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Canadian Pacific Railway Slashes and Burns/Saint Luc Yard will absorb Lachine’s Intermodal Terminal

December 6, 2012

Railways were once considered as nation builders and unifying forces.  They were creations of government by way of parliamentary charters.  Some like the Canadian Pacific Railway were the forerunners of the now widespread practice and form of Public Private Partnerships. They were feudal-like entities unto themselves with special powers like being able to police themselves.

Railways are considered essential services and utilities in certain circumstances.  They are so vital to the Canadian economy that the Federal government  felt obliged to legislate CPR’s locked out workers several month ago.

However,  in terms of transport policy, railways are treated at the bottom of the barrel.  North America has been living a fly/drive bubble for the last 70 years or so.  Recreational boating and Ski-Doo trails quite often gets more attention from public authorities than railways do. Disinvestment and indifference are the mainstays of railway public policy.

The following article outlines general aspects of CPR’s plan:
“Improving the railway’s operations will include cutting the company’s workforce by nearly a quarter over the next four years and effectively putting a “For Sale” sign on major parts of its network, CEO Hunter Harrison said in an exclusive interview”  (http://business.financialpost.com/2012/12/04/exclusive-cp-rails-harrison-details-new-plan-to-cut-nearly-quarter-of-workforce/)
In the words of CPR Chief Hunter Harrison:
“Now let me move to an area that people ask me all the time a lot. What’s different about this model? What’s going to be different about CP moving forward from other railroads? One of the most significant things that we’re undertaking, we have undertook through the guidance of this operating team, which has been doing a wonderful job, is we have already closed 4 hump yards in our system in the first 5 months. Now think about, those of you who followed railroads for a while, think about the last time you heard of a hump yard being closed. You haven’t heard of many. Think about the last time you heard of 4 being closed within a 5-month period of time. It just doesn’t happen. And I get a lot of questions, probably more questions about this than anything else, why close the humps and what does it do for you? Well, number one, humps are effectively assembly lines. And those of you that don’t understand or appreciate rail operations in a certain level of detail when you hear about a hump yard, a hump yard is simply an assembly line where we shove calls over a hill or let them go down a hump where they’re uncoupled, flow freely through gravity and they’re retarded by electric or pneumatic retarders and go through automatic switches in the classification tracks.And to justify that you haven’t a lot of volume. The best analogy I can give you maybe is that if Henry Ford was going to build 10 or 15 Model Ts a day, he would have never had an assembly line. But when you get up to 300 or 400 cars a day, an assembly line was necessary. These yards are — were, and by the way they are at Alyth, which is our Calgary yard, which is really kind of boxed in where we have very little opportunity for growth there, with Calgary, Winnipeg, Toronto and Bensenville, which are our hump yard in the states, there in Chicago, are the 4 that have been closed.And there’s a number that people will debate a little bit, but somewhere in the neighborhood of you have volume of 1,400 to 1,500 cars a day to justify a hump. And we were down with all our humps in the neighborhood of 700 ,800 cars, 900 cars a day or less, and that’s with some of the cars being humped more than once.

So this hump yard rationalization gives us a great deal of opportunity to save a lot of cost, to expedite the movement of cars and reduce the dwell time, the tension time, if you will, through the hump yards. I think you’re going to hear some numbers tomorrow. I mean, don’t take mine, take theirs, but somewhere in the neighborhood of $40 million to $50 million in what I would call direct cost and much, much more in indirect cost as a result of the closing of those yards.

Now let me give you another — some gravy to that story that people don’t take into account. If we looked at our Montréal operation, which I think you will see maybe an aerial photograph of tomorrow, which was really a hump yard style operation without a hump, which might have been the worst of all worlds. If you look at that operation there, we had a freight yard operation. And by the way, in a hump yard, you at least have to have 3 yards, individual groups of yards, where in a flat yard you could have 1 or at the most 2. But within that huge complex and about 60% of that track capacity today is not being utilized there. We have, I guess, 6 work centers. We have the freight operation, we have 2 separate auto compounds, we have what we call our expressway service, which is the only actual trailer on flatcar service that we have, and we have our Intermodal business.

