Welcome everyone to the CN 2023 Investor Day. Bienvenue à la journée des investisseurs 2023 du CN. [Foreign Language] Please welcome our host, Janet Drysdale, Senior Vice President and Chief Stakeholder Relations Officer. Welcome everyone. Everybody here in the room as well as everybody that's joining via webcast. Bonjour à tous. Pour ceux qui nous rejoignent sur Internet, cet événement est disponible en traduction simultanée. Welcome everyone to the CN 2023 Investor Day. Bienvenue à la journée des investisseurs 2023 du CN. [Foreign Language] It's so great to see so many familiar faces. There's even a few of you out there who I remember being with when you first started covering the railways. For those of you that I don't know, I hope to have the opportunity to connect with you in the coming months. In the meantime, I know that my IR team is gonna take great care of you. At CN, every work assignment starts with a safety briefing, and today is no exception, so I'm going to ask the head of our new southern region, Nick Clark, to brief us. Hello again, everybody. Again, my name is Nick Clark. I'm here to do a safety briefing this morning. It will be fairly short, and I do have to read some of it as it's very intensive to The Gwen here where we are today. We are located in the Gallery Ballroom. This location is The Gwen Hotel, which is 521 North Rush Street in Chicago, Illinois. In case of emergency, I'll be the person that will call 911, and I will notify any hotel staff or the nearest hotel staff in the front desk. Mr. Pat Whitehead over here, to my left, is in charge of first aid and CPR if required. Just as note, there are two defibrillators here on site, one on the fifth floor and then another in the basement. If we need one, we can get a hotel staff to bring it here to this room. If an emergency situation arises, I will follow any instruction by the hotel staff. In the event of a fire, we'll alert the hotel staff. If you need to, you can find some of the red lanyard. CN, we can find the hotel staff if needed to find the nearest fire extinguisher. If for some reason we were needed to exit the building here, we will proceed down the corridor going south, which is out this way that we came in. Proceed down the stairwell to Illinois Street, where we will wait further instructions as far as where to go for evacuation. If a nearest hospital is required, Northwestern is 0.3 miles away, and we can help guide you to that. We do ask that you be accountable for your neighbors. This is a large group, so look to your right and look to your left. Those will be the buddy system if we were to have to evacuate here. Also note that inside your tables there, you will see plugs, USB for charging for your computers, your cell phones, so on and so forth. Be mindful if there's any cords dangling, to the tight quarters here, standing up, trip hazards with bags, so on and so forth. You heard Janet say that we give one of these safety briefings for everything and, truly we do it for everything. Right now, anywhere across the CN, there may be, you know, upward to 100 crews getting a safety briefing as they start their shift at 8:00 A.M. this morning. It is not unique necessarily to the industry, but we've taken a lot of pride in our safety briefings. We don't start a task, we don't start a shift, we don't start an assignment without understanding the safety protocols and what's out there to do. It's something we're very prideful of. It's really who we are. We have doubled down on that in the last few years. We were doing mid-shift briefings, and we also empower our folks to pause work whenever necessary to have their own briefings, if anything were to change. Again, it's been a pleasure. It's an honor to give this safety briefing here in front of all you. Have a safe day. Thanks very much, Nick. Before we get down to business, and as is becoming customary practice, particularly in Canada, we will do a land acknowledgment. Land acknowledgments are undertaken as a way to recognize indigenous peoples, the original stewards on the land on which we now live and work. Chicago, where we're gathered today, is the traditional homeland of the Council of Three Fires: the Odawa, Ojibwe, and Potawatomi Nations. Many other tribes, like the Miami, Ho-Chunk, Menominee, Sac, and Fox, also call this area home. Located at the intersection of several great waterways, this land naturally became a site of travel and healing for many tribes. I would also like to acknowledge that the CN network spans many treaty and tribal lands, Métis homeland, unceded lands, and traditional territories of indigenous nations, tribes, and governments across Turtle Island, what we call North America. All right, let's get down to business. I would like to draw your attention to the forward-looking statements and additional legal information on the screens and online. Today's meeting will refer to certain projections and other forward-looking statements within the meaning of U.S. and Canadian securities laws. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied. We have a fantastic lineup of speakers for you today, starting with our CEO. But before I hand the mic over, I want to say a few words. I've had the opportunity to get to know Tracy over the last year. She is intuitive, balanced in her approach, demanding, and strategic. Rarely have I seen somebody who can so effectively engage at all levels of the organization and externally. I am very proud and pleased to introduce CN's President and Chief Executive Officer, Tracy Robinson. Good morning. Thank you, Janet. That was very nice of you. All had your coffee this morning? Offset that sugar from late last night. That was quite a dessert bar, wasn't it? Thank you for being here with us today and for being here with the CN team. We know that some of you've spent now, will be spending a couple of days with us. Those of you who were around yesterday got to do a little bit of railroading. I hope you enjoyed that. I heard some great stories last night and some really good feedback. You got to spend some time with a cross-section of our team out there yesterday, and you're gonna spend some time today with a whole other cross-section of our team. Today we're gonna talk to you a little bit more about how we're running the place and where we wanna take this place. I've now been in this role with CN for just over a year, and I couldn't be happier with what this team has accomplished. I'm really proud of the results that they've driven, and I'm really proud of the way that they have come together as a team to drive those results. A number of you, as I've met you over the last year, have asked me or Ghislain or Ed or Doug, you've all asked us how we were able to turn this around so quickly, and I can tell you. It's three things. We have the right operating model. We drove some clarity and alignment so that everybody knew their role. We got the right leadership team in place. You're gonna hear all about that today, but I can tell you as we stand in now, here now, CN isn't just back. I think we're better. We're excited. Let me tell you what I'm gonna do up here today. I'm gonna spend a little bit of time giving you some context on what you're gonna hear today, how we're structuring our thinking, how we're organizing ourselves as we go forward. I'm gonna touch base on all these six areas now that you see on the screen. They're all critical to the way that we're putting our plan together. You'll hear more of the detail in each of these areas as we go through today. Let's get started. As you heard Nick say, we start everything, every day, every activity with safety. It is the most important principle that guides all of our actions. It is every day, every hour at the front of our minds as we come to our work and as we move in our personal lives. Today, it also rests kind of very heavily on our hearts because we lost one of our own on Friday. We had a CN conductor trainee, Mohammed Khan, lost his life while he was working on Friday. Mohammed was just like the rest of us. He loved railroading, he was excited about his career with CN, and we are devastated that his life was cut short. It has reinforced to us the significance of our responsibilities to every CN employee and to everybody who touches the railroad. Last Thursday, we finished 841 consecutive days fatality-free at CN, and that was a record for us. Today we're at 4. We're gonna keep pushing because we must, we have to continue to push towards zero. We owe that to Mohammed. We know that to every CN employee. As I come back into the industry, I would say that we owe it as an industry. It's occurred to me over the last number of months since the derailment in Ohio, that you'll all be familiar with, that in this industry, what happens to one of us happens to all of us. As we go down this journey to a safer future, we need to do it together. We need to take all the best ideas, all the best technologies and processes. We need to collaborate. I'm proud of what the industry did in getting together and doing that. All the information went on the table as we created new standards for ourselves for wayside detection, and that's a great start. We need to continue that because safety in this industry is our social license to operate. I hope when you were out in Homewood and Kirk yesterday, that you saw some of what we're doing, you saw some of the technologies that we're using and we're developing so that we can be safer in the future. You probably saw the automatic track inspection car. You maybe saw some of the tools that we're using to collaborate with communities and first responders in those communities. You might have seen or heard some of you were up on the 9/11 car. These are all the things that we're doing as we try to advance. What I hope you felt out there was the depth of our commitment to building a values-based kind of safety culture. What happens to one of us happens to all of us. My personal commitment to our employees, to our union leaders, to our communities, to you, to the industry, is that we won't stop until we find that point of zero, and that we were here to collaborate as we go through that process, because that's the best path there. Over the last year I've been in this job, as I reflect back, the most important decisions I've made is who I gather around the leadership table with me. Those have been very intentional, and I know some of you have noted, but I've took my time on that because it's really important thing to get right. I'm gonna just tell you about a few of the people that are new to their roles. Not always new to the company, but new to their roles that you're gonna spend some time with up here today. Doug MacDonald leads our commercial organization, and he is the right guy to lead our commercial organization right now. Doug has had a spent a lot of his career in commercial. He knows our customers, he knows our markets really, really well. He also feels as strongly as I do about the fact that scheduled operating model is the one that we need to use here. It's right for us at CN. He's been instrumental in driving some focus and leading our commercial organization back to that kind of model and making the adjustments so that our book of business fits our operating plan. He's worked with Gis and with Ed in driving that alignment that we need across the organization because this is the plan. It's our only plan. It's the one plan, it's the plan we're all running, and everyone needs to understand their role. Doug's got a great team, and you're gonna see a number of them up here with him today as he talks about what we see forward-looking from a growth perspective. It didn't take long before I came in where I knew what operating model we needed to get back to. I knew also that I needed the right leader to kinda help us do that quickly. I was able to entice Ed Harris. Was not easy. He made me work for it. I was able to entice Ed to come and spend some time, come back to CN. Ed's a CNer. He knows our network well, he's run scheduled railroads, and he has got this way about him that opens people up and that draws people to him. You know what? If you talk to Ed, and you will, Ed would tell you he's not here for long. Turns out my powers of persuasion only go so far. While he's here, he's committed to coaching and mentoring that next generation of railroaders. I'm really happy with the time that he's spending with our frontline supervisors, helping them to develop the perspective and the capabilities to run the plan. So Ed also has a bunch of his team here today that you're gonna meet, and two of them we've put in new positions over the last year. Patrick Whitehead, Derek Taylor, are two of probably the most talented senior operating folks that I've met in a very long time. They're working together. They both get it. They know what we're up to. They're working together to drive us towards this plan, and they're doing a fantastic job of it. You're gonna see them up here in just a few minutes. Behind that, I am really encouraged by the talent I see coming up in this organization. You saw some of them yesterday, you saw some of them last night, you're gonna see another group of them today. We're leaning in to accelerate their development because they are the next generation of this railroad. As we think about the talent that we need, I would tell you, I'm a believer that that old school culture is gone. That kinda top-down command and control. Things move way too quickly now for us to work like that. What we're looking for is people who understand, who wanna accelerate, who are willing to have the permission and the mandate to step into it and to act. I think that the people that you've seen, I hope that you've recognized that they embody that kinda spirit. Those are what we're hoping to draw into this organization and to build. What we believe is, it's also the type of approach that is gonna draw in the next generation as we go forward. Getting this team right is an absolute priority for me because they are the engine. They're the engine that's gonna drive our success as we go day to day, and they're the engine that's gonna drive our success in the future. They're also the engine that's gonna drive the scheduled operating plan. Let me just spend a few minutes with you on this. I want you to understand why. You're gonna hear a lot, you've probably already heard a lot about, you know, the scheduled operating model and the fact that this is the one for us, and we're pretty serious about it. I want you to understand why it's so important. You have this phrase around here that you may have heard, and you're gonna hear a lot more today, the plan is sacred. In this railroad of the past number of years, we moved away from this kind of a plan, and we moved more towards a long train strategy in search of what I'm told is a different kind of efficiency. My belief is the scheduled plan is the right one for us. Let me tell you why. CN is a single-line network. If you think about how a single line network works. Well, let me do it this way for you. Imagine that you're an operations manager and you're in a yard, right? You're about to depart a train, say it's 7,000 feet. It's gonna depart 2 o'clock, 1400. If you are in a long train model, right? You're looking at your inbound lineup, you may see two, 3,000 feet coming into that yard over the next number of hours that could go on that outbound train. You want the longest train possible. What you're gonna do is delay that departure. You're gonna wait till that traffic comes in, you're gonna marshal it up, you're gonna send out a 10,000-foot train. Right? No one knows when that train's leaving across the network, no one knows when it's gonna get to the next yard. What you've just done is you've optimized for that terminal, for your yard, and for that train. If you're running a scheduled operating model, that train departs at 2:00 P.M., 1400, at 7,000 feet. It does that because that power is expected in the next terminal to be turned and put on another train. Those cars are planned for a connection so that they can get to the customer. What you're doing in that model is you're running a much more consistent level of customer service, and you're optimizing not to the yard, but you're optimizing to the network. You're gonna get more asset velocity, more consistent utilization of power and crews, and more predictable service. So the way this model works in our railroad is that the plan is created at the center. That's Patrick Whitehead's job. You're gonna hear him talk about it. When he creates this plan, he looks at all the volume across the network and all the parameters, and he sets a plan that optimizes for the entire network. He hands it over to Derek Taylor. Derek's the Head of Transportation. You'll see him in a few minutes. Derek's job is to run the plan. What he does, the trains depart on time, they arrive on time, they have the right blocks that make the right connections, right? If Derek has trouble doing that, if there's something wrong with the plan, he doesn't revert to tactical measures to fix it, he gives it back to Pat. Pat fixes it at the network level. This is what we mean when we say scheduled railroading. We implemented this on April 1st of last year. We went back to scheduled railroading. Over the last year, this team has made some pretty impressive gains. I know that you've been watching our numbers. Our customer service has improved dramatically and is much more consistent. Our assets are moving faster. Our car velocity has gone up by more than 30%. When your cars move faster, you create capacity. You can sell into that capacity at lower incremental cost. You've seen us doing that. You've seen us moving more volume with less assets than ever before. That's the power for a network like ours of the schedule railroading model. Now we've lapped that April 1st implementation, and what you're going to see from here on in is Pat and Derek will continue to refine this model. They'll make changes to it as volumes change, as they are now. They will make changes to it for areas that aren't quite working. They'll make changes to it as we implement a new technology, but always optimizing for the entirety of the network. Running an operation like this is what drives customer service. It's what drives efficiency. For us, it's the platform for growth as we look forward. The last year we've been working on this question of, you know, is there growth and where are we gonna take this place? As we stand here now a year and a bit in, I can't tell you how excited I am about the pipeline of growth opportunities that we have in front of us. Of course, it starts with this network. CN has a very advantaged network. I know how advantaged it is 'cause I competed against it for a lot of years. As I come back, I can tell you, it hasn't changed. It still is strong. Let me tell you what I like about it. CN has optionality. 