Canadian National Railway Company (NYSE:CNI) Q4 2022 Earnings Call Transcript

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I mean, instead of taking 12 hours to get through the city, to get to our yards on the south end, where we rounded in an hour. That benefit is unbelievable. And the ability to run trains out of Winnipeg through the J to Toronto around the South Lake, Michigan, is just fantastic. I mean I wish I could have been here when they bought it because I would have been on the first train going around the horn. But actually, a lot of opportunity, a lot of possibilities here. And I’ve just started digging back in really when it comes right down to it. I am extremely impressed with the management team here, the operators, lot of knowledge, a lot of people that were here before. A lot of people that came from other carriers that understand the game, too.

So besides that, and we simplified the network going from 2 regions, which to me was just too much for any 1 guy to handle to 3 regions. I like my operating officers to be able to be in the face and talk to the crews and be part of the crew solutions. And this allows them to do that. And we set up the organization. We just finished reorganizing the operating department and a traditional realm that we used to do back in the days. In fact, Ghislain said, “Hell, that’s the way we used to do it when was here.” And that was the truth. We did it the same way again because that’s what I was familiar with, and it leads into what’s down the road for the next generation of railroads. You can see it on the org chart. if you’re second or third out, you can plan on getting promoted probably in about 5 to 10 years.

And that’s the way I want these people thinking. And I think that drives efficiencies and opportunities. So I hope that answered your question. I probably got a little long winded, but like I say, I like railroading.

Operator: The next question is from Brandon Oglenski from Barclays.

Brandon Oglenski: And Ed, welcome back. Ghislain, I hate to focus on the operating ratio. But I guess given the EPS guide, it seems like there’s some pushes and pulls here on the outlook for margins. So — is this an environment where you think some of those cost pressures might be too much to show a lot of improvement this year?

Ghislain Houle: No. Listen, Brandon, as I said before, we are continuing to focus on costs. We know we need to improve our margins on a year-over-year basis. And it’s just — we have a low volume environment, so it makes it a little bit challenging, but we are working on it and stay tuned. I think we’ll see what happens, and we’ll see what happens with the economy.

Tracy Robinson: Let me come in over top of that just for a moment, Brandon. So I’m pretty proud of what this team did this year on a 130 basis points improvement. When you want to improve operating ratio and improving our margins, it takes everybody. It means a good efficient operation. It means that you sell into your network, and it means you price properly and you stay focused on the velocity of your operations. So those are all basic building blocks. And in any economic environment this year, whatever unfolds, those are the things that we’re going to be working on. We have a couple of headwinds that Ghislain outlined to you. We’ll see how those play out over the year. We’re going to mitigate them as much as we can. So really, it comes down to what kind of leverage we get out of volumes. And that remains to be seen. So we will be in front of you as that becomes more clear to us.

Operator: Thank you. Next question is from Kenneth Hoexter from Bank of America.

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