CN Railway to push for further efficiency gains

Wed Dec 11, 2013 5:06pm EST
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By Susan Taylor

TORONTO (Reuters) - Canadian National Railway Co (CNR.TO: Quote), the country's largest rail operator, said on Wednesday that it aims to improve its industry-leading operating efficiency over the next three years, even as it carries more goods.

The Montreal-based railway estimates its 2013 operating ratio at about 63 percent, nearing last year's 62.9 percent, and targets a rate in the "low 60s" over the next three years.

Operating ratio measures productivity by tallying how much revenue is used to maintain operations. The lower the number, the better.

"For me, low 60s is 60.001," Chief Financial Officer Luc Jobin said at the company's investor update in Toronto.

"Anybody that can move on a big ship like this, that can move the operating ratio from 63 down to 60.001, is actually doing quite a bit of travel, and that's a lot more difficult to do ... while growing the franchise at a very good clip."

Improvements are also more challenging because CN operations are already relatively efficient, he said.

The railway will work to boost productivity by a range of measures, such as running longer trains and using more fuel-efficient equipment.

Booming demand in CN's energy business, which includes crude-by-rail and sand used for hydraulic fracturing, along with a record Canadian grain crop will help power revenue growth in 2014, Chief Marketing Officer Jean-Jacques Ruest said.   Continued...