2 ports on the West Coast. We have 2 ports on the East Coast. We have 2 ports down in the Gulf. Sole service provider to the Port of Prince Rupert, sole service provider at the Port of Halifax. We have this little gem that many of you actually were out on yesterday, an EJ&E here in Chicago, that allows us to move reliably and quickly around Chicago. You may have heard this yesterday, 25% of the rail volume in North America touches Chicago. We have this unique advantage of being able to move around it very, very efficiently and very, very quickly. With this network, over the past year... I wanted this growth opportunity thing scrubbed. They were working on some stuff. I needed to understand it. I wanted to know that we had turned every rock. We pulled together the strategy team with the commercial team, some finance folks, and we invited in some of the operations team. We scrubbed it. We looked at business groups. We looked at every commodity line. We looked at every part of the network. We looked at, how trade flows were changing, and they are, and where they may go and how that may impact us. We looked at some of the market disruptors. Think about, you know, the transition to a low carbon economy. We looked at our traditional markets, and we looked at our emerging markets, and we did a lot of thinking about the partnerships that we were gonna need to develop in order to make us successful. We did that over about 6 months, 6, 7 months last year. What has come from that is a really interesting portfolio of growth opportunities across the network, each one of them distinct based on where of the network, they're happening. As a result of that, we're investing. We're investing in the western part of our network, where we are close to capacity because of how compelling some of those growth opportunities are, and you're gonna hear about these today. In the east and the south, we're working to create those opportunities to densify our network because we have capacity there, and there's some interesting opportunities there. We are working through solidifying some of the relationships that are gonna be really important for our collective success, and you've started to see some of that work come out as well. Now as we build this up, our intent, what I want is for us to be the best option. If you're bringing containers into North America, whether it's from the east, the west, or the south, I want us, and we will be the best option. Best service, most consistent performance into the MidCon. If you are exporting resources, think of all of the bulk commodities, whether you're sending them to world markets out the west, the east, or the south, we will be the best option to managing your supply chain and the consistency of it and maximizing your asset utilization. This company has wanted to be in Mexico, in that Mexico market for years, and I'm really happy that we are. With our partners, we will be the best option if you're going from Mexico into the U.S. and Canada or the other way. If you're looking at some of the emerging markets, and you'll hear about some of them today, they're really interesting. We will be the best option for that as we will be for our traditional markets. Today, Doug's team is gonna take you through what we call some proof points of what's in this portfolio that we're working on now and where we think it's gonna go. As we stand here, I am confident as I look at this portfolio, that we will drive volume growth that exceeds the pace of the economic growth on the continent into the future. Railroad's humming. It's working well. We're excited about the growth ahead. It's critical for us, and it's critical, I know for you, is that we drive that top-line growth to our bottom line. We're pretty focused on that. This growth is gonna give us the opportunity to invest in our network, to expand our capacity, to build some new services like you're seeing us come out with. The key to all of it is to do it productively. You're gonna hear Ghislain talk to us today more broadly about capital allocation and how we're thinking about that. More specifically, how we're changing the way that we're gonna manage our capital and the deployment of our capital, and the implementation of our capital investments. We want you all comfortable, and as comfortable as we are, that we're gonna drive the returns from those investments that we've targeted. This means a different kind of focus to get the most out of every dollar we put in the ground. We're deploying capital in our network. We're also investing in technology. You'll hear over the course of today how we're deploying technology in some interesting ways to make us safer, make us more efficient, improve our service, and make us easier for our customers to do business with. The same rules apply to those technology investments. Our new approach to capital deployment covers every single investment. With this approach, we're gonna continue to invest to make our business bigger, to make it more efficient, to make it safer and more resilient. Ghislain is gonna take you through that today. He's also gonna do some wrapping up of what you hear today and give you a sense of the numbers and a little bit of guidance on what we see coming forward. You're gonna hear a lot about today, as you go through about the build the plan, run the plan, sell the plan. You're gonna hear a lot about where we're gonna go and how we're gonna drive value that way. Let me just make a personal comment on sustainability, 'cause it's important to me. I'm sure it is to you. We don't have a separate section on sustainability. We don't have a separate department on sustainability. Sustainability is not separate. In my view, sustainability is our business. We are a sustainable company. Safety, if you think about it, is our social license to operate. Climate change is kinda the defining issue of our time. If you think about talent, who we can attract, who we can develop, it's gonna power our growth. The way that we engage and align with stakeholders is going to amplify, support everything that we do. A part of being a sustainable organization is keeping an eye and a steady hand on the future. I understand all of the quarterly realities of leading a publicly traded company. I've also watched, and in truth, I've been part of railroads overreacting to changes in the near term, to changes in volumes, to changes in, you know, where we are in the economic cycle, to third-party shocks. We overreact, and we lose what makes us good at what we do and good at providing service to the industries and growing the economy in this country. In this company, we're gonna keep a pretty steady eye on the long term. We think it's the right thing to do, even if it means that we get a little lower margin leverage in the short term. It'll be there when the volumes come back. I would tell you, we've done the math. We've looked at every cycle that this company's been through. We are far better off to stay steady and be ready for when the rebound comes, and it will. Let me just wrap up. When I came in a year ago, I was excited. How could you not be excited about coming into a company like CN? It's pretty iconic and, you know, I lived around it and watched it, competed against it my whole career. I also had some trepidation because I didn't know what had happened to CN, and I didn't know for sure where we could take it. Now, I'm a year and a bit in, and I can tell you I'm all excitement, no more trepidation, because I know exactly where we can take this place. We've got the right operating model without a doubt. We have and are building the right team, and yous can see who's coming up in that team. We've got a portfolio of growth opportunities that I hope you'll be excited about as I am by the time you leave. We are investing in the right way with the right discipline and alignment to push that growth to the bottom line, to our benefit and to all of yours. I'm pretty excited about the future, and I can't wait to see how this team can lift in to what comes next and continue to build our business but also support the growth of the North American economy. There is a new energy around this team. You know, they know that they're back. They know they got this. They know what their role is and where we're going, and they're having fun. I hope you see it, and I hope you feel it as well. Let's get them up here. Mr. Harris, I think it's your turn, my friend. It is my honor and my pleasure to introduce you all to our Chief Operating Officer, Mr. Ed Harris. Well, that's the first time I've ever got a hug from a CEO, that's a great start for me. Welcome to Chicago. It was great seeing a lot of familiar faces, familiar people that I've worked with in the past years. She's exactly right. She's very persuasive. I've enjoyed this opportunity more than you can ever imagine, because for me, it was coming back home. For me, it was getting back into the operation that I helped build a couple decades ago. I think you all realize that I had a lot of questions last night. How many times have you retired? I think it was four, maybe five. I'm not sure. Where are you gonna go? I said, "Well, I'm here right now." I've enjoyed every one of my retirements. I've enjoyed going back to work every time. Some not as good as the other ones. This happens to be a very enjoyable role for me, and I like it a lot. I was sitting in Florida in my condominium on the Atlantic Ocean, enjoying a very casual Sunday, and the phone rang. Could you meet Tracy? I said, "Yeah, I guess I can, but I'm, you know, I'm not associated. I'm not working." Could you just talk to her? "All right. You gotta come to Chicago. That's where I'll be next week." She flies to Chicago. We meet in the peninsula, and we start talking railroad. Before I know it, we've been talking railroad for over 2 hours. I was excited to hear her view of the operation. I kinda knew what was going on here, operating-wise, because I still had a lot of associates here. I talked to everybody. I knew what she was up against, I knew the frustrations she was feeling trying to get that message across. As a consultant, I share a lot of those frustrations, or when I was a consultant. Only because you can only suggest to the management team what they ought to be doing or where they ought to be looking. You can't tell them. You don't last as a consultant very long when you tell them. When they hired me as a consultant, they sent me a contract. The monthly retainer fee was blank. I got to fill in the number myself. That's never happened before. I gave that a lot of thought, and I said, "Well, I don't wanna overblow this thing, and I wanna be conservative because I know they're watching their dollars, but I wanna get rewarded for what I knew I could do." I filled in the number. I got hired as a consultant. Tracy and I developed an operating relationship. They would send me turnovers, the daily turnover, to my personal email. I would look at the turnover. I would email her back, "Ask them this, ask them that. Push this. Report this way." We quickly understood between us where we wanted to be and what we needed to do. Quite frankly, it's been a labor of love. I've enjoyed every minute of it. It's been fantastic. I'll tell you something about her. She said she was persuasive, so now I've got the opportunity to say that. We decided we needed to make a change, and it was a collaborative understanding, and when she had me wrapped up, which took a few months. My first day, she goes, "Where do you wanna start?" I said, "Edmonton." "Why do you wanna go to Edmonton?" I said, "It's operating headquarters. That's where I was. That's where I worked. That's where their focus needs to come from." She says, "Okay." It was a very timed execution of a change of command. I fly to Edmonton. She says, "I'll send you a car." I said, "No cars. I'll take a cab." I take a cab to the yard, go up in the tower. She has a conference call, and she introduces me to the operating team. I'm there talking, trying to establish some momentum, finding out what was going on internally now that it's been announced and I don't have to ask for reports under the, under the cloak of darkness. I start digging into car management, crew management, things like that. I'm up there for about three or four hours, and I get a text from my wife. Oh, God. I look. There's a picture of a dozen roses. Who the hell is sending my wife flowers? Tracy Robinson. There's no other person, no other CEO in this industry that would ever think of a spouse before they think of you. I was sold. My wife was sold. Anyway, that's how I got here. From consulting, I knew exactly what needed to be done. I knew where we should address our focus operationally, and it really is nice to be back home again. Tracy and I never talk about PSR. That's not in our vocabulary. I don't even acknowledge PSR. What we do is run a scheduled operation based on the car with a strong level of safety and a strong level of commitment to our customers. The car is the driving mechanism. The velocity of that operation is what makes this thing hum. I don't talk about precision scheduled anything. I talk about car velocity. I talk about train speed. I talk about customer service. I talk about the spotting plan. I talk about the scheduled service. I talk about how we take the bulk trains and feed them in between the scheduled trains out of Edmonton going to the ports. It's all part of the plan. As you were in Homewood yesterday, and you went through the training center, and you met some of the new hires, we drive that plan as soon as they walk through that door, whether it's Homewood or Winnipeg. They understand the importance of the plan and how we look at the sacred atmosphere that we're trying to develop from our working force. The lower that we can get within the organization to make decisions, the stronger we become. Whether you're a carman, whether you're driving crews, whether you're calling crews, whether you're a yard master, whether you're in the tower of Kirk Yard, whether you're pulling cuts out of the classification yard to build a train, you know what on time means. I, too, got that question, how did we change so fast? How did we turn so fast? One word, discipline. We all had discipline in the operating plan. It would be nothing for us to pick up the phone, "Why are we 30 minutes late?" Yesterday's on-time departures were at 94% for our 200 some odd trains that we run. You're gonna hear Pat and Derek talk about launch and land. Departure to arrival is an important metric for us. We never deviate from the plan. We always stay on target. We always stay focused. Today, I wanna talk about safety, what we do to address our safety operation and a safe railroading atmosphere. I'm gonna talk about our version of schedule railroading in a little bit more detail, and I wanna talk about the next generation of talent. Let's talk about safety. 0 is possible, and I shared the pain that we all felt a couple of days ago when we lost 1 of our team. It's a dangerous business. You always have to be aware. You always have to know your surroundings. You always have to be diligent. Safety briefing, safety briefing, safety briefing. Takes 1 second of not paying attention, and you get in trouble. It's more than just a injury for this company. We talk safety. We do safety in every form of operations that we have. The wayside detection technology, we have over 1,000 detectors across our main line to measure things like bearing temperature, acoustic detection that measures the sound that's coming out of the bearing, wheel impacts looking for flat spots, dragging equipment. We have over 24 million data points a day from all the inspections we do. I had to ask Dom, our head of IT, "What the hell is a data point?" All the different measurements, all the different things we look at as far as components, the portals, the inspection, the artificial intelligence, the trending analysis we do from detector to detector, measuring temperature and gauging track. Our plan is to be preventive about our maintenance policy. I don't wanna wait until something breaks on the main line. I wanna get it into the rip track, get it repaired, change out the wheels on plan, not as a result of a disaster or pending disaster. That doesn't do this railroad any good. Doesn't do any railroad any good as we've learned recently. You saw yesterday at Woodcrest the automatic track inspection equipment, the automatic track inspection car, ATIP as we refer to it. Track geometry, cross level, gauge. This thing now, they're developing some kind of radar mechanism to look down into the roadbed 6 feet. To look for any soft spots, any under current activity going on on the track bed. That thing runs over 1 million miles a year, and we've got 10 of them. We usually attach them to our intermodal trains to try to check the track at the fastest speed that we have. You saw the air repeater cars. That allows us to run in minus 40 a reasonable train length to protect our customers' business when you have a hard time getting air through the cars. The repeater car, in lieu of another distributive power engine, is another air source for us. That allows us to run longer in the winter when most companies just kinda shrink it down to 5, 6,000 feet. We're still through the tier of the temperature, and the repeater car that we would add to the train allows us to keep it up to 8,000, 9,000, 10,000 feet to keep our service plan intact. It's hard operating up here. It's a tough environment. A lot of things can go wrong, and the colder it gets, the more things seem to go wrong. Nine-eleven car, Tracy mentioned it. You saw the slide on it. That car travels through a lot of the communities we operate in. That allows the first responders and our first emergency response team to collaborate and work and develop relationships where we literally share what we're hauling through their neighborhoods, through their towns, through the cities in case we did have an issue. It could be something as simple as a leaking vent valve that prematurely releases a vapor in the air. When we all understand the nature of our business and we all understand how to repair things, and it's not as bad as it usually seems, especially when the press gets a hold of it. That's better railroading, that's smart railroading, that's good railroading. You also saw the Electronic Track Authority Verification System we have for our maintenance of way people. This allows a track inspector to get on the railroad or a maintenance of way crew to get on the railroad with protection through the dispatching system to allow them to go from point A to B without picking up a telephone or making a radio call. It's all done electronically. You also saw yesterday, I think you would have saw, the eNABLE system that we use for our crews and our personnel in the field to report hazards, report opportunities, things that they say, take pictures of it, send it to the safety center so we can address things that we see across the network immediately. That's just part of our railroad. The training centers in Homewood and Winnipeg are the best you've ever seen. We cover all crafts, regardless whether it's a maintenance of way or signalman or operating guy, operating role, new hire, brakeman, switchman, whatever the case may be. They get it ground up. They go out in the field, practice what they learn, then they come back for another round of training. It's a very intense program, very intense process, but it's money well spent in line with the future of this operation. The old days, you used to get a rule book and a timetable and a pair of gloves and a ladder and say, "There you go. 3 trips and you're qualified." You don't do that anymore, but that's the way it used to be. I hope you were very pleased when you went through those training centers and you saw the signal room. You saw the walking simulator. You saw the locomotive simulator. Hopefully, you got a chance to get behind the stick and run a train for a little while. It's impressive. Next thing I wanna talk about is the schedule railroading plan, and I said it's disciplined. It's a disciplined approach. We spend a lot of time talking about the plan. We look for weak spots. We use the saying of, "We make the train, we run the train," by the plan. It's always by the plan. Tracy used the reference, whether it's 4,000 cars or excuse me 4,000 feet or 10,000 feet, we're running on time. Because of the connectivity throughout the network, whether it's power, whether it's crews, whether it's availability. If I'm a customer and I'm on a 4,000-foot train and you don't run me to build train length, what do you think I'm gonna say? Where's my service plan? I'm paying you a lot of money to run this train on time and you're telling me you're holding it for a longer opportunity? That don't fly. I was sitting with one of our marketing managers last night and we started talking about scheduled service, and I didn't even think of this until last night. A lot of our petroleum and chemical customers have to lease their own fleet. That costs them a lot of money. The more velocity that we have in the network and the more car speed and train speed that we create, we've had customers actually reduce their fleet, turn back their lease equipment. That's a savings I think we should be charging for, but we don't. It's good for our customer relationships. They drop their expense from the benefits they see from running a scheduled operation, because we do run everything on time and we do run it in full. The plan is sacred. That's all we focus on. What do we do against the operating plan? How did we perform? We want Doug MacDonald's team to go out and sell the plan, show what we've done operationally. I mentioned earlier, we were at 94% on time yesterday, departing. Sell to that. Sell to that opportunity. How did we improve so fast? Well, Tracy picked some pretty good managers, I think. Although I gave her a hard time, as she said. Just wanted to make sure one more time. We started bottom up. We started to enforce the plan, enforce the operation from the basis of the operation, right from the customer's gate, right through the classification yard, right into the switch engine assignment, right into the terminal, right out to destination. We proved to our customers we can deliver service and they could be proud of shipping on CN. I really think that was the answer that allowed us to be able to turn this thing around quickly. It seems so quick when you're doing it, but, when you look at the metrics, you can tell month to month, quarter to quarter, constant improvement. We've improved every quarter that I've been here. It's only been 2, but we started in April, but we started with just start the trains on time, please. Do that. That was the first step. Don't run anything longer than siding length. You go out there and run long trains and you don't fit in a siding, what happens? You start holding trains back 10, 12, 15 miles waiting to hear me. Can't do that. Every stopped train costs this company money, costs us in customer service, costs us in our relationships with our customers. I made a commitment when I came here again in Montreal, and I told everybody, we're done cutting heads. This company has gone through way too much head cutting, and we've been paying the price ever since. The way railroads, that's hard to say, the way railroads make their money, increase profitability, keeping things moving. Work on train speed, work on velocity, work on car miles per car day. We're handling more loading today with probably about 20,000 less pieces of equipment across this railroad. That's momentum. That's productivity. We started day one. I spent as much time with car management as I did with the operating groups because I wanted to see that improvement. I wanted everybody to be focused on the cost of the car. Somebody reminded me last night