CEO PERSPECTIVE: Railroads Must Lean Into Their Natural StrengthsWritten by JJ Ruest, President and CEO, Canadian National Railway Company
As part of a special series in Railway Age’s March 2022 issue, 11 North American railroad CEOs address what must be done to grow and gain market share from competing freight transportation modes. JJ Ruest, President and CEO of CN (ret.) is the 3rd to share his perspective.
While the industry as a whole is very good at moving goods from point A to point B in a single line, there remains enormous door-to-door, port-to-door, point A-to-point B interline freight markets in North America that want to be captured from other more expensive modes of transport.
Simply put, railroads must lean into their natural strengths, but also be more than rail and not be limited by their own strengths.
As network businesses that carry goods, we often move freight from one end of the continent to another. This gives us tremendous exposure to a wide variety of customers from all sorts of industries. This means we are fortunate to be able to work directly with beneficiary freight owners and adjust our approach. Conversely, this also means being decisive about which business segments are best suited for our natural strengths and which ones are not. Not all commodity segments are the same, and no two customers are the same. Being targeted and being precise enable a better outcome.
Being so in tune with markets and customers also requires being nimble and being a constant student of the market and customer focused. One of the best ways to attract a customer away from their current supply chain of choice is to make it fact-based but from their point of view, not by applying a one-size-fits-all formula. Managing costs and being lean is a key to any good business and a natural strength for the railroad, but once that is achieved, growth is the entire ball game.
Scaling and growing is a challenge for every business, from startups to multinational large caps, but railroads have learned that if growth is planned, strategically and methodically, it can power the future of your business. By working with customers to understand their needs and investing into scalable markets and infrastructure for resiliency and capacity, using already existing operations as the foundation, railroads can provide the best total cost service to customers.
Railroads need the talent and ambition that will enable the right investment, the right technologies, and the innovative solutions. The railroaders, our people, are what set great companies apart. Attracting and retaining talent is key. To make matters tougher, railroads compete with an even broader group of companies for talent, since an innovative thinker, an IT expert, an HR specialist or a crisp communicator can come from any industry. Railroads need to make themselves attractive to everyone.
By leaning into their natural strengths, by being more than just a railroad, by investing in infrastructure, and by adopting and adapting new technologies, railroads possess the potential to capture an increasingly bigger slice of the huge supply-chain land transportation freight market of the North American continent.
Read more of Railway Age’s special CEO Perspectives series:
• Katie Farmer, BNSF: Sustain a Growth Mindset
• Keith Creel, Canadian Pacific: Supply Chain, Market Reach and Sustainability
• Jim Foote, CSX: Performance, Sustainability, Innovation Are Keys to Growing Market Share
• Pat Ottensmeyer, Kansas City Southern: Competing on a Global Scale
• Alan Shaw, Norfolk Southern: A Simple, Powerful Recipe for Growth
• Lance Fritz, Union Pacific: Solving Customer Problems at the Heart of Innovation
• Peter Gilbertson, Anacostia Rail Holdings: Growing With People
• Dan Smith, Watco: Stay Close to Your Customer
• Ian Jefferies, Association of American Railroads: A Growing Rail Industry Needs Policy Sanity
• Chuck Baker, American Short Line and Regional Railroad Association: Four Parallel Paths to Growth