AT THE END of this month, shareholders of Canadian Pacific Ltd should approve a plan to divide its holdings into five publicly-owned trading companies. Subject to favourable court and tax authority rulings, Canadian Pacific Railway expects to be trading as an independent entity in 2002.

CPR results for April to June 2001 reveal record operating income at C$206m, although net income was 1% down at C$95m. With the operating ratio steady at 78%, CPR still has some catching up to do with its larger rival CN, which has been transformed since privatisation in 1995 (RG 7.01 p455). CPR executives told an August 2 investors’ conference that 500 jobs were being cut this year, and efficiency gains would see annual operating costs C$150m lower by 2004 despite projected 4% revenue gains each year.

A major factor in raising CN’s productivity has been tight scheduling of all operations including train movements - a revolution on a continent where most freight is not timetabled. Late in 1999 CPR introduced Genesis, which saw intermodal trains timed and tightly controlled across the network. The result claimed was 99% on-time arrivals. Since July, Genesis has taken over scheduling of other trains, along with much tighter control of locos, rolling stock and yard operations. This is expected to boost asset productivity, and thus deliver the promised cut in operating costs.