of what I did when I was at Canadian Pacific. I came up with a form that said, cars are cash. They sure are. I was surprised somebody even remembered that because I couldn't remember it. We don't reduce heads. We work on operating the efficiencies. That's what generates our profitability and what generates our expense savings. We focus on dwell, reduction in equipment requirements, and money in the bank. We're data-driven. We measure everything. We continue to measure everything. As I said, we run trains at siding length. We create velocity, that gives us capacity. The faster we are, the more capacity we have, the less opportunity we need to build sidings. We save capital dollars by using our available capacity first and foremost. Won't give me any money unless I can prove to them that this is what we need. I better have my numbers right. Car miles per car day, as I mentioned, that was an important aspect for what we measure as far as controlling the inventory and ensuring we're getting the velocity that we need. The first mile, last mile responsibility we drove to our field officers. I was surprised how many customers didn't get service because lack of crews, lack of power, things weren't getting addressed in the terminals. We addressed that as well, too. We're working with engineering now and we're getting ready for work block season and spending some of those valuable capital dollars to build their work block plan right into the operating schedule. We want to give them undisturbed time. We don't want them jumping on and jumping off the railroad 3 or 4 times in a shift. Once we give them 6 to 8 hours, they get 8 hours. No more than 8 hours, Brent, we give them 8 hours undisturbed. That's a valuable opportunity for the railroad, and it's a good use of our capital dollars. I focus a lot with mechanical on the reliability factor. I don't want the engines to fail. I want to make sure we do the proper maintenance and proper inspections. Car inspections are vital to us. We've got all this technology. We still got to walk the track and look at the cars. We still got to ensure that the brakes are all released. I'm going to turn it over to the next generations of railroaders, two guys I've gotten very close with over the last few months. Tracy's already mentioned Patrick Whitehead, our Senior VP of Service Design, System Servicing or whatever the hell it is. I'm not sure what it is. Derek Taylor, our Senior Vice President of Field Operation. One guy plans, one guy executes. It's kind of a weird combination in this industry, I'm telling you, it works, and it works very, very well. You'll see the relationship these guys have. one guy makes the plan, one guy runs the plan, and I'm off the stage. Thank you very much. Thank you, Ed. We are all very excited to have you back home at CN. We appreciate your experience and your leadership. For the record, my title is Senior Vice President, Network Operations, and I'm headquartered at Edmonton, Alberta. Joining me on the stage this morning is my good friend, Derek Taylor. Yeah, thanks, Pat, and good morning, everybody. My name is Derek Taylor, Senior Vice-President, Transportation. Believe it or not, Pat and I manage different teams, but we actually have a lot in common. We both cut our teeth here in Chicago, where we're at, and maybe had a few kind words for each other maybe 20 years ago and didn't even know it. I think we did. At the end of the day, one key thing with that is, it gives us unique perspective in Chicago. We both realize the EJ&E and the gift that has given us, and it keeps on giving. As you hear about Rupert, operationally, we feel that way about the J. With no further ado, a little bit about myself. I've been in the industry for 23 years, actually as of May 1st, a few days ago. I actually worked for the South Shore Railroad, in a steel gang, tie gang, and as a welder helper to try to pay for school. When I graduated from DePauw University in May of 2000, I hired on with CN, and I've actually been here ever since. During that 23 years at CN, it's all been in operations. Started here. I've worked in all three regions, lived and worked in Canada twice, was fortunate to serve as vice president of two of those three regions, and also oversaw the network as Vice President of Operational Excellence. Happy railroad anniversary, Derek. Yeah. Thank you, Pat. Wedding anniversary, too. She's still with me after 13 years, so I was about to say that, you beat me to it. As Derek said, we have a lot in common. We both started our careers right here in Chicago. We have each worked the other's job throughout our career, we both truly believe that the best way to run an efficient railroad is to run a disciplined, scheduled operating plan. I have 30 years of experience in the railroad industry. I started my career with Conrail as a unionized employee. I worked as a conductor, locomotive engineer, and a rail traffic controller. My father was a superintendent for Conrail in Detroit at the time that I started. My first management role with Conrail was in the coal fields of West Virginia. When Norfolk Southern and CSX acquired Conrail in June of 1999, I went to work for Norfolk Southern in Columbus, Ohio. My dad, on the other hand, went to work for the CSX in Indianapolis, Indiana. As you can imagine, this made for some really interesting Thanksgiving dinner conversations working for rival railroads. It was okay because Mom was there to, A, referee, and B, remind us that we're not allowed to talk about railroading at the dinner table. I worked in a variety of leadership roles at Norfolk Southern of increasing responsibility across the entire system in transportation, mechanical, and network operations. When I left NS, I was the Vice President of Transportation. I joined CN in Chicago in April of 2021. I worked as the Eastern and Southern Region Vice President from September of 2021 until I moved into my most recent role in July of 2022 as the Senior Vice President of Network Operations. Today, Pat and I are here to tell you a short story about the dramatic operational turnaround in the past year and change. We're gonna talk about the key results, how we got there, and where we're gonna go next. That only gets it done with him and I being aligned between field operations and network operations. With that, well, I'll share some of our current operational metrics. As you can see on the chart, there's four different key metrics here. On the dwelling 32-hour cars, you can see a consistent downward trend, but also the big momentum we've had from 2022 to 2023. That's phenomenal work by the entire team across the entire network. There's been a clear pivot back to a scheduled operation, and as you can tell, we're getting clear operating momentum. These four key metrics on the screen give us a pulse of how the railroad is operating, but that's also through compliance through the scheduled operating plan. This impacts the footage of our major processing yards when we speak about dwelling 32-hour cars, but also the serving yards of our customers. When we have less cars online, that equates to faster turn times, less congestion, which all equates to eventually less cost. Adherence to the scheduled operating plan is what allows this to happen. I'll start with covering train speed and car velocity. We'll review these two metrics. These are key indicators of the health of our network as a whole. We use these metrics for planning our assets, specifically cars and locomotives. As we speed up, we optimize our assets. The network operations team watches these metrics very closely and makes adjustments. I'll talk about a little bit of the improvement that you see on the slide. We captured a great deal of this free speed, I'll call it, simply by running a disciplined, scheduled operation. To say, we didn't spend money to pick up this speed and velocity. We unlocked it by adherence to running trains on time and running to our plan. I will say this, in our heavier corridors, such as Edmonton to Vancouver, additional speed beyond what you see will require some capital spend. A lot of hard work has gone into achieving these results, and this clearly demonstrates the alignment between all of operations. We have clear vision. A solid plan and a disciplined execution of that plan. Let's take a look at how we got here. As you heard earlier, we still have solid operating people. That was required for us to get where we're at today. That enabled everyone at CN to rally back around a scheduled operating plan. We started with alignment around the key principles of running a scheduled operation. Let's talk about those. One, run trains on time from origin. Number two, safely handle cars with urgency to make our planned scheduled connections. Put the right car on the right train in the right block every time and arrive our trains on time at destination. We started this focus at the four hump yards, we moved on to the large flat yards, and finally, the intermodal network. I'd like to use Kirk Yard as an example. It's been become our most productive hump yard over the past five years, as you likely heard on the tour yesterday. They take tremendous pride in executing and delivering key metrics such as on-time performance, connection performance, and blocking integrity. They also set the tone for the network when we introduced a scheduled operating plan. As you know, with their critical location here in Chicago, we were able to see immediate operational benefits and impacts. I'll talk about an intermodal network example, and this is a very simple example. We were looking at how do we better improve transit times of our intermodal product. We looked at the service design. We looked at the West Coast ports, for example. We're running a train with half Montreal, half Toronto, stopping in Toronto, working, and then moving on to Montreal. What we did is gather density of traffic in the West Coast ports, redesigned the train plan across the network so that now we land a train in Toronto that wants to be in Toronto, and we land a train in Montreal that wants to be in Montreal, reduce the transit time for our customers, and improve the service. Reduced line of roadwork events and sped up trains. We made these changes, and we looked at our unique at our regions, we knew that each one is very unique. Let's take a close look at the three regions and their different characteristics. I had the opportunity at dinner last night. Some of you had some very good questions, and it was a bit, we went back to three regions from two. What's the difference between each region? That's what I'm gonna touch on for a bit here. They are distinct. The Western region, as you all most likely know, is our heaviest GTM territory, but it's very bulk train and unit train-centric. The Eastern region, although it has the least amount of GTMs, is very consumer-centric with both the domestic and international intermodal business. The Southern region is actually a bit of a hybrid of them both. We've got a wonderful Gulf Coast bulk franchise and a solid intermodal franchise. It's also our most manifest-centric and actually our most complex due to all the Class I interchanges throughout the U.S. Because of that, we can't have a one-size-fits-all approach. That's where the teamwork between Pat and I come in, as the plan gets designed for what's right for the network, but keeping in mind the unique characteristics of each region. Give you a couple of examples. The team put back in place a scheduled grain plan in the Western Region. Another example we discussed a bit for some of us at dinner last night. We also went back to siding length on our core train package in the Western Region, which you heard Ed talk about. Bear in mind, context is important. Siding length in the Western Region, depending on the corridor, is 11,000 or 12,000 feet to meet trains in both directions fluidly. Understanding these 3 region allows us for a solid foundation to what a scheduled operating plan should look like when it gets built. Pat is now gonna speak more in-depth on making the plan. Thanks, Derek. You've heard it a few times already. The plan is sacred to us. There is no backup plan. There is only the plan, and when we get off plan, we are all aligned around how do we get back on plan and move forward. The service design team is responsible for building the plan and monitoring the effectiveness of the plan. This is done, however, in lockstep with transportation, intermodal operations, sales and marketing, and HR, so that we make sure we have the appropriate amount of people to run the plan. What does an effective operating plan look like? Let's take a look. A good operating plan is built to optimize train speed, car velocity, and asset utilization. The plan is built to drive cars as deep into our network as we possibly can before we handle them again. Hopefully, you had an opportunity at Kirk Yard to see an example of this. They're very proud of this train. We gather a solid train, sometimes up to 10,000 feet, of empty center beam cars used for lumber loading from Kirk Yard every day. We send that train 2,100 miles to Prince George, British Columbia, without ever touching those cars again for final distribution to our customers. A great plan. Core trains, that is our scheduled intermodal and our scheduled merchandise trains are the foundation of our plan. We slot our very robust bulk train franchise, bulk plan around those core trains to reduce conflicting movements and optimize our train meets. This is particularly critical in Western Canada, where traffic volumes are the highest and our capacity is at a premium. The plan must also incorporate time. I see Mr. Lang right there, for our production gangs, our engineering production gangs to get their work done within the plan. After we've collaborated to make the plan, now it's time for Derek's team to run the plan. Derek is going to talk about disciplined adherence to running our plan. Thanks, Pat. You know, the key to running the plan is truly sticking to the basics, starting with running on time. Sounds easy, doesn't it? End of presentation, I'm gonna give it back to Pat. No, at the end of the day, even shared some pictures last night, we got three feet of snow in Lansing, Michigan, and it's 80 degrees in Edmonton, Fahrenheit, with brush fires. That's just some of the challenges we go through every day. When it comes to running that plan, connection performance, blocking performance, industry dwell, and assets dwelling beyond standard are four critical metrics we look at on a daily basis. These four basic principles, when done right, equate to speed and velocity, but it also drives balance across the network, which you heard both Pat and Ed talk about earlier. It also equates to cost takeout when coordinated right. You know, one thing to remember, you can always create the best plan in the world, but if you can't execute that plan, it really doesn't matter. With that, it's a great opportunity being here in Chicago to talk about the opportunity with the EJ&E and how has it allowed us to leverage these key principles. Perspective. I had actually worked in Chicago twice in the early 2000s in two different roles. That was before we owned the EJ&E, so I can fully appreciate what it's done and the transformation I've seen it do for CN. No exaggeration, I have seen a CN train sit for two weeks before in the terminal and not turn a wheel. Okay? With the EJ&E, that was a game changer in 2009 as it's evolved. It's more than just getting through the terminal with one crew. For example, with another Class I airline partner, with the equivalent of 4 trains a day, we shaved up to 48 hours of transit time by using the EJ&E. Investments at Kirk Yard. Over time, it's allowed for a 15% productivity in our hump yard over those five years, which has allowed us to drive workload out of 5 other yards in Chicago, which are much smaller, which are here to really serve industry. The benefits of that is not just about cost takeout. You heard Pat mention three forty-seven and the center beams. It allows us to build trains at Kirk Yard that can go deeper into the network without having to touch those cars again. Another benefit, it also allowed us to integrate our intermodal and automotive network. You didn't see that, at Harvey, Markham, Illinois, that was the original flat switching yard in Chicago. That allowed us to leverage that where we've now integrated our intermodal and automotive package and allowed us to handle that traffic less, therefore decreasing transit time on one of our most time-sensitive commodities. You know, Derek, having worked in and out of Chicago my entire career, I can tell you that when I was over at NS, I was sure envious of CN's purchase of the EJ&E. I know that every other road that transits Chicago felt the same way. It is I now get to see firsthand just what a competitive advantage that is for our transit time through Chicago. Thanks, Pat. It's a great perspective with both of our backgrounds 'cause it just justifies the necessity of that whole transaction. With that, now let's talk about aligning the network. As you heard Pat mention earlier, we started in our four hump yards, which are Symington in Winnipeg, Mac Yard in Toronto, Kirk Yard in Chicago, and Harrison Yard in Memphis, Tennessee, as they touch approaching 40% of our manifest volumes. We rolled it out to our major flat switching yards in places such as Thornton Yard in Vancouver, Walker Yard in Edmonton, Taschereau Yard in Montreal, and then Battle Creek, Michigan. After that, the final piece of rolling out that plan together was with the intermodal team. That's when we focused on our inland intermodal terminals, but also the port terminals. A critical component of the turnaround was the focus on speed and velocity versus train load and train length. Accumulating inventory to run big trains in our terminals was delaying traffic and gave us the appearance that we were short of people, and in some cases, locomotives in certain corridors. The slower network train speed was driving that perceived shortage. We just needed to speed the network up. As we sped the network up and stuck to the disciplined scheduled operating plan, we could more accurately predict the actual resources we need and plan accordingly. We now know what we need from a resource perspective, given the volume and given our desired speed. As you heard earlier from both Tracy and Ed, alignment is critically important. This was not done in a vacuum, what Pat and I did. All the key internal stakeholders were engaged with us to get that rollout done. Another key item was the muscle memory I discussed earlier. I've been here 23 years, as you know, and the five core principles have not changed: service, cost control, asset utilization, safety, and people. For those of you that may have been around a while, you probably have heard that before. That's the foundation to build up upon from everything we do. As you heard too, we still have some seasoned operating talent around here, but there's also the new generation of railroaders that we've been able to come on board over the last many years. That was a great opportunity for us to show and teach them about the value of scheduled railroading. Interestingly enough, they quickly adapted and embraced the new plan and the alignment and structure it provided the entire team. As we aligned around a new scheduled operating plan, we needed some KPIs. There are four key feeder metrics that we'll review now. I'll start by reviewing origin train performance and destination train performance, or as you've heard it referred to now a couple of times, launch versus land. Originating trains on time from terminals is the foundation of our scheduled operation. Destination train performance is how we feed the customer's cars at the final mile, and we feed the assets to the terminating point to start the cycle all over again with launching trains. As we focused on these critical metrics, you can see the improvements that we made. Since Ed teed it up, rather than refer to the numbers on the slide, I'll refer to yesterday. I was prepared to do last 28, but Ed teed me up here. Yesterday, we launched trains at 94% on time. We landed trains at 86% on time. Our goal in that process of launch versus land is to squeeze that delta as tight as we possibly can so that we are landing as close to what we launched as possible, getting trains across the railroad. We own that. Our teams own every bit of that jointly. This is the life cycle of a train across CN's network from launch to land. We own it together. Thanks for that. Connection performance and blocking integrity are two key metrics that measure the execution and health in the terminal. As you can see from the slide, these weren't even measured and created until 2022. You see the 68 and 73, that's when we first launched this new measurement to measure our terminals. Obviously, in 2023 so far, you see a further improvement. The definition of that for connection performance is the right block on the right train, but is it done within the specific connection standard of that train? Block and integrity is, did we build the right block on the right train, and it was in the right sequence on the train. Each metric is really two items. If you fail in one, you fail the whole metric from the percentage point of view. It is critical to comply with the plan that Pat and I work