Now that footprint, in the future what we will try to do is to take the auto compounds, the expressway, the Intermodal and all consolidate them in 1 yard in this 1 footprint, which will allow us to take one of the yards in the Montréal market that has a value of somewhere in the neighborhood of $40 million or $50 million and to convert that, monetize that into free cash flow and every yard that we’re looking at in that regard has that potential. So the whole hump yard rationalization is an exciting part of this exercise.

One of the things we learned through that, which I had learned many times, is effectively what we did. And if you go back and look at those yards, they’re mostly 1950s and ’60s vetted yards. So obviously, we’ve outgrown the technology there. We — our book of business is extremely different than it was then. At that time, if you look back, and I hate to be able to remember it, but it was pretty Intermodal effectively. We were still moving grain and 40-foot boxcars. And about 85%-plus of a typical railroads business need to be classified or sorted in what we refer to as blocks or classifications. Today, that’s changed. If you look at CP today, with our book of business, we have about, including Intermodal as unit train operation, about 72%, 73% of our business does not need sorting or classifications. So once again, not the need for hump yards. So what we did was we took people that were very good switchmen that could read a list, and even go back and date myself even further, people that are really into technology and SAP. We didn’t have SAP then, we had a piece of chalk and we wrote on the side of the car where it went. But we turned those people into kind of robots with pushing buttons, and we decided to not to push the buttons anymore. We found out that we have to go through a lot of retraining with our people.

Now the other significant operating issue that I would bring up to you is that we are further doing, siding extensions. This year, we have — we’re completing, I think, our eighth siding with the length of 11 to 12,000 feet, which is going to give us the opportunity to further be more productive with our train sizes. Those have already increased both weight and length in the first 5 months about 10% round numbers. But these additional citings — and we’re taking a little bit of a different approach there. We’re taking citings that what we call obsolete because they’re not long enough to accommodate the size of trains today. And rather than let them sit in the ground and rust, we’re picking up those surplus sidings, putting them together to make one large productive citing, which effectively says that the only thing that’s capitalized in, in that exercise is just the labor to move the sidings.”

(See: http://seekingalpha.com/article/1045391-canadian-pacific-railway-limited-shareholder-analyst-call?part=single)

  In its latest budget the Quebec government had a tax goodie/loophole for the two planned intermodal container facilities, (CPR & CSX), in the Montreal area.  Looks like CPR will use St. Luc Yard in Cote Saint Luc for its intermodal facility at least for the foreseeable future and sell Lachine Intermodal Services Terminal, (IMS).   This land once constituted the former Summerlea Golf Course  in Dixie, Lachine: “In the fall of 1962 the members bid adieu to Lachine, bringing closure to the first era of the club’s history…”  (See: http://www.summerlea.com/index.php?option=com_content&view=article&id=21&Itemid=131&lang=en)  The course remained open under the Meadowbrook, (name of the golf couse operator that also operates the former CPR Wenthworth Golf Course under the same name), banner into the early ca 1970s and then was converted into the CPR’s IMS facility.
CPR will also consolidate its two automobile compound operations and place them in one area of St. Luc Yard probably near Cavendish as there is more land available in that location.  The current car facility near Meadowbrook Golf Course is on leased land belonging to land promoter Groupe Pacific which is also the owner of the golf course.  The golf course was once bigger and had extended where the current auto compound is situated.  No doubt there will be pressure to build on that land although ideally the green could be reestablished.
It is the intent of current CPR management to take repair of rolling stock in-house.  This probably means more work at the St. Luc Diesel Shop and remnant Roundhouse.

Specific questions arise:

1. Can Lachine IMS Terminal, (estimated worth between $40-$50 million), be land- swapped for Meadowbrook, thereby conserving Meadowbrook as green?

