Published: June 2nd 2010
Source: Reuters
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VANCOUVER, June 2 (Reuters) - Canadian Pacific Railway (CP.TO) can become more efficient with operating changes that do not require significant capital spending, the carrier's new chief operating officer said on Wednesday.

The railway has begun pilot projects at its Winnipeg, Manitoba, terminal and started schedule changes that will speed up movement of freight and reduce the time cars spend in its freight yards, Ed Harris told analysts.

Harris, who joined CP in April, retired in 2007 as vice-president of operations at Canadian National Railway (CNR.TO), which has a reputation for having the lowest train operations ratio among North America's major carriers.

"We know where the opportunities are, we know where the efficiencies are," Harris said during CP's annual investors day, during which analysts asked him for comparisons between Canada's two main railways.

"Canadian Pacific may not have the infrastructure that Canadian National does in terms of size of yards and things like that. It does mean, however, we need to be that much more fluid that much more flexible," Harris said.

Chief Executive Fred Green also cautioned there are differences between CP and its larger rival CN.

"The franchise is different, the traffic is different; nobody should assume that the same outputs will arrive," Green said.

Harris said the operational changes CP has under way will also allow it to compress the schedules for its transcontinental freight trains, which the railway is also lengthening by changing how it uses locomotives.

"I don't know what the number is yet, but I know it is going to be better than it is today," Harris said.

Improved train operations will allow CP to reduce its car and locomotive fleets. It also expects to abandon 2,240 km (1,400 miles) of track in its network in Canada and the northern United States over the next 18 months.

POWDER RIVER PLANS STILL ON HOLD

Canadian Pacific has still not decided whether to pursue expansion into the Powder River coal basin, partly because it is unclear what future U.S policy on coal energy will be, executives said on Wednesday.

The railway picked up the option of expanding into the the major thermal coal production region in Wyoming through its purchase in 2008 of Dakota, Minnesota & Eastern Railroad, which was already pursuing the idea.

"We have not made a decision on expansion into the Powder River basin," Jane O'Hagan, vice-president for marketing told analysts at the company's annual investors day.

"Market volatility, coupled with the politics of coal-generated energy and CP's requisite conditions for investment, such as mine access, long-term contracts and assembly of the right of way, have not been met," O'Hagan said. (Reporting Allan Dowd; editing by Rob Wilson)