on together because that's what's right for the network. This is not about what's right for one individual terminal, division, or region. The plan is sacred, and these metrics here allow for the accountability for measuring that terminal performance. As you can see, as this has increased, our overall suite of metrics have also had great success. These metrics here that we just discussed, along with a number of others that we won't cover today, are key components that enable the daily operating excellence when executed properly. What does everyday excellent look like in a scheduled operation? Let's start with running the longest distance on the network. We talked about that example. I'll use the center beam cars again. A plan that drives traffic is deep into our network without rehandling it to improve our transit times. Minimize the handling events. The enemy of train speed and car velocity is unnecessarily stopping trains. We minimize the number of handling events and reduce the asset dwell, keep the traffic moving. Classifying traffic within standards for connection. Back to what we talked about. If we must stop a train, Derek's team handles that traffic as efficiently as possible and gets the train moving again. Eliminate out-of-route miles. This is one of the network operations team's main goals. The plan is to send the traffic the most direct route. They measure to see how we are complying against that and tweak as needed. We do not want to backhaul cars, and we don't wanna run cars around the network unnecessarily. Optimize our first-mile, last-mile service. Do what we say we're going to do for our customers at their dock to grow our business together. We've talked a lot about how we got here. Now let's talk about where we're going. You may be asking yourself, when do we think our performance will plateau? I'll say this, we still have plenty of opportunity to improve our performance with disciplined execution of our plan, and we will hold ourselves accountable, and we will push every day to continue to get better. I'll say it again. In heavier corridors like Edmonton to Vancouver, we will require capital investment in order to grow without impacting our network fluidity. We do have strategically planned siding extensions and double track projects over the next three years to accommodate the forecasted volume in this corridor. In line with Pat's comments, our ability to grow at a low incremental cost is there in most places in the eastern region and the southern region to bring on that profitable volume. The western region, in many cases, is bumping up against that capacity. It is so important that we have alignment with marketing, finance, engineering, and operations. We wanna bring on that profitable growth. We have a good line of sight on what that's gonna take in getting it done together. Also in the western region, we need to be aware of our limits when it comes to bringing on that growth, so we have an idea of what it looks like so we don't just jump in head over heels without doing our homework first. We do a corridor analysis with Pat's team, that exercise is done by train and corridor. It shows which trains actually have incremental capacity to put more volume on, but also what corridors are at or potentially over capacity. When we coordinate with marketing, we can do what's right for the railroad and have that line of sight together as a team. As we talk about where we're going next, you know, customer centricity plays a key role. When we talk about that's the critical value piece that will enable us to get that growth. One key question that we constantly ask ourselves internally, how does that customer fit into the plan, and how do we develop the plan around the customer so we can provide consistent, reliable service? That is what they ask for. LSCP, or our Local Service Commitment Plan, it measures two things. Did we give the right cars to the customer, but did we actually also do it in the proper switch window that we committed to? As you can see on the chart here, once again, the way this measure came about in 2022 was about 80%, and now in 2023, we're at 88%. That's a key touch point between us and our customer. When you couple that to an eventual trip plan rollout down the, down the road, that's gonna give a better product for our customer. We also have something called MRS, which is the Mobile Reporting Services, that enables us to give advance notification to our customers before arrive and also gives them better visibility of the traffic. That's also better reporting for CN 'cause we get things more real time internally. As technology evolves, we need to continue to be innovative and disciplined in our approach in how we implement that. Overall, as a key partner in supply chain, we gotta ensure we have a sustainable, repeatable operating plan as that's critical to everyone's success, not just CN's. All right, what are the ongoing benefits from a disciplined operation? As Derek outlined, customer centricity is key to our growth. We have must add value for the customer in order to grow. Internal facing metrics that we reviewed in some detail are how we measure and monitor the health of our network. To most customers, they don't mean very much. I'll use myself as an Amazon customer as an example. I'm not really concerned with Amazon's internal facing metrics. What I care about is that my package was delivered on time as agreed when I made the purchase. Growing my use of Amazon services is based on my customer experience. I would say that based on my lovely bride's use of Amazon service, that we are very pleased with Amazon's customer service. At CN, scheduled railroading is the foundation of how we provide our service at the optimal cost. However, we must focus on improve our customer's experience in order to continue to grow at the right cost. We have proven our ability to realize the benefits of what running a disciplined, scheduled operating plan has done this past year. We've got to convert that discipline, that scheduled operation, into a better experience for our customers that they're willing to pay for and grow with us. To wrap up and summarize, if Derek and I were to show you the T-shirts that we wear, mine would say, "My team makes the plan," and Derek's T-shirt would say, "My team runs the plan." We have a short video for you on some of the operating technologies that will help us take it to and find that eighth notch. After that, Derek, Ed, and myself will take a few questions. Thank you very much. At CN, we believe that technology unlocks value creation by powering operational efficiency, by easing the way to do business for our customers and partners, and by protecting CN and its customers with a solid cybersecurity foundation. Technology is a key enabler for operational excellence, and the reason is simple. It helps us maximize our asset utilization, optimize our network capacity and fluidity, and increase safety with innovative solutions. In the field, the technologies we deploy optimize our rail performance. These technologies improve our network safety, capacity, and reliability. The evolution of our dispatching system will enable the benefits we are getting from movement optimization throughout CN's mainline operations. What we mean by optimizing train movements is removing unnecessary train meets, delays or stops, as well as avoiding replanning while reducing fuel consumption. As we look to improve the safety of our employees and the reliability of our network, we continue to expand train protection through significant enhancements to our wayside infrastructure and telecommunication. The digitization of our Canadian network also contributes to the automation of our mainline. Our ongoing automated and autonomous inspections also help us run safer operations while unlocking fluidity and velocity. Let's look at automated inspection portals. These modernize our railcar inspection process by pairing machine vision with artificial intelligence. They complement current manual inspections, helping our carmen maintain our fleet with a lot more efficiency. With portals, we are able to build preventive maintenance schedules which improve safety for railcars using data analytics. This data optimizes maintenance work schedules and equipment shopping decision, which reduces as well. On the other end, we have autonomous track inspection cars. Those inspect rail integrity on an ongoing basis by using state-of-the-art sensing technologies to capture track data. This data is analyzed by algorithms and AI to prioritize and schedule rail repairs. Sensor technology captures real-time pictures of geometry, shape, rail distance, cross-level deviation, alignment, 3-D assessment, and component analysis. A radar-based technology is also under evaluation. We currently have a fleet of 10 inspection cars which are running in regular freight service 24/7. They have helped achieve a 98% improvement in the number of unprotected geometry defects, and all of this without disrupting train service. Thanks to new track and rail car inspection technologies like these, our employees can proactively prevent defects and keep us running to deliver for our customers every day. Last but not least, CN's award-winning innovative real-time navigation aid application gives precise location information to our engineering on-track operators, alerting them when they are close or when exceeding main track authority limits. This tool, called Electronic Track Authority Verification, increases safety for track employees and reduces main track authority violations, which is a main cause of injuries. Technology is used in every single step of moving the rail traffic safely across our network. Our vision for CN is to become the safest, most carbon efficient, and best operating railroad in North America. Okay. We're gonna take a few questions of the operating team right now. I just wanna remind everybody as well that there will be a full Q&A session after lunch, after all the executives have presented. Maybe I could just kick off as you're thinking about your question and see if I got the message right here, guys. I took some notes. Plan is sacred. Pat's T-shirt says his team makes the plan, Derek's team runs the plan, and it's the disciplined adherence to the plan that drives efficiency, capacity, and more reliable service for our customers. If I heard right, there's still more opportunity to take our game up a notch. Technologies will help. I get it about right? You don't need us, Janet. All right. I think, some hands are quickly going up here, so we've got a couple microphones in the room. We're just gonna have those, brought around. Patty? Yes. Stand up. Sure. Thanks for the presentation. Fadi Chamoun, BMO Capital Markets. You showed us some slides targeting improvement in some of the key metrics, car miles, train speed, et cetera. You've talked about capital being one of the tools to achieve that. Are we getting to a point where the optimization coming out of the plan is coming to an end, or you're starting to hit a ceiling there in most of the progress going forward is gonna be capital kinda driven? I just wanted to get a flavor of what are the key kinda KPIs to drive that velocity and the achievement on the car mile and the train speed that you're gonna get going forward? Patty, not even close. We're looking at opportunities as we speak, and certainly there will be some capital spend that'll be required. Remember the comments made about reliability and service and dwell through the yard itself. I think we're just on the cusp of being able to really make a big difference in this industry for a service level at a very safe operation, which we just saw the video. I wish we would've played the video. I wouldn't have to come up here. I thought that was great. No, we got a lot of internal things we can be working on before we start throwing capital at problems. Next question is there. Yeah, thanks. Chris Wetherbee from Citi. Ed, you used to spend a lot of time in the industry talking about operating ratio and haven't talked about it yet today. I'm kind of curious, as you think about CN today versus when you were here before, what do you think the opportunity is? Should we be thinking about it that way, or is it more about incremental margin profitable growth? No, I don't think about operating ratio at all. I mean, back in the Illinois Central days, there was a big jump for us to be able to break 60. That's not a number that I even focus on. If we continue to do everything right, that number will take care of itself. There's two sides of that ratio. Doug's gotta do his job on the revenue side, we gotta do our job on the expense side. That's about as simple as we need to be to make it work. As long as we do our job on the expense side, I know Doug will do his job on the top line. Over here. Thank you. Ravi Shanker, Morgan Stanley. Ed, if I can ask you, go back to Tracy's example of the 7,000 foot train that now you're saying, "Hey, she should need to leave on schedule." You don't wait to add the 2,000 foot addition to that. Now you're left with a stranded 2,000 foot kind of mini train thing, right? How do you fix that going forward? Are there new tools like technology tools or operations tools that will prevent that from happening in the future, or? It's a little bit of a chicken and egg situation, right? How do you solve that problem? Thank you. I mean, we know what's gonna cascade up to a train, and we know what our maximum train length allowable that we can run over any subdivision. These guys will tell you exactly how we do that and how we protect that additional 2,000 feet to run 9,000 feet. Our average siding length is like 12,000 feet, I would think, especially in Western Canada. We've got a lot of double main that allows us a lot of flexibility in expanding train length and maintaining the train length across the network. You guys wanna add anything to that? Yeah. No, it's, that's where Pat and I come in together. If we see that only 3,000 feet, we change the plan to ensure maybe it's a 10,000 foot train, right? It's gotta be a constant adjustment. You don't just focus on one thing. You gotta run the plan. As that plan runs per schedule, to your point, you may see the opportunities, and that's when we adjust the plan together, so we can maximize the efficiency. Good. Ken? Good morning. It's Ken Hoexter from BofA. Just talk about the CapEx requirement in the Western region. I think in the last couple of minutes, you both mentioned higher CapEx a couple of times. Seems like you've raised your CapEx target about a half a billion to a billion dollars. Can you dig into kinda is that one time? Is that ongoing? Can you talk about that? Well, I'll let Pat add to it. I know we're gonna do two sidings between Jasper and Rupert for sure, right? Yeah. What we do in coordination with marketing, we get the forecast, we look at these are the desired metrics, you know, where we're at currently, and to maintain that fluidity and that speed and velocity here are where we will invest using our smart network tool, and we invest accordingly. We stay very close with Doug's team in making that infrastructure capital plan based on volume that we see. That being said, and I just wanna add, Halifax is as important to us as Rupert is, and we will be doing 1 siding on that corridor as well. That's a temporary boost or is that sort of the second one as well? We'll make you a thought when there's just laying later. How about that? All right, Tom. Yeah. Tom Wadewitz from UBS. Volumes are weak today. They'll get better at some point. How do you think about the leverage in the current schedule? If you say the carload average train length, you know, is X, it could be 10% or 15% or 20% higher, likewise with intermodal. Just trying to think about, you know, what's the kind of latent capacity in the current schedule, and then, you know, I guess constraints for expanding that schedule as it crews or other things. Thank you. Well, you know, we feel there's a lot of capacity available. Yeah, you've mentioned that loading is down somewhat. What we'll do is shrink our train size or shrink our train count to be able to adapt to the loading requirements that we need to cover. I'll tell you, we hear from customers, a lot of our bulk customers wanna fill a slot. I mean, it's a daily opportunity just talking to the marketing folks this morning. We're getting some big opportunities on the other side of the merchandise. The lights are a little bright in my eyes on that side. I think somebody's got the mic over there. Thanks. I'm Amit Mehrotra with Deutsche Bank. Ed, how long do you expect us to ground a CEO of the company, number 1? Number 2, service and volumes tend to be inversely correlated, and, you know, our TMs are down 7%, 8%, 9%, something like that. Can you just talk about maybe Pat, Derek, the confidence you guys have to be able to, it's related to Tom's question, execute on the plan in an environment of much higher volumes over the next couple of years? Thanks. Well, we should, with the capacity we have today that I'm not worried about the volume increase. I mean, we run a lot of GTMs every day. We watch our GTMs very diligently to make sure that we are getting the biggest bang for our buck that we can. As far as me staying, it's as long as needed to be here. I think you met 2 of the all-stars that we have following up, and these guys will be running the railroad one day, and I'll be gone back to Florida. I'm looking forward to that again. Do you have anything to add to that? Yeah, just to the service question, it's a great question. You talked about the inverse relationship, but that's when it gets back to us having that schedule plan. You heard me mention LSCP. That's a new metric we've put in place. The one thing we haven't talked a lot about today, people are a more important asset, and they shouldn't be called an asset, but people are the most important thing you have. How we train them, how we bring them up together. When you look at some of our past service challenges, it's actually been based upon people, right? You heard Tracy mention earlier, you heard Ed mention earlier, how we're gonna handle our people situation is a bit different than in years past. That's gonna be a key thing to enable continued good service, but also be ready for that rebound when it comes back. I don't know. I think we had maybe time for just two more in the front here. I see Dave and Brian kept having your hands up. Okay. Konark, to you. Yeah. Yeah, it's Konark Gupta from Scotiabank. Thanks for the presentation. Just one question. You mentioned about capacity increasing obviously and growth comes on. From a volume standpoint, you can take it to the capacity. How do you see the incremental margin evolving over this four-year plan? Would the regions, Western, Eastern, Southern, one of them would be sort of the key driver of that incremental margin? Thank you. Well, I'm not much on on numbers, but I will tell you, if we all do our jobs correctly, the margins will increase with the additional traffic that we take on and the more we watch our expenses, especially the stop train expense, the opportunities that we see across the network, and we're getting better every day. I'm very proud of the work that these guys do in making the operation move fluidly and safely. Margins will be there. I'm not worried about that side at all. I don't ever get into it to begin with, but I know on the expense side, we're doing our job, and that'll protect the margins for sure. Okay. We'll take Brian, and then, Dave, I'll get to you, and then we're gonna take a break. Go ahead, Brian. All right. Thank you very much. Brian Ossenbeck from JP Morgan. Just wanted to see if you can offer some comments on consistency of the service. Are you getting to the point where you feel like you can sell that truck competitive product? I'm sure we'll hear more about that later in the afternoon. Just on the other side, resiliency. You talked about the three feet of snow in Michigan, like these things happen all the time. Last year, you had some issues as everybody did with supply chain, with drayage. Where do you feel that you are on that level of resiliency in the network as it ties to consistency and being able to sell that? Thank you. Yeah. You guys go ahead. When you look at some of the new services we've implemented, I mean, I'm sure Doug will talk about with UP and FXE, for example, right? We're upping our game with certain things. We've got a great network and great opportunities. I think when Doug and team come up, you're gonna hear about a lot of those things. You know, resiliency, you know, people have a lot to do with that resiliency. You heard me mention that earlier, right? That allows you to do certain things you couldn't do otherwise. Listen, as weather continues to change and these challenges, that's gonna be a key thing for my side of executing the plan. You know, Pat's done a great job in terms of building that plan. You know, it doesn't happen in a vacuum. We've been successful last year for what him and I have done together. Pat, jump in a bit. Yeah, I would say you mentioned weather, one thing we did look at is when as we approached winter this past winter, we looked at what does the operating plan need to look like. It was a little bit different than what it looked like in spring and fall, and we stuck to that. Again, a