. Do you expect it to find its footing? MONGEAU: We are trying our best to help them find their footing. At first, I think they were using trucks more than they needed to (in order) to make sure their replenish- ment was in order. Now, they are getting over the hump with that and finding their rhythm, we hope to move more of what they sell through intermodal. This is one serious retailer, and it was a big expansion all at once into Canada. I have every expectation that Target will find its rhythm and start to grow nicely into Canada. JOC Contact Mark Szakonyi at mszakonyi@joc.com and follow him on Twitter: @szakonyi_joc. ONE-ON-ONE WITH CLAUDE MONGEAU The Canadian National Railway chief sees match-backing as key to intermodal growth Claude Mongeau, president and CEO of Canadian National Railway, sat down with Senior Editor Mark Szakonyi at the JOC's 14th Annual TPM Conference to share his views on intermodal growth, the pace of the U.S. and Canadian economic recovery and whether Class I rail consolidation is ahead. To read the full interview, see http://bit.ly/NrTErp.

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