The Canadian Pacific Railway Transforms Operations by Using Models to Develop Its Operating Plans

North American railways have traditionally practiced tonnage-based dispatching, running trains only when they have enough freight. As a result, their customer service and their use of crews, fixed assets, locomotives, and railcars are poor. Canadian Pacific Railway is using new decision-support tools developed in-house and by MultiModal Applied Systems to create a scheduled railway. These tools use operations research approaches, such as an optimal block-sequencing algorithm, a heuristic algorithm for block design, (very fast) simulation, and time-space network algorithms for planning locomotive use and distributing empty cars. This implementation has saved $300 million Canadian (US$170 million) from mid-1999 through autumn 2000. We estimate it has saved at least an additional $210 million Canadian during 2001 and 2002 in fuel and labor costs alone. Labor productivity, locomotive productivity, fuel consumption, and railcar velocity have improved by 40, 35, 17, and 41 percent, respectively. Furthermore, Canadian Pacific Railway now provides its customers with reliable delivery times and has received many customer and shipping association awards for its improvement in service.