disciplined adherence to that plan. We tweaked some things that we needed to tweak and I think it demonstrated our resiliency through the winter. Dave? Thanks. David Vernon with Bernstein. Pat, could you talk a little bit about how dynamic the plan is, how often you're updating it from a forward-looking basis, how you're responding to customer needs? Then, you know, if I look back over the last couple of years, one of the biggest disappointments I think around the company was the overselling of the network that led to a huge CapEx budget. Can you as a team kinda talk to the guardrails that are in place around not letting the commercial guys get too far over their tips in terms of overloading the network, and, you know, what you think that upper limit is on growth in a 3-year period? Thanks. Okay, I'll start with the plan is sacred. We'll say it again. There is no backup plan. That being said, we look for trends in the plan. We look at it every day. We also trend it. Are there trains that are not the size we want them to be? Not that we're looking to run oversighting length trains to Ed's point, but we also don't wanna be running 2,000-foot trains. As we see volume shrinking, we look at are there opportunities to put trains together. It doesn't change every day, but it does change as we see the trends, and we need to make that change. I think the second part of your question, David, it's good that you noticed that because that's exactly what I noticed, before I came back to work here, that they oversold on the capacity side. We don't need to do that. We use a capacity map. Doug knows where to sell. He knows what are our opportunities. We've, we've got capacity all over this railroad. Maybe some regions are a little bit heavier than other regions, but we'll certainly gain opportunities if we do sell to that capacity. We will spend a little bit of capital, not a lot, but we'll restrictively grow the operation through a good sales program and a tight expense plan. Right. I just wanna say thank you, Ed, Pat, Derek. I really appreciate your time today. For those in the room and online, we're gonna take a break now. We will resume at 10:15 A.M. sharp. All right. Welcome back. If everybody could, take their seats and we'll get back underway here. It is now, my pleasure to introduce Doug MacDonald, our Executive Vice President and Chief Marketing Officer. Doug has been with CN even longer than I have. He's hard to miss. He has a deep knowledge of CN, our operations, our customers, our technology, and the broader supply chain. Please welcome Doug. Thanks, Janet. Thank you all for being here and everyone online. It's a pleasure to be here, and we got lots to talk about. We have a great growth story that we're going to go over everyone for you today. I know some of you have already seen it online, which is good, but we'll talk about some of the details now. First of all, we'll go over the history of CN. We've had a great history at CN of growing. I don't think that's ever been our problem. Some of you alluded to in some of the questions with Ed, is that what happened when we oversold our capacity, which is what we did a couple of years ago. When that happens, you can't move your traffic as fast, right? We had, okay, now we got to add capacity and you have to have more capital, and you're trying to catch up, but we're outselling again. You're in this never-ending spiral of trying to catch up to what you've sold. How do we fix that? Well, you come along and you can use one of Tracy's words, which is curate. We sat there and said, "Okay, we have to match our capacity to actually what we're, what we've sold." We did that. We went and took some of our least profitable business, I'll say, and we just raised price to say, "You have to earn your right on this network." That's what happened, right? Some of it went away, and all of a sudden we are balanced. When you're balanced, you see what the operating team can do. They have done a phenomenal job on the service that they're providing. This slide, it's got a long statement in it, but I'll take a couple of the words anyway. Integrated. I think what you'll see is how integrated we are as a team, and you'll see that coming up. Outside of what Derek and Pat and Ed had already spoken about, and Tracy, you'll see the team come up here, and it's a combo of the sales and marketing team and the operations team, because that's how closely we all work together. Just to give you a little example, every Friday at noon Eastern Time, right at lunch hour for me, we have our top 100 sales and marketing and operations people on a call every Friday. We go over every piece of business that we have in the company. We go over the car supply, how that's gonna work. We go over any of the customer issues that need to be highlighted, that we need to take on, and then we sit around and say, "Okay, what about next week? What are the opportunities that we have to deliver on and also for the next month?" It's very operationally focused, but it's hard to imagine the interaction we have on those calls with all those people really all on the same page for the first time. It works really well. Sustainable. Different. Sustainable, Janet and I will differ sometimes on the definition. I will tell you sustainable is the business we are looking for to make sure that we have a consistent supply or consistent demand across our network. A good example I use is a lumber customer. A lumber customer generally makes lumber Monday to Friday and ships their 10 cars or 12 cars, whatever their loading rack is, every day. That allows us to take that volume and plan for it. We have a daily switcher that goes out and services the person, then it brings it into the yard. We have a yard plan to make sure that is always moving on to the next train. We have a train plan that takes that as far as we can to go to destination. That is the type of business we like because it's easy to plan for. That's where Pat's team comes in, Derek's team is moving it. Very sustainable, allows us to move forward. Obviously, everything has to be profitable and how we drop that to the bottom line. We'll get more into that, though. We're gonna spend the next hour with myself just going over a few of the higher level details on what we're doing. The team's gonna come up one after another and go through our top growth areas. You'll get to hear from them directly. Then I'll just wrap up on a couple other items, and then we'll have a short video, and then we'll do some Q&A. It all starts with a great network. You'll hear us say that over and over again because it does. Now we have a network that's geared for growth, a network that's also able to grow and add capacity. We'll see some more of that as we move forward. It all starts with our port as an example. We have great access. We have our crown jewels in both Prince Rupert and Halifax. Lots of ability to grow in both of them. Very uncongested. Those will be moving forward. You'll see great growth coming out of those, I think, for years and years to come. We don't wanna forget about the other ports, and Dan will give you a lot more with respect to Vancouver is expanding. We have Montreal that's going has an expansion plan. We also have Saint John, which we have historically been the serving railway there, and that's expanding, so we'll hopefully get some more business there. We have our two ports in the Gulf Coast, which Mobile has an expansion plan, and New Orleans has a big expansion plan coming up in a few years. It starts just there. At the same time, we have that great market diversification. Our biggest commodities line only has 20% of our revenues, and that's really our big international intermodal site. Even when the economy is up and down, it's usually only, in fact, impacting a little bit of our network. That's even what we're seeing today, where we're in a mild recession. We see our bulk franchise is still doing really well, and some of our other manifest freight is just doing good as well. Not growing as much, but at least it's not down, so that's excellent. The one thing I really wanna highlight is our northern network. When you talk to the operations team, they're gonna say, "Man, it sucks operating in the north," especially in the winter. What you're gonna see is that's where all the development is on... When you talk about a lot of development in Canada coming up, you have where's all the fiber coming. The fiber's moving up northern for forest products. Where's all the mines being developed? It's all in the northern part of the provinces. We'll get to that in a second on the map. You have the Met Coal projects. Once again, they're all moving up north. Our gas drilling, same thing. It's all up in northern BC. Even the grain is moving gradually further north, where they can have more arable land and do more planting. Another thing about the great network, 85% of our products originate on us, that we move, our shipments. Hard to beat that. It allows you to plan. Commercially, 65% terminate on us. When it comes to Pat and Derek and the team trying to plan around, well, how are we going to move our products? When you're originating it or terminating that much, it allows you to actually have that full plan on how that car is going to move right through the entire cycle. Where do all these new projects show up on our network? I won't be able to keep up with how the map's being populated, so we'll go one by one. Grain and fertilizers. You can see we have expansions right across western Canada, but also in the south. Right? You have our coal. Coal's got 2 mines starting up in northern BC over the next few years, and Sandra will kind of give you a hint about that. Petroleum and chemicals. That's 1 of our most robust areas for expansion. It's both in our franchise areas of northern Alberta, northern B.C. You got the U.S. Gulf Coast, you're also sitting with Eastern Canada, Buck and the team are gonna be able to go through that. When I talk about our northern network, you really see the metals and minerals, all of the new mines are sitting in the north, right adjacent to our networks. We have a couple automotive plants coming on, sitting in the Michigan market. Forest products, not as prevalent as it was over the years when the pine beetle kill was giving a ton of fiber for the sawmills to be able to make lumber out of. As the allowable cut in BC comes down, the fiber allowance is going up in the northern BC, right along our network. Lastly, Intermodal, which Dan and Kerry are going to talk about. Tremendous expansion plans, both at the ports but also inland that they'll be able to go through. How are we going to move these projects on our network? I got asked a lot of questions last night: "What are you going to do differently, Doug, from a sales perspective?" We're already doing it. A lot of the team was doing it before, but now we're doing it right across the board. We're being very disciplined. One of the questions with Ed was: How do you control that it doesn't happen again? Everyone on the team is very focused around selling to what our capacity is. We actually have different an operating plan that we sit down where we're adding capacity, we have to go through with the operating team, and we have to do all that planning around expansion. Historically, I'll give you a good example. When frac sand came on, we just sold, and it was like, here it is. Move tons and CAD 1 billion worth of frac sand over a few years. That was tough for everyone to do. We did it so quickly. It was tough for the operating team to actually come together and move it, but they did a great job. It did impact the network. What do we do now? It still starts with the customer. We sit down with the customers. We plan, but we say, "Okay, here's what we can move now." The customer goes, "I need to move a lot more into the future." Okay, we put that plan together. That comes with great conversations, not with just the customer, with our operating team, Pat's team, Derek's team, on how we're gonna plan it and move it, and then we actually sign a contract with our customer that gives us the commitment to do it. It's very highly integrated. The map here is really something very simple that we use to explain both internally and externally where our capacity is. The first ones really are more the yellow, lots of available capacity from Quebec City down to New Orleans. Basically, the sales guys can sell there and know even if they add a train onto the network, it's not gonna have an impact. We still coordinate with everyone, but they have free rein to sell. Now, in the blue areas, you know, there's a moderate capacity issue there where we can actually, with an added train, we got the capacity, but we may have to watch out how it's gonna affect us into the future. We still sit down with them, but there's more planning required, that's all. When you get into the really, it's, we're near capacity, I'll say from Edmonton West and a little bit between Winnipeg and Chicago, that's where we have a very big conversation with everyone. We have to plan the capacity additions we have to do. Do we need more sidings? Do we need more double track? How are we gonna handle it? It gets into a very detailed operating plan, which we then sell to the customer. We don't sell in advance. It's like, here's what they wanna move, here's what we can do, that way, we are not going to oversell the network ever. A good example I'll just use is we're moving grain in a new elevator from Saskatchewan, let's say to Vancouver. We sit down with the customer, he goes, "Okay, I wanna ship about a train a week." Oh, that doesn't seem a lot, except we're constrained between Edmonton and Vancouver. We sit down and say, "Okay, how does it fit into the network plan once a week? What's the right day to service them? What's the right day to pull through that? When do we have an available slot for them to move in that corridor? Do we have the crews and the power to do it?" We give that plan to the customer. It's a highly integrated way of selling. With that, we're gonna get into some of the numbers, and we're gonna bring up the team. I'm gonna first start off with Sandra Ellis, our VP of Bulk Products, and James Thompson, our Vice President of Western Canada. Thanks, Doug. Cheers. Good morning. I'm Sandra Ellis, the Vice President of Bulk here at CN. I'm a farm girl from Saskatchewan. Growing up, dinner table conversation was about grain prices and fertilizer costs. Now these are my customers, and my team is helping them make their markets. I'm joined here today with my partner in growth, James Thompson, vice president of the Western region for the transportation team. As you'll see as we go through our story today, the bulk growth story has two chapters: the growth in traditional commodities and the impact of the energy transition, which we'll see manifesting in renewable fuels. Let's start with the traditional commodities of grain, potash, and coal. We moved record volumes in 2022 and again in the first quarter of 2023. We do that because our network offers optionality. What that means is, in the United States, our grain customers can ship to the river or to the Gulf, wherever their net back is highest. The growth in grain products is being matched by increased containerization capacity near our Chicago terminal, and we can better penetrate the animal feed markets of the U.S. Midwest through our transload network. Moving north to Canada. Our Western Canadian network, we have over 70 high-throughput elevators already, and we have a few more coming online in time for harvest. This is matched by the optionality of export capacity through Vancouver, Prince Rupert, the gem, moving east to Thunder Bay, Montreal, and north to Quebec City. As grain yields grow because of technology-enabled farming practices, we have the network that can move it more effectively and more efficiently because our customers are investing to expand the capacity at origin and destination. Now pivoting to potash. This technology-enabled yield requires more fertilizer, and our customers are investing to grow along that capacity. Nutrien has announced that they Expanding to 18 million metric tons through 2026, and the new BHP potash mine is coming online in Saskatchewan mid-decade. We are poised to move more potash for decades to come through our tri-coastal network. Closing with coal. We've again moved record volumes in 22, and the metallurgical coal remains very strong in 23, and our customers are investing for more productive capacity, including the Conuma mine that is called Quintette that is expected to come online again before the middle of the decade. We look forward to moving that to export. With that, I'm gonna turn it over to James to let you know how we're going to do it as partners. Thank you, Sandra. As Sandra highlighted over the last 12 months, we've broken basically every record we count as it pertains to the movement of grain, coal, and potash in Western Canada. How do we do it? Well, it sure as heck wasn't by accident. It was done through our network, it was done through our people, and it was done through collaboration with our partners. Many have talked today about our network. Sandra even highlighted the great tri-coastal reach we have. I won't spend a lot of time talking about that. Pat and Derek talked very contently and articulately about what we were doing with capital expansions as far as double track requirements and siding expansions needed west of Edmonton. I wanna take a minute to talk about our people. Derek and Pat talked about this a lot during their presentation. Our people are really what drove that success. They're the ones who build the plan. They're the ones who integrate with the customer, and they're the ones who drive that execution and discipline to the plan. Why was grain successful? We brought structure back to it. We started spotting by 7:00 A.M. when our customers want to work. They load through the day, and we pull in the evening. That means we use the same crew and the same locomotive to move that grain train in and out of the customer facility. Where in the past, without that discipline, sometimes that was two crews and two different sets of power on different days. That creates efficiency, and it's our people that create the plan that drives that efficiency. The collaboration piece, that's done in partnership with our customers. I'll highlight a couple stories on that and really focused on the North Shore in Vancouver. G3 is the newest high throughput elevator on the North Shore in Vancouver, and they've leveraged technology at that facility in the form of tower control. What tower control is an automated process for moving the locomotives around while they unload or they cycle the grain through the facility. What that gives the facility is the fastest turn time, throughput, and most efficiency on the North Shore. Where we're the partner in this is we build the set sizes, we have the network that allows them to run the trains that they need to run, and we coordinate with them to make sure that the power going in and staying on the sets is capable of utilizing tower control to maximize that efficiency. Again, on the North Shore, Richardson. Sandra talked about 70 high throughput elevators being built in the prairies over the last several years. Richardson expanded a number of those elevators to 140 and 150 cars. That in turn matches our network and our capability of running trains across the network. The last piece was the receiver piece. We were down in Vancouver just a month ago and met with Richardson and went through the entire design for the site, how it'll be serviced, what it'll look like, and our operating plan and their operating plan to run the site. That's before a spike is in the ground, a tie is in the ground, or rail is in the ground. That's how we leverage our relationship with our customers and collaborate to move this profitably and efficiently. With that, I'll turn it back to Sandra to talk about renewables. Thank you. The second part of the growth story for bulk is the impact of the energy transition. Renewable fuels are important to CN for 2 reasons. They're going to help us reduce our carbon footprint, and the supply chains needed are going to result in carload growth. Let's talk a little bit about the carbon footprint. You met François yesterday, so you already know we have an effective and capable locomotive fleet. New technologies are coming, but we need renewable fuels to reduce our carbon footprint, and they unlock the capability to move freight and reduce our carbon footprint at the same time. The supply chain that's needed to do that is what's going to drive carload growth. It starts in a field of canola in Northern Alberta. You're standing amongst the yellow flowers. When that is harvested, that little brown seed, it's full of protein and oil. It's going to be loaded in a rail car to begin its journey. I want to draw your attention to the green dots on the map. These are oilseed crush facilities, this is where the first rail movement is going to go to, from the elevator to those oilseed crush facilities in Saskatchewan, in Western Canada, and in the US Midwest. At these facilities, it's going to be turned into meal and oil. The meal will be reloaded in those rail cars that delivered it, they'll go off to their markets, the oil will continue its renewable fuels