TORONTO (Reuters) - With his push to turn around Canadian Pacific Railway Ltd ahead of schedule, Chief Executive Hunter Harrison has his eye on another challenge: the logistics nightmare that is Chicago.
CP has offered to buy, lease or at least operate the small
switching lines that knit together North America’s major railways at Chicago, Harrison said in an interview on Thursday.
The Indiana Harbor Belt Railroad and the Belt Railway Company of Chicago are currently owned by consortia of major railways, including CP Rail.
“We think we’re pretty good at operating terminals, and we could do a better job,” Harrison told Reuters.
He said a single company would be able to focus on improving Chicago’s railroad interchange, which is the busiest in the country. Serving six of the nation’s seven major or “Class 1” railroads, the city is a gateway between networks in the East and in the West.
Bad weather, disabled trains and anything else that slows traffic around Chicago can quickly ripple through the continent’s rail network, hitting grain shipments especially hard.
Harrison took over CP in 2012, after a proxy fight launched by activist fund Pershing Square Capital Management. Before the high-profile battle, he was best known for transforming CP’s main rival, Canadian National Railway Co.
On a conference call in April, Harrison recounted how he had tried to buy Indiana Harbor and the Belt Railway when he was at CN Rail, but could not clinch a deal. Instead, CN Rail bought a line that goes around Chicago, which has given it an advantage over rival CP Rail in the area.
The Belt Railway’s other owners include Berkshire Hathaway’s Burlington Northern Santa Fe, Canadian National Railway Co, CSX Corp, Norfolk Southern Corp and Union Pacific Corp. CP’s stake is 8.3 percent.
Indiana Harbor is 49 percent owned by CP, with the balance held by Norfolk Southern and CSX.
Harrison spoke during a two-day event for investors and analysts in New York. On Wednesday he unveiled ambitious new revenue and earnings targets, and CP said it was on track to meet previous targets two years ahead of schedule.
With additional reporting by Karl Plume in Chicago; Editing by Jeffrey Hodgson and Meredith Mazzilli and Dan Grebler