Business & Investment

CN conducts strategic review of non-railway assets

CN We are conducting a strategic review of non-railway assets and are considering the possibility of railroad closure. Freight transport business In the coming months as we seek additional operating profit of $ 700 million (US $ 548 million) in 2022.

“There is no sacred cow in CN. Looking to the future, every aspect of our business, every business we do, must contribute to our ultimate goal,” CN said. The president and CEO said. JJ Ruest said earlier on Friday by calling an investor outlining CN (NYSE: CNI) Growth strategy.

CN’s non-railway assets include: TransX acquired in 2019, And that Great Lakes ships and other assets In addition to the acquisition in 2003, CN executives also did some transshipment work. According to Ruest, CN maintains a relationship with the asset even if the asset is sold.

Non-railway assets, according to CN executives, are just a small portion of the $ 700 million pie that CN is about to generate next year.

CN’s plan was announced on Friday Following a failed attempt get Southern Kansas City, KCS finally chose to merge with CN’s rival Canada Pacific (NYSE: CP) earlier this week. KCS (NYSE: KSU) Previously, he chose to merge with CN, but CN states that the US regulatory environment prevented the merger from proceeding.

However, Ruest said the opportunity provided CN with an opportunity to hear from customers and shareholders what they want from CN. Customers want enhanced products such as a clean gateway to North America via Halifax with Prince Rupert of Canada, but shareholders want a new focus on streamlining operating costs. is.

As a result, CN is trying to reach its goal Occupancy rate According to Ruest, it will be 57% in 2022 and will meet the needs of both customers and shareholders as services can be sacrificed if the OR is too low.

Executives say CN will consider three factors to achieve its target OR and an additional $ 700 million in operating profit: labor costs, operating costs and pricing. In addition to conducting strategic reviews of non-railway assets, CN plans to improve indicators such as car speed, train speed, and train length. We also aim to keep capital investment in 2022 within 17% of earnings.

The company can also reduce management and support staff by more than 600 and reduce engineering, machinery and transportation union members. In addition, CN can reduce purchases and material spending by closing underutilized buildings, among other actions.

According to CN, the plan described on Friday is based on the strategic plan developed in January.

When asked about Recent comments from shareholders Regarding CN’s leadership and the desire to add four new board members, Ruest said that board chairman Robert Pace and another board member retired in April 2022, with two CN board members. He said he would decide on a replacement.

“I know a lot has been said lately about our bidding wisdom and the quality of our team,” Ruest said, and the KCS-CN merger “absolutely” in CN’s interests. It would have helped.

“I also tell you that CN will lead the industry to a profitable, customer-centric, customer-service-centric railway model …. We CN focus on the future of railways, not the past. “We are matching,” said Ruest.

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CN conducts strategic review of non-railway assets CN conducts strategic review of non-railway assets

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