journey. Its next stop on the road is going to be the blue and the yellow, the gold dots that you see on the map. The blue dots are the refineries we serve today. These aren't new facilities. What happens is the canola oil is co-processed alongside crude oil and results in a lower carbon intensity fuel. It can go to a gold dot, and that gold dot, it will fully transform the canola oil and the soybean oil into renewable diesel and sustainable aviation fuel. Some of that might be out of Tidewater Renewables, Prince George, BC, or we are already taking canola oil down to Louisiana to Diamond Green Diesel's facility there. We have another rail car movement because some of this renewable diesel and sustainable aviation fuel is once again loaded in a rail car to go to its final destination, including a terminal project Buck will talk about in a few minutes. As you can see, growth comes from that canola seed being touched 4 times by the railway. Now I will turn it over to James to wrap up how we do this effectively. I talked for a minute about collaboration with our customers as it pertained to the bulk franchise, and really something I'd like to point out here on the map, and Sandra Ellis went through what the color of each of the dots means on the map. To me, the success in this map is the tight grouping of those dots. You know, Pat Whitehead talked about density at origin as it pertains to train load, running a plan, and operating efficiently. This coordination with our customers that sales and marketing and business development have done have created an an opportunity where we can create volume out of a serving hub for us with multiple customer sites being served out of one location versus serving these customer sites over 100 miles railroad, spotting in each one, lifting each one, and delaying traffic in the process with ultimately more touches. This provides a option where we run to a serving hub, the train arrives, we pedal it out to the customers, within a day, we can have it back on a train loaded and turned around. It's about the efficiency, it's about the leveraging the density of our network. Pat talked about, you know, train stops, train touches. I think Ed touched on that as well. The big key piece to this is once a train leaves that origin hub, it's going to destination. The other thing that's very interesting about the way this grouping has come together is if you followed Sandra's story about canola coming from Northern Alberta into this area, canola generally moves in hopper cars. Same hopper cars that we can handle grain or other canola in. If we're loading canola and shipping it to a facility in, say, Toronto or Vancouver across some of the congested points in our network, and then trying to run empty cars back into the prairies to gain another load, that's inefficient. That's out of route miles. So that's backhaul, as Pat talked about. This plan and this coordination with our customers has created an environment where we can run loaded canola in to a serving hub, unload the canola, and then within 100 miles of that facility, spot those cars for another load. That's a key to success to me. With that, I'd like to introduce Buck Rogers, our Vice President of Petroleum and Chemicals to the stage. Thank you, James. Good morning, everybody. I'm Buck Rogers. I'm the Vice President of Petroleum and Chemicals here at CN. I'm gonna be highlighting you for some major wins at CN as we continue to collaborate with our customers leveraging our brand new scheduled service, which literally provides the conduit for the petrochemical hubs in Alberta, Ontario, and the Gulf Coast. The global demand for secure, clean energy continues driving significant growth along our robust energy corridors. Right now, I'm gonna be highlighting for you the incredible market potential that we have, and then I'm gonna turn it over to my partner, James. He's gonna be walking you through the benefits of our strategic alliance with our LPG producers and the benefits of the new Ace terminal. We continue to see significant NGL growth to Japan, Korea, and Hawaii. AltaGas' Ridley Island export terminal and Pembina's Watson Island terminal continues to see significant growth. It was just three short years ago, we were averaging around 34,000 carloads of NGL exports. This year, we are on target to do over 55,000 carloads of NGL exports. Just this last week, we saw another announcement in the export space. AltaGas and Vopak have announced a joint venture to build a large LPG and liquids terminal at Prince Rupert. As significant gas supply continues to come online from Northeast B drilling, we see other announcements of fracs and plant debottlenecks across Alberta in the next three years. We continue to work with our midstream producers in order for us to make sure that our capacity on growth is in lockstep with their plant capacity as well to ensure effective egress for all of their volumes. Another great proof point, Pembina just recently announced a new propane plus fractionator expansion at their Redwater facility. This facility will now be capable of adding an additional 20,000 carloads of propane and butane by the year 2026. I'm pleased to announce that we recently put together a majority share long-term agreement with a major LPG exporter out of Northeast BC and East Edmonton to the ports of Prince Rupert and Ferndale, Washington. Oops, excuse me. The new contracts drive ratable year-round export, which in turn reduces seasonal NGL supply chain stress. This improves profitability for CN as well as the customer, it drives additional carloads. Last fall, we announced the signing of an MoU with Keyera that will leverage our joint expertise to build a new clean energy terminal in the Alberta Heartland. The new infrastructure would aggregate conventional and clean energy from multiple sources. I'm now going to turn it over to James to let him speak to this. Thank you, Buck. I guess the LPG franchise, the best way I would start this off, when we talk about oversold, I had this territory as a general manager at the time when we were very oversold here, and it created an environment where we had to get creative, collaborative, and come up with new ideas and ways to move traffic with our partners, our customers. This brought forward an opportunity, and to me, something that differentiates CN in the marketplace, which is our pipeline management team. This team coordinates with the customers and makes sure that we have the right number of cars on our network, meets the forecast of the customer. Most importantly, that things are moving fluidly in the supply chain. They have daily calls with customers where they talk through what's needed for vessels to them, how the vessel lineup is looking, making sure we're not staging equipment on our territory or on our network, and making sure that when we introduce a train, it runs A to B, end to end, without stopping or being touched again. That pipeline management team was very effective at helping us debottleneck the LPG supply chain, really as we moved out of 2017 into 2018. They didn't have any real tools to use as a shock absorber in the system to stage cars, move cars around, or make effect. It was moving cars in and out of storage locations effectively. One of those storage locations was a Cando facility in the Alberta Heartland, where customers were contracting storage sites. We saw this as an opportunity to partner with Cando to leverage that to create, again, density at origin, control our destiny, and launch trains from one point to the endpoint on our network that can move continuously. We've partnered with Cando in Scotford at their facility in Redwater, adjacent to the Pembina Redwater facility, and launch trains from there today. However, what differentiates the Ace Terminal and where the Ace Terminal to me becomes the future of where we're going is, we control all inputs to that, and there is no first mile, last mile component. We pull a train into a large terminal, 100, 120, 140 cars. The terminal works the train, and 8, 10, 12 hours later, that train comes back out. That means we don't pull power off the train, that means the set stays intact, and that ultimately means, as we live through today, we can have less cars on our network and run more efficiently because of that. With that, I'll turn it back to Buck. Thank you. Thank you, James. In our 10-year growth model, we have the possibility of 9 new plants being built in the Alberta Heartland alone. All of these have the potential to be pipe-connected to the Ace Terminal. By steering the aggregation of all of these commodities into 1 central rail loading terminal, CN can reduce crews, capital, and locomotives. Our customers see a great benefit for that as well. They can actually reduce fleet sizing, which is a significant cost outtake for them. The reduction in fleet also helps out Ed, as he spoke to earlier. This creates fluidity and capacity at no incremental cost to CN. We continue to have discussions with anchor tenants, ports, and destinations in order for us to see how we can move all of this volume through Prince Rupert, which has been the choice for most of these export volumes are going to go to is Prince Rupert. Taking a quote from one of my favorite actors, Cousin Eddie, from Christmas Vacation, "Prince Rupert is like being a member of the Jelly of the Month Club. It's the gift that keeps on giving all year long." I'd now like to call to the stage Martin Guimond, who is our Vice President of Eastern Operations. Moving to an incredible growth story for our eastern assets. Today, CN transports approximately 85% of all the refined fuels manufactured across Canada. We have seen our refined fuels franchise RTMs grow by more than 7% annually over the last 3 years in the eastern side of our business. The shortage of fuels is now being recognized in Ontario. What is driving that? It is the systematic downgrading and increased cost of the Trans-Northern Pipeline and the much-talked-about decrease in refinery assets in the east. The good news is CN will fill this ever-growing demand with additional carloads at great pricing and minimal capital. We are selling into the already available capacity that you heard about in the eastern corridor. In addition to the marketplace short, we have seen a surge demand for renewable fuels. We see a significant shortage of fuel supply that can only be supplied by water to rail and rail to truck. That brings me to the brand new GTA terminal that's being built in Toronto's Mac Yard. If I could draw your attention to the drone footage that is now getting ready to be played. This footage was just shot a couple of weeks ago. What you see there in the middle of that is where the brand new rail unloading cars will be done. To your left, those are brand new storage tracks for the cars coming inbound. You can already see in the middle there where the brand new tanks have already been constructed and are ready for fuel. Where you see that haul truck running on the left and that tractor running at the bottom right there will be a brand new state-of-the-art, fully automated truck loading system that will be capable of loading a truck in less than 15 minutes, gate to gate. This facility will have 24/7 365 access for both the rail and the trucking. I'm now gonna turn this over to Martin and let him walk you through some of that. Thank you, Buck. Good morning, everyone. My name is Martin Guimond, Vice President, Transportation of the East region. Buck, this is great news, fantastic story, and I think great opportunity for us to move more traffic in the east. Located in Toronto at our MacMillan Hump Yard, this facility will allow us to increase our volume while leveraging our actual operation. This high throughput rail to tank to truck terminal will have the ability to unload string of rail car in less than 2 hours. In regards of our operation, we will leverage the expertise of our CN transload group, who will provide the switching and the unloading of the rail car on site. The transport section team will provide the switching of the inbound and outbound train on the holding track. The customers who will use that facility will have the opportunity to ship in larger block, which of course for us mean less switching requirement and by default, also reduce costs for handling that extra volume. This facility will also complement our actual jet fuel franchise that feed the Toronto Pearson Airport. The new sustainable aviation fuel will ship in the same corridor than our actual jet fuel shippers. This will allow us to marry up shipment and serving yard, giving us the ability to ship in larger block. When I was talking earlier about the ability to leverage our actual operation, this is the type of example I was referring to. Being able to ship larger block while using our same resources. That's the example I was referring to. There's no doubt that this site within Mac Yard will help us or provide us with great flexibility and efficiency on our actual operation. In fact, that strategic location, combined with our scheduled railroading approach, will allow us to work with the customers to maximize the use of asset with a goal to grow their volume while minimizing the requirement to invest in a car fleet, which also of course, help us to maintain a fluid network. This is fully aligned with the strategy to grow in the east, where we have capacity and the resources to take on more volume. In collaboration with Buck, our marketing colleague, working closely with our customers and combined with the key, the capacity that we have in those key corridor, this will allow us to grow our volume but at lower incremental cost. In fact, what we're doing is we're adding volume on a network in a very, very efficient way, and we're ready to do it. Buck told me we'll see some of that volume coming on the network by the second half of 2023. When I look at that project, I think this is a great example of what I call our ability to look at the global supply chain, where we work closely with the customers to define what's the best location and also what's the best operating model for us and for them. Now we're in great position to be able to support the growth of those customers on CN network. To me, this is a great story, fantastic opportunity to be able to handle more volume in the East region. Buck, back to you. Thank you, Martin. The new rail terminal will be backstopped with a long-term contract that will not only help with the shortage of fuel supplies over the next 3 years but also help us transition to the cleaner fuels that we'll be moving. We're working with a lot of our shippers and producers to move a lower carbon fuel like sustainable aviation fluid, lower CI ethanol, and renewable diesel. CN will also be participating in the supply chain for our own renewable supply. We have a significant forecasted carload growth for this terminal. By the year 2026, we will see this terminal doing over 20,000 carloads of unloading. The marketplace for petroleum and chemicals continues to thrive across CN's network. Our newly minted scheduled operating plan has allowed us to once again become the carrier of choice for all of our customers. Thank you. Thanks, Buck. Now to talk about our next great opportunity, I'd like to invite on the stage my colleague, Kelly. Good morning. My name is Kelly Levis, and I'm Vice President of Industrial Products. In my 25 years at CN, I cannot remember a more exciting and fast-paced industry change than what we're seeing today as we shift to electric vehicles. Did you know that one in every seven vehicles that was sold in 2022 globally was an electric vehicle? This compares to just one in 70 only six years ago. Today, Martin and I will talk through the current environment, CN's network, our customers, the real opportunity for growth, and how we're gonna get there operationally. The landscape in North America is favorable right now, and the government is focused on creating ecosystems to sustain this new growth. CN has a unique footprint with our network that reaches to the far north regions, where we can access and create hubs, conglomerate and gather products, and put them on rail to further into the market on this new electric vehicle. Whether it's access to mines, transformed materials, electric batteries, or finished vehicles, we are working with every part of the supply chain. CN is at the forefront of creating these long-term sustainable supply chains. As we talk about mining, there's not enough lithium currently in the world to supply all of the projects that have been announced. I'm excited to say that at CN, in the coming weeks, we will have our first lithium shipment starting, coming from the northern parts of Quebec. There are over 20 projects in the works right now, they're mostly in the eastern and southern parts of our of our network where CN has the capacity to grow. If you look at Bécancour, Quebec, that is a great example of a location where there continues to be development in that battery space. There's been new processing and new manufacturing announcements that are happening all across the network. Umicore, GM and POSCO, as well as Volkswagen have all announced, they're all along CN's network. There's gonna be more and more announcements coming as we get into 2024 and 2025. The opportunity isn't just about mining. The opportunity is about taking the raw materials and moving them further and further in the supply chain. CAD 30 billion of announcements have been made in Canada and the United States. CN is working to continue to expand its product offering on the finished vehicle side by adding in more rail cars to be able to handle that volume growth. As the market continues to unfold, there's also gonna be the need for recycling of batteries. As we continue to work towards the new low carbon transition and the circular economy, it's gonna become more and more important and a fantastic opportunity for CN. CN continues to remain focused on our customers, our stakeholders, and the industry as a whole, piecing together the different parts of the supply chain, working internally with our operating teams and our service design network strategies team to make sure that we are aligned for this future growth. With that, I'll pass it over to Martin, who'll talk through the operational side. Thank you, Kelly. This is another exciting opportunity, another great project where we can move more traffic. As we saw earlier during Doug's slide, the east region is well set up to handle more traffic. It has the infrastructures and the capacity right now to put more freight on a network. With the development of the electric vehicle supply chain, with some of the origin loading point being the mines in the northern area of the region, this will allow us to increase the traffic on our existing train. What I mean by that is we don't need to add more train departures. We don't need to put more train on a network to be able to handle that volume. All we have to do is take the cars from the customers and add it on to our existing train plan. The beauty of it is we're ready to do it right now. We have the resources. As we heard from Kelly, we even expect that the first shipment from Northern Quebec will be on our network by the end of this quarter. This is also fully aligned with our strategy of growth that we have in the East Region, and as I said earlier, will also help us to grow volume at a lower incremental cost. The electric vehicle supply chain is not about moving the min only. It's not about only moving the minerals from the mine. It's also about moving the minerals from the mine to the transformation plant, which could be in Bécancour or in Ontario, where their own finished product, which could be electric battery or any other electric vehicle component, will then further move on CN network so we can supply the new electric vehicle factory across North America. Once the finished vehicle are produced, well, we'll be in position also to move them to their final destination. With two really large Canadian market like Toronto and Montreal in the east region, we will have the capacity and the ability to take on and move that vehicle to their final destination right now. Our scheduled railroading approach, our ability to look at the global supply chain, our collaborative approach with the customers, when you combine all of that with the key capacity, the capacity that we have in those key corridor, will allow us to build a very efficient supply chain for the electric vehicle. Really, when I look at those opportunity, the east region is ready. We have the capacity, we have the resources, and we are eager to start moving those traffic. Thank you. Thanks. I'd like to invite James Thompson to join me back here on the stage as we talk about our next, our next opportunity. The northeast region of British Columbia is CN's backyard, and the energy transition is a key factor that is helping this growth opportunity and driving this opportunity in this region. Today, James and I will talk through the drivers of growth, the diversity of projects, and the collaboration that we have, both internally and externally, with our customers and key stakeholders to make sure that we set up a proper long-term, sustainable supply chain to help with the growth in this area. As the global energy transition is happening and there's a geographic shift, Fort St. John is well-situated to