Canadian National Goes Green

Canadian National (CN) is one of 137 companies that made CDP’s Climate Change A List. The only other two logistics service providers on the list were Deutsche Bahn and the NYK Line. CN was also the top ranked logistics service provider on the Clean 200 list.

Moving freight by Ocean (NYK Line) or rail (Deutsche Bahn and Canadian National) already provides for lower carbon emissions than other modes of transportation. CN, for example, reports that a train can move a ton of freight 200 kilometers on a single liter of fuel. But, each of these companies demonstrated a desire to push forward and further reduce their carbon emissions.

In Canadian National’s case, with 84% of their greenhouse gas emissions coming from rail operations, the best way for the carrier to positively impact the environment is by continuously improving their locomotive operating efficiency. They have done this. They have had a 37 percent increase in fuel efficiency since 1996. The company also consumes 15% less fuel per gross ton mile overall than the industry average.

Sustainability

Canadian National is using fewer railcars and locomotives to ship more freight. Achieving these gains have been aided by some interesting supply chain technologies. According to an online CN report on the environment, these technologies include:

  • A Trip Optimizer that regulates the speed of a train by controlling the locomotive throttle and dynamic brake. The solution computes the most efficient manner to handle the train. At the end of 2016, the Trip Optimizer became operational on almost 490 of their locomotives.
  • A Locomotive Telemetry System that collects data that can be used by other systems to improve train performance, including fuel conservation.
  • The company developed a Horsepower Tonnage Analyzer that uses the telemetry data to optimize a locomotive’s horsepower-to-tonnage ratio. This internally developed tool gives crews instructions and provides real-time monitoring to ensure they the train only uses the power it needs during a trip. It does this by optimizing a locomotive’s horsepower-to-tonnage ratio.
  • A Distributed Power solution allows for remote control of the locomotives and improves braking performance, train handling and fuel efficiency. The company has 770 locomotives that use distributed power.

In addition to using new technologies, they have focused on training and new practices to improve their performance. They collaborate with terminal and port operators to reduce their dwell times. Their train crews and rail traffic controllers undergo ongoing training on best practices for fuel consumption. Those practices include quicker locomotive shutdowns in the yard, more efficient railcar handling, and train coasting and braking strategies.

There are cost and revenue implications linked to the carrier’s sustainability strategy. Between 2016 and 2017, CN’s intermodal revenues increased by 12%, representing C$350 million. A small but largely incalculable portion of that reflects some customer’s desire to move goods in a sustainable manner. Better supply chain management and new equipment led to fuel savings of $2 million in 2017. That is peanuts.

But CN is also impacted by Canadian provinces imposing greenhouse gas cap and trade systems or carbon taxes. To the extent that the tax or cap and trade regime treats all transportation modes equally, it represents a huge opportunity to shift road traffic to rail.  This is particularly true the heavier the taxes become. CN calculates this to be a $350 million opportunity in the near term.

In conclusion, for Canadian National, going green has more than one meaning. It is not only about sustainability, it is also an economic opportunity.

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