2.  In a related matter, will the automobile compound, west of Meadowbrook become a residential neighbourhood right in an active railway facility or can it become part of a greater Meadowbrook Regional Park? railway proximity and related health issues such as noise, vibration and security come into play.
3.What are the future plans for the Les Cèdres Intermodal project?  Is it in deep freeze?  Will the 330 hectares of dezoned farmland be sold off?4. Regarding  the December 05, 2012 CPR Investor Day slides 36 and 37,
which of the two Auto Compound areas in Montreal – St. Luc Yard will be transferred and where? (See: http://www.cpr.ca/en/invest-in-cp/investorday/Documents/investor-day-2012-05.pdf)a.  Will the Auto Compound near Meadowbrook Golf Course be moved?orb. Will the one near Cavendish/former Blue Bonnets  Raceway be transferred?

c. Will the Intermodal Facility be placed where the former hump classification tracks are, (green circle/eastern part of St. Luc Yard, slide 36)?

d. When will CP begin reworking St. Luc Yard?

Wholesale Asset Stripping of the CPR was announced with great fanfare to the Temples of Wall Street and Bay Street on Tuesday, December 04 and Wednesday, December 05, 2012 . Canada is less for it today.  Shame on most of our political leaders for abandoning our nation building railway policy and allowing CN and CP to be taken over by gamblers, sharks, asset strippers, banksters and US controllers.  To date we have lost strategic lines like  the shortcut to the West, the Ottawa Valley Railway, on the Alter of the Bean Counters.
No doubt the operating parts of railways should make a profit.  But why are roads not measured on a profit and loss basis?  Should not the rail infrastructure be treated similarly?
This is a tragedy of immense proportions that is all but ignored and pushed to the back pages of the corporate media and the margins of general discussion.  Not only are railways extremely efficient, but they are less polluting than automobiles, trucks or planes and take up less of an an ecological footprint than other mass transport modes.

 

3 Comments leave one →
  1. December 7, 2012 1:26 am

    Clarification: CPR has an option to buy the auto compound. When Fairmont Hotel and Resorts sold Meadowbrook to Groupe Pacific, CPR made sure that it was able to purchase the car compound if it chose to:

    lot # 1 052 070 November 2006 Deed: Servitude in option to purchase From: Meadowbrook owner Groupe Pacific Inc. to CPR….

  2. December 13, 2012 6:42 pm

    As reported here first … Les Cedres at best in deep freeze or at worst dead…
    Canadien Pacifique: important projet sur la voie de garage | André Dubuc | Transports
    Un investissement d’au moins 300 millions dans la municipalité de Les Cèdres, près de Vaudreuil-Soulanges, et devant créer 1300 emplois pendant sa construction, paraît…

    http://affaires.lapresse.ca/economie/transports/201212/06/01-4601266-canadien-pacifique-important-projet-sur-la-voie-de-garage.php?fb_action_ids=3899015241748&fb_action_types=og.recommends&fb_source=aggregation&fb_aggregation_id=288381481237582

  3. December 13, 2012 6:43 pm

    The stated reason for the delay till now was that CPR had not finished its environmental assessment. since July they are no longer required to do so. This has not been reported in the media… Les Cèdres Intermodal Complex
    Les Cèdres (QC)

    Reasons for a Federal Assessment
    Project Description
    Final Decision
    Reference Number
    Canadian Environmental Assessment Registry: 08-01-39516

    Final Decision

    On July 6, 2012, the new Canadian Environmental Assessment Act, 2012 came into force which replaced the former Canadian Environmental Assessment Act. As a result, there is no longer a requirement to complete the environmental assessment of this project.

    http://www.ceaa-acee.gc.ca/052/details-eng.cfm?pid=39516
    Canadian Environmental Assessment Archives – Les Cèdres Intermodal Complex
    http://www.ceaa-acee.gc.ca
    Archived summary of the environmental assessment entitled “Les Cèdres Intermodal Complex”.

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