become a region where we can establish rail both in and out of that region. There are 17 different opportunities today with different customers, different commodities, different probabilities, and different timing. What different means is that CN is not reliant on any one customer, industry, or market. LNG Canada is expected to start in 2025; the infrastructure is being built now. When we look at Phase 1 of this LNG, it's estimated that an incremental 1.5 million tons of frac sand will be required just to meet the drilling requirements in the area. That will produce the outbound liquids that Buck talked about a little bit earlier. When we talk about mining, there's ores like copper and zinc that can be found in the Yukon as well as other northern parts of British Columbia. There's also metallurgical coal that Sandra talked about a little bit earlier. That market remains strong and is continuing to grow. If you turn it over to forest products, I think everybody in this room has heard about the lack of fiber and the supply issues that there are in British Columbia. North of Fort St. John, there has been a 75% increase in the allowable cuts in this region. That is driving more and more opportunities for pellets and logs. With that, it's creating a long-term, sustainable fiber supply in the BC region that's been lacking in other parts of BC. At CN, we're continuing to work closely together. Sales and marketing, working with network strategies, working with finance, engineering, and operations to make sure that as we're investing and as we're moving and as we're growing the business, that our timing is also aligned with our customers. There's potential to double the volume in this region. With open lines of communication and proactively working with our customers, CN is at the forefront of creating these supply chains. It will create the platform for multi-decade sustainable growth. With that, I'll pass it back to James to talk through how we're gonna do this efficiently and safely and make sure that we're aligned with this growth. James. All right. Thank you, Kelly. The best way I can describe this line is it truly is a diamond in the rough. One we've started to polish just a little bit and are starting to see some shine on. To talk about where we're going with this line, I've got to take it back a little bit. Prior to 2018, this line produced less than carloads annually for CN. Not a very big, robust development. This was part of an acquisition we had taken on from the BC Rail. Really, at that point in time, because of the allowable cut south of there was not the forest products demand, there was not the demand in the area that we're seeing or started to see back in 2019. In 2019, we began to invest in the area. Really, the best way to highlight this is it wasn't done as a capacity improvement. It wasn't done as we put in new sidings. We started with resiliency. We started with safety. We started with ties, rail. We're able to increase our speed. We're able to increase the resiliency of the line. That's really how we've started to unlock the capacity of that corridor is through speed and efficiency. The next tranche will be through some capital investment, which will go on through 2023 and 2024, adding 2 sidings to the line to be able to handle the business we see on the horizon. As Kelly put it, there's 17 potential opportunities up there. There's a lot going on, and we need to be ready to capitalize on them. The biggest piece and the biggest challenge from my lens is the people piece in that corridor. It's very demanding right now as far as the labor market goes. Everybody is growing up there. The forest products producers are growing, frac sand is growing, drilling activity is taking off, and at the same time, we need to hire people to support all that. What have we done to be able to address that from 2019 to today, and we will be able to continue to do that? We've used shortage employees. What shortage employees are surplus employees in other locations across Western Canada that the collective agreement allows to move into the areas that have a shortage of employees. That's not the sustainable approach we wanna take over the long term. What we're doing is we're partnering in the area with local First Nations, schools, and the small communities. We're present there. We're meeting and doing career fairs. My superintendent was up in Fort St. John not too long ago doing a career fair, trying to get CN's brand out there and being good neighbors in our community. This visibility will provide line of sight to people to bring people into our organization in the location where the growth is taking place. We're bringing volume as our customers are to Northeast BC. We wanna show that to the people living in Northeast BC that we're an employer of choice, and this is a great opportunity for them to come and work for the railroad. Bringing the right people to the right location on our railroad will be key to our future. With that, and speaking about the right people, I'd like to introduce Kerri Crozier and Dan Breslin, VP Multimodal Operations and VP Intermodal. Thank you. Great job. Okay. Thanks, James, and happy birthday. My name is Kerri Crozier. I'm Vice President of Intermodal Operations. I have I'm a fourth-generation CN Railroader, and I'm very proud to be working for this company. I have a long, diverse background in operations across both field operations as well as network operations prior to embarking into this role a little more than nine months ago. I am honored to be here today and to talk to you about our plan that has been entrenched as both discipline and resilience. What I'm gonna talk to you about today is I'm gonna talk to you about why our discipline plan matters. I'm gonna talk to you about the resiliency that has been established as a result of our discipline plan and how it's created new opportunities, including growth. My colleague, Dan, is then gonna talk to you about some of the really exciting future growth opportunities ahead of us. Let's first talk about discipline. Our discipline plan has yielded some really positive results. We've seen betterment in our car utilization. We've seen betterment in our car velocity as well as in our car hire. Those betterment has resulted in a benefit to our cost in a per unit basis of over 5%. Our service has also improved. Measured by left behinds in terms of left behinds to a plan, so that's left behind units to a plan. We're more than 98% compliant. We work collaboratively. We work integrated with all the functions across CN. Derek and Pat did a great job talking about how the team has come together to be able to create the right plan and how we've executed to become disciplined and create the opportunity for resiliency. Let's talk about resiliency next. Our customers have asked us for resiliency in some key markets, including Toronto, Montreal, Vancouver and Chicago, and we've created it. In Toronto, we have the second-largest inland container terminal in North America. That's measured by throughput. Sorry, definitely not by size. And our discipline plan has allowed us to create the capacity, has allowed us to continue to create capacity and find solutions. We have established some very exclusive partnerships with some container yards in Toronto. Those partnerships allow us to be able to surge volumes up when required, including supply chain disruptions, without jeopardizing the capacity or the fluidity on our CN network. In 2022, our resilience was tested when there was an industry supply chain challenge. We were able, through the resiliency that was created, to be able to outpace our peers to be able to right the ship, pun intended. Building on the partnerships that we've created, we've also established new partnerships with boutique terminals to be able to service some key market growth areas, including southern Ontario, in particular Hamilton. These partnerships allow our customers to be able to reach their market closer, as well as allow our customers an alternative to be able to improve their carbon footprint, which is a growing necessity. One intermodal train takes more than 300 trucks off of the road. Our technology advancements are tied into our discipline and resilience as well as our growth. Our intermodal terminals operating system, which is really the brain of what it is that we do in the intermodal systems, is being replaced currently with a new system called Smart Terminal. The Smart Terminal system will allow us not only to have better work order optimization, better inventory management, but it also allows us to build for automation into the future. A second application that's in place right now is we're rolling out a system called CN Express Pass. How I can explain that to you best is that how you check in at the airport right now, where you use your phone to be able to check in advance of arriving at the airport. That application and that access to airports now has changed the way that we access the airport as well as improve our flight experience. That's what our customers and in particular their truck drivers will be able to experience when they come into our terminals. That all being said, we've got a lot of integrated integrated approaches as well as our discipline and resiliency is helping us to be able to shape the way for the future. Intermodal growth is happening. We are ready for it. With that, I'll turn it over to Dan to speak to. Thanks, Kerri. One thing I wanted to say is intermodal is ready to grow and we're ready to do it. We've got a big ambition of growth over the next 2 to 3 years. I'd like to just say to the operating team, it's a lot of fun for our sales folks to come to work every day knowing exactly what we're selling, where we're selling, and have pride in our product. I just want to thank them for that. I'm going to talk about three things today that are gonna help with our growth. Port capacity coming on in the next 2 to 3 years, inland capacity coming on in the next 2 to 3 years, and partnerships that we're gonna continue to develop, existing and new. Port capacity. In the next 2 to 3 years, about 3.5 million TEUs of existing and new capacity will come online at the ports that we serve. What's great about it is that almost half of that is at terminals where CN is the sole serving carrier, Prince Rupert and Halifax. Prince Rupert still, I think, the best service to the Midwest, and I think our customers see that. Halifax, we just set a record and the momentum is there with all of the changing trade patterns for them to catch more. The next tranche capacity is about 800,000 TEUs of capacity that's going to come in through the Gulf. Okay? New Orleans has capacity to grow today. Mobile's just announced a $65 million expansion plan to increase their intermodal yard. What's great about that capacity coming online, we have the best route to the Midwest, and that's what's gonna help us grow that capacity. The last tranche capacity is about 1 million TEUs that's gonna come online in Vancouver and Saint John. That's jump ball capacity. We're gonna win the jump ball by jumping higher. We're gonna have fast, reliable trains. We're gonna have a focus on low dwell, and we're gonna have best-in-class customer service, which is through a digital platform or just answering the phone. It's quite exciting. Now, ports pitch, inland terminals catch. If you can't catch it's not worth moving it. On the inland side, our three core terminals in Montreal, Toronto, and Chicago touch about 70% of our intermodal involvement every single day. Montreal, with a very minor cost, we can double the capacity there. In Toronto, we're breaking ground, we're quite excited to add another 450,000 units of capacity for both domestic and international by 2026. In Chicago, we're even more excited about a new footprint in the southwest suburbs of Chicago. That's gonna put us right in the heartland of our Class I US rail competitors, we're gonna have great service from the West Coast. It's also gonna put us in a great place for us to compete against East Coast rail providers, as we're gonna be already in the neighborhood where all of the newest, latest distribution center capacity square footage is being built. We're extremely excited about that. Further to that, we're gonna continue looking for new storefronts that we can work on, whether they're in Northern Quebec, Southwestern Ontario, Kerry mentioned Hamilton, US Midwest. Anywhere we can look to partner with someone to help us to develop the menu and up the menu of options that we can provide to our customers is going to help us grow our, in our markets as well. Last is partnerships. Doug's gonna talk a little bit about our UP partnership and our Falcon Premium. We're gonna continue to grow with our existing partners, New York, New Jersey, and the Port of Philadelphia with CSX. We're gonna continue to push to do more volumes into the Ohio Valley with NS and CSX. Indianapolis is adding a lot of capacity at their terminal. We've got room to grow there. It's been a phenomenal partnership with a best-in-class regional railroad. We have projects that we're working on with the Port of Prince Rupert as they develop the Ridley Island Export Logistics Park, and I think they'll do imports there too. We will also be looking at. We're also working, we announced a few weeks ago, working with Montship, the Canadian name, but Captain Logistics, on a new 30-acre transload within our Calgary Logistics Park. I think Alberta is the transload future. With that, I just wanna recap that the capacity is there for us to sell, both from a port level and from an inland level. We've shown that we can sell, and we can fill this. Last, we're gonna continue to work best-in-class partnerships to try and hit that number and that growth number that we projected. Thanks, everybody. Thanks, Dan. We're gonna welcome Doug back up to the table. Good job, guys. Good job. All right. Thanks, everyone. We'll kind of get through the wrap-up here pretty quickly. Had a lot of questions last night about what we're doing with our new Falcon Premium service, we'll touch on that first. Actually, we'll touch on it second because it goes in order. First thing we did is last October, we actually announced a partnership with the EMP service with the UP and ENS. Now we're the sole Canadian carrier for this service. Now what that is it's an interline service that we didn't have before for intermodal. Historically, our intermodal boxes would move to Chicago, and that would be the end that we'd see them. The customer would have to... We get them off the train, they dray over to another terminal, they go on another railway, we'd have no idea where they were going. A lot of work for the customers. With the EMP service is it's an interline product, so the customer bills it from origin all the way to destination, and we take care of all that in between the CN, the NS, and the UP. The customers love it, and we've been able to really grow it quickly. Dan and team have done a great job selling it, but we're also selling it for all of our products, including forest products. We get to the Falcon Premium service. Working with the UP, we said, "How do we expand on the EMP? How do we get into Mexico?" We've been meeting with the UP on and off for, I'll say, five years, so this isn't anything that's come up over time. With changes in the marketplace, I'll say we've all come forward and said, "Hey, we need to get into Mexico better." Just over the period of two weeks, we were able to put together, I'll say it's gonna be a world-class service between Mexico and Canada and Detroit for us that's gonna move product between there that's moving over the road. A lot of people ask me, what are the numbers, right? We did a lot of work on this when we were looking at the buying of KCS. Listen, there's about an equivalent four trains a day northbound, two trains a day southbound that moves over the road today. You need balance in the rail industry to keep your costs down. You sit there and say, "The balance is 2 trains each way a day." What are we looking at taking it? We'll be really happy getting the 1. That's taking 1 train a day with the UP and the FXE off the road. We think we can do it. We think the service will be there to do it. You'll see yesterday we also announced a partnership with Crowley. What that is really the new service that we're going to be doing, short sea shipping into the Mexico City market. It'll move on CN to Mobile. Mobile, it gets transferred onto a Crowley ship that's actually a high-speed ferry that moves down to the Port of Tuxpan. Texman is not served by rail. It's actually a truck port. It'll go off, and it'll get trucked into the Mexico City market. That's something we don't really touch on yet today with our UP partnership, so it's an additive to it. It's not competing against it. We're looking forward to that, and that'll be starting up, I believe it's in September, Dan, right? Yep. You can hear from our interline partnership, it's all about taking trucks off the road. We're not trying to take trucks off other carriers. We're really going for that, what the railways have always talked about. We're gonna take trucks off them. These products are designed for that. With respect to that, we'll also say, "Hey, how do all these projects add up?" Which I know you guys wanna see what the final numbers are. It's a big number. Eight hundred thousand to 900,000 carloads or units per year of growth by 2026 annually. How do we get there? Like, this is just big, the project growth that we've talked to you here today. We have a lot of small, medium-sized projects that we don't have. It's easy to fill in any gaps that we have. Big projects come up, big projects don't always come through, but we have a lot more we're working in the background anyway. Just to give you a quick recap, in bulk, we have 80,000-90,000 carloads of growth. In renewables, we have 70,000-80,000 carloads. Just in NGLs, we have 55,000-65,000 carloads of growth. In the EV market, Northeast BC, Kelly and the team talked about 130,000-145,000 carloads on our existing network. Intermodal is the big kicker, Dan talked a while about we carry 465,000-520,000 units of growth over the next three years. Like, it's just a big, big number. How do we get there? It's disciplined growth and with the support of our customers. I think you've heard that a lot, is that we're gonna be very focused with the operating team on bringing this all onto the network, not impacting our existing service. Really trying to drive that growth, and we will right to the bottom line. Just to finish up, we can't have a presentation here without talking about pricing. I know you'll be asking about it, so that's good. Listen, we continue to see moving forward, we'll be able to price rail inflation and above. We continue to see strong markets for that. The easiest thing we can do though is have good service, so it allows us to get us. The service that Ed, Pat, and Derek and the team have been providing over the last year make it an easy conversation with our customers. Ed alluded to the fact that, hey, the private car shippers are actually don't need as many cars, so they're seeing some savings. The other part of that is that the inventory carrying costs of customers are way down when they're shipping with us. They have less products in the pipeline, so they're happy about that as well. It's easy to ask for more price when you're able to actually show them justifiable savings. From all this, what CN really needs to do is really bring this to the bottom line. I know a lot of you have said, "How are you gonna bring that growth to the bottom line?" It's a team effort. You see that today between our salespeople and our operating people all working together. I don't think there's anyone that can come out of this and say we're not aligned right across the company. We have significant growth opportunity moving forward. We're gonna deliver on it. It's that simple. Next, we actually have another video coming up, short video, and it's all about the technology that we're doing with customers, featuring, Dominique and Mohit again. You'll get to see some of the stuff for there, then we'll do a quick Q&A after that. CN is enabling customers and supply chain partners by providing an end-to-end shipment and tracking visibility, driving a better experience, better planning, and better business decisions. Our goal is to provide solutions to our customers offering three things: collaboration, connectivity, and automation. Enabling collaboration means supporting all parties along the supply chain from customers using CN's rail and intermodal services to partners in trucking operations, logistics, ports, and shipping companies. Enabling connectivity allows our partners to choose the channel that best meets their needs and access the most real-time data that is so vital for their operations. Our most recent product rollout, CN One shipment tracking tool, allows customers to track their shipments via mobile application or the web. Another example of connectivity in intermodal is our newest trucking platform, Express Pass, which simplifies interactions for trucks entering CN facilities and provides improved predictive ETA to our customers. The benefit to our customers and partners is that it provides them a quick and easy way to access real-time plan, ship, track, and pay data. In turn, they make better, quicker, data-driven business decisions to simplify their operations, improve their planning, and grow their business. Finally, enabling automation is key to our modernization efforts. We started with the intermodal terminal technology through our Smart Terminal program. We plan to expand this transformation program by adding integrated planning capabilities and eventually moving towards a semiautonomous operation. In today's global supply chain marketplace, customers want to be able to decide when and where to have their products and merchandise delivered, and they want to know the status of their delivery at any time. To meet those requirements, supply chain performance is more important than ever. Data needs to be available and shared between all supply chain stakeholders so that everyone has the right information when they need it. By using technology to share data with our customers and partners, we are removing barriers and connecting every link in the supply chain to power CN to the future. CN is enabling customers and supply chain partners by delivering modernized platforms through multiple channels. By providing a seamless end-to-end experience across the entire supply chain, doing business with CN has never been easier, faster, and better. Say thank you to Doug and the team. That was a really helpful discussion. I mean, it's obvious, this is not new material for me per se, but as I was sitting over there stage left, there was three things that really struck me. One is the significance of the growth opportunities. Two is the deep integration between the commercial team and the operating team. The third thing was also this supply chain integration and the way that we talked about the EV supply chain and the renewable fuel supply chain. That's a real new level of integration with our customers and supply chain partners to really lift our game up and be able to take on this next level of growth opportunity. We have time for a couple of commercial questions. I have my glasses on, so hopefully I can see you all a little better. We've got Greg and Marius that have got the mics out. I think over here, Marius, I see you've got the mic there. Thank you. Jonathan Chappell, Evercore ISI. Doug, two-parter for you. That 800,000 to 900,000 carload growth potential, how much of that is in the outlet that you laid out earlier this morning, the 10% to 15% earnings growth? The second part is, you know, a lot of that growth comes in James' territory, where you had 2 big green boxes of near capacity west of Edmonton and between Winnipeg and Chicago. How much of that 800 to 900 can be met with the capacity you have today and the capacity that Ed and his team are creating, versus what you need to invest to chase some of that new potential? Okay. Firstly, we'll talk about the fact that it's pretty much all in the plan, but it's also not just those projects, right? We have other projects going on. Like I said, some will drop off in the end. They just won't happen. Other ones we'll add in. Overall, those are the numbers we're using that we're pretty confident that we can deliver on. Now, being in James' territory, all of these projects, because there is some tight capacity there, have a plan against them for adding capacity. Every single one of them. They wouldn't be up here if we didn't have a plan for it. That's the nice thing. We can deliver on that in the time frames asked for by the customers. We're set. Walter, you've got it. Yeah. Thanks very much. Walter Spracklin, RBC Capital Markets. My question, I guess, first one is for Sandra, second one for Dan. Sandra mentioned Quintette, Jansen, and the Canpotex opportunity. I'm just curious, I haven't heard anything from tech about Quintette. Is that deal, is that mine going ahead? And Jansen, you know, have we had a decision on that one yet? I'd love to hear whether that's going ahead. And then for Dan, you know, of the 800,000-900,000 carloads, 400,000-450,000, as you mentioned, Doug, is all in that area. I think, Dan, you mentioned 3.5 million TEUs coming online. How much of that 3.5 million is in that 400 to 450,000 carload? Do you wanna go ahead, Sandra first, or? Sure, I can take that. Thank you. Walter, on the Quintette opportunity. The transaction was published a little while ago about how the transaction itself is closed, and they have continuously continuing to move forward in terms of the final work towards bringing that project online. We're working with them closely to understand what that's going to mean in timing so that we're all aligned when we bring it online. With respect to BHP, they continue to expect to bring that mine online, and they publicly have stated in 2026. We continue to be very close to them in Saskatoon a lot as we work with all of their teams across all of the functions to make sure we understand what their needs are going to be and how we can work with them to move some of their potash in the future. That is still under discussion, yeah. We will both be connected, and it is a multi-generational opportunity. Dan? Yeah. Thanks for the question, Walter. I'll break down that 3.5 million TEUs of capacity. 2 to 2 and a quarter of that is really capacity that's there today, okay? For instance, Prince Rupert, we've got a 900,000 TEU run rate, and there's 1.6 million TEUs of capacity there. That's room to grow in, and there's a train plan against that. There's also a plan against that extra CAD 1 million that's coming online afterwards, which is, you know, 200,000 more new TUs of capacity at Rupert. It's Halifax. It's working with PSA so that they can optimize their operation in order to do more there as well. Maybe one thing I could have mentioned was, you know, long-term, 2028-2032, there's probably another aspirational 8.5 million TUs of capacity across all the projects. Just to mention, we're in good shape for a good share of that as well. Thank you. Question on this side. Yes. Justin Long with Stephens. When you think about the growth opportunities going forward and compare intermodal to everything else, how would you say the incremental margin and incremental returns compare intermodal versus everything else? Better, worse, about the same? Then second question, just on pricing above inflation, is that something you think is achievable across all businesses, or could it be a bit more challenging in intermodal, given the heightened level of competition from both truckload and some of the other rails? Well, we'll start with the pricing question. Honestly, in almost all areas, the pricing environment is still very robust for us. We're providing a great service, and we're able to actually price above inflation. Intermodal has gotten a little bit tougher recently with respect to the capacity available in the trucking market, but we're still working with that. Like, we don't have contracts that come up every day in intermodal, right? Those are long-term things. Trucking capacity is gonna tighten up. I don't expect any time of long-term inability to price above rail inflation intermodal either. I'm trying to remember what the first question was. Incremental margin. Oh. Return. Yeah. versus everything else. Historically, intermodal margins have been less, right? We've been able to work on cost reductions through our intermodals, entire network, supply chain, I'll call it, and we've been able to improve those dramatically. They're still not at the level of some of our carload business, but they are extremely profitable for us, and we love having the business. I think, Cherilyn, saw your hand go up. Thanks very much. Cherilyn Radbourne from TD Cowen. One of the things that I think is really powerful about the CN network is just how much of the traffic, you originate and terminate. Mm-hmm. Which gives you a lot of control when the plan's really working. So if I think about some of the growth opportunities that involve interline partnerships, I just wondered if you could speak to how you're working with those partners to make sure that the interchange doesn't, you know, sort of circumvent the route advantages that you have. No, it's a great question. First of all, you have to put your schedule together, which we've kinda just put out in the last week, and we just tightened up yesterday as an example with the UP going to Mexico. Then you gotta turn around, you gotta scorecard it. Like, we have to sit down with them, and we're gonna have a joint scorecard that measures everything. That way, you just look for opportunities to get better. We'll be doing that the entire time. Some of it is you take on some of the more, I'll say, some of the additional workload if you need to. As an example, we will be doing on the UP service into Mexico, we'll be sorting the boxes at our terminal 'cause we have capacity, and we have a plan to be able to do it, and we have a lot more destinations, so it makes sense for us to do that. Where with the UP plan down at the FXE, we're only going to two terminals. The northbound product could be going to 15 terminals. We'll handle that workload, and we're pretty confident we can measure it and get it done. Scott. Thanks. It's Scott Group from Wolfe Research. Of the 800,000-900,000, how much would you say is aspirational versus contracted, if that's the right way to think about it? You know, if it all hits, it's a lot of growth. I know we talked earlier, we don't wanna oversell the network. How do you think about overall volume growth relative to the economy? Is it a point or 2 more? Is it more than that? Just more near term, like volumes right now, obviously very challenged. Any crystal ball of when we start to see some growth again? It's all in the plan. I'll say right now, we're pretty confident that most of it's gonna come in, if not all of it, right? That's otherwise, I don't think we would have had it up here today. The team is all working on that and as well as the operations team's fully involved. We have plans to move it all. There won't be an impact to the network doing it. Contracted, there's probably, if I had to, you know, turn around, it's probably only about 20-25% contracted today 'cause some of these are, aren't a couple of years out. You know, as per the question, like, BHP won't be entering contract negotiations until this summer, as an example. The second part of your question? Just like how much overall growth above the economy. We're growing above the economy. It comes lumpy sometimes, so we don't actually aim for that 1% or 2%. We take what we can get when it's there. We are gonna grow faster than the economy. I think that's all we'll get into. I think just Lance will cover some of those numbers. I think, Tony, you had a question. I'll just get you the mic. Thank you. It's Tony Hatch. Doug, how much do you have to invest in the Falcon business by giving UP more business, you know, by retreating in a way? I mean, I'm looking at that as an investment that you're looking to net that amount, but how much units or revenue would you say that you are not gonna compete for as part of this new business? Secondly, why is Halifax as important as Prince Rupert? I'm surprised it's been mentioned several times, and does it really have that kind of opportunity? What about New Orleans, which you used to talk about a lot? Sorry. We'll start with the service. It's really almost a 0 capital commitment. We have a capital commitment with the UP's for the Falcon Premium service already to add in more EMP containers. That's an EMP commitment, not a new service commitment working there. Honestly, I don't think we'll have to add in any capital, which is great. We get to sell into an existing network. All of us have capacity to move it. Really it's just having the sales team and everyone focused on it. With respect to the ports, listen, last year, Halifax really started to take off for us, and we could see that. We added a second train into Halifax last year with the best service in North America into Chicago and Detroit, and it sold out right away. We think it's got a tremendous amount of growth potential, and it's got definitely a lot of room to expand still, which is great. It's running at 600,000 TUs, I think is what we had in 2022, and it's got immediate capacity of 1.1 million. We can effectively double it. With the service we have in the uncongested part of our eastern network, it's an easy growth target for us, the customers seem to love it. New Orleans. New Orleans is great too. We're on dock there, by the way. We're the only carrier on dock, they don't have the inbound flow as much. Now they're building a big new terminal located down on the NS trackage, the port railway will be the serving carrier for it, they'll be distributing product right to all the different carriers. We think we'll be in great shape there for whatever business it's able to attract to run that up to Memphis, and Chicago, and Detroit, even into Eastern Canada. Bascome Majors, Susquehanna. Will you take an honest look back to a few years ago when overselling the network, what were the one or two biggest breakdowns that caused that to happen? If you look at today, what have you changed in either the structure or the way that operations and sales talk to each other where you're confident that can't happen again? Thank you. It wasn't any one thing, I'll say, it was primarily focused in the West. It's probably taking on too much grain in too short a time period would be part of it. You're talking about, you know, taking on crude oil was moving at some of that time, which really doesn't really move anymore. We're moving lots of frac sand. It's just little pieces here and there that all added up to putting us over capacity. We were running extra intermodal, right? That we probably said to the ports, "Hey, we'll give you that extra train just because the business is there." What has changed now is we're 100% focused with Ed and the team. We run all that traffic through them before we agree to it. Even for our contracts, I'll say it's a great process we have now. We have an operating committee where all future contracts over CAD 25 million get reviewed by the entire leadership team. It's just like Ed's involved with that. He actually runs the operating committee. Tracy's on it, myself, Ed, and we actually review every contract saying, "Does it fit the network? What's it gonna do for capacity? Like, what are the capital requirements?" It's a very integrated approach right across the company. Okay, thanks very much. We're kinda out of time for the Q&A for right now. As I said, there will be one at the end of the day. Just a few logistical matters before we break for lunch. If you were on the tour yesterday, we have some photo souvenirs for you out of this room. Take a look and see if you can find your photo. We're gonna go back up to the 11th floor where we had breakfast. That's where the lunch is being set up. Please be back here. We're gonna start the webcast live at 12:45. For the people in the room, if you could be in around 12:40 just to get settled, it would be much appreciated. Have a good lunch. Bonjour tout le monde. [Foreign Language]. Good afternoon, everybody. My name is Dominique Malenfant. I am the Executive Vice President and Chief Information and Technology Officer, and I have the delicate mission to bring you back on focus after that great lunch. I hope you enjoy your morning so far. Before I start, I felt compelled to clarify one important item. I know that some of you may have found suspicious that I only appeared on video up to this point. I want to reassure you, I'm not a ChatGPT creation of some sort or any generative AI bot of some sort. Now, more seriously, I have the immense privilege to be leading the information and technology of CN for the last two years, a great talented team. Prior to that, I was 6 years as the chief technology officer for GE Transportation that became Wabtec in 2019. Prior to that, I was for 23 years with Bombardier Transportation in the passenger rail business. If you all that up, it's 32 years now that I'm developing product and technology to serve an industry that I'm truly passionate about. I'm sure you discover a lot of passionate people during your visit, especially yesterday. People are very passionate about the industry and about CN, and the reason is simple: it's an industry that matters. It's an industry that is important. It's an industry that is good for the environment. It's the backbone of the economy in North America. It's a lot to be passionate about. At CN, we believe that technology is an enabler for value creation. You saw this morning in the first video how technology enable operational excellence and safety, leveraging technology like mobility, like data, like AI, like machine learning, that's like sophisticated inspection technology, like powerful planning tool for network planning, and so on. You saw in the second video how technology enable customer and ecosystem partner by providing them the right information at the right time through an integrated platform that is seamless digital experience that helps them to connect the dot between the various transportation mode to be more easy to do business with. Now you're gonna see in the third video that we're about to project how CN established a foundation to accelerate our digital transformation. You're gonna learn about partnership with Google, for example, that we signed in December 2021. You're gonna also learn how we protect CN from cybersecurity criminal. I hope you enjoy the video. I will be back with you at the end of the day to answer question in real with a team of 3 CN team at around 1:30. Thank you. CN is using data to drive the future with next generation digital technologies and intelligence systems, which will make us more efficient and safe. In the last few years, we focused on laying down the foundation for data and mobility platforms. This was an opportunity to change our way of thinking, to become more agile and move towards platform-based environments. Our partnership with Google modernizes our infrastructure to an always-on global network. By moving to the cloud, we're building a scalable architecture with a secure foundation. All new solutions will be built in the cloud, allowing us to create integrated data landscapes and enable real-time insight and analytics. We will also be more agile, where we can scale railway services for customers and our employees to accelerate growth over the coming decade. We're also building data expertise across the organization and have assembled a specialized team responsible for end-to-end data initiatives, including governance and privacy. All these initiatives drive better data quality and help our employees and leaders make better decisions. We take a partnership approach when working with other functions in the company to help manage our enterprise risks. This is from both a cybersecurity perspective and the modernization of our core application landscape. We're doing this by migrating our core business applications to contemporary cloud-based platforms. Investing in a modern cloud-based suite will reduce CN's data center footprint and provide a cost-effective and efficient cloud infrastructure to implement our latest advances. This will result in significant savings. We're also modernizing CN's back office and technology footprint by implementing a cloud-based SAP S/4HANA transformation that will deliver a best-in-class solution. The result will be improved business performance, user experience, integration agility, security, and cost-effectiveness. This transformation will also drive process improvements and integrated business planning capabilities across functions. Our agility is founded on people. We encourage our team members to innovate and learn constantly, providing them with opportunities to experiment and modernize technologies to solve business challenges in a cybersecure way. Cyberattacks show no sign of slowing down. Protecting CN requires a constant state of preparedness. For cyber resilience, we need a security program built on a solid framework that continuously identifies risks and vulnerabilities, protects data, detects malicious or suspicious activity, and can deploy a robust incident response against multiple threats. Regular testing is a key component of our program. This includes exercising incident response plans and audits of our program maturity to identify opportunities for improvement. Our investments in talent, technology, and processes are helping us realize an industry-leading security program, allowing us to protect CN and enable normal operations in an ever-evolving threat environment. Ensuring our company network is secure and validating that security controls are perfectly functioning is a fundamental at CN now and for the future. The one thing we can predict is that cyber attackers will not stand down. Rest assured we have the right people and the right tools in place to keep CN cyber safe. We believe that technology is central in reaching new heights. When it come to operational efficiency, customer solutions, talent acquisition, and digital security. By accelerating digital agility and protecting CN, we are creating the best solutions for our employees and customers. By using technology with a purpose, we generate more value for our investors. We build the digital backbone of the railroad of the future to accelerate sustainable and profitable growth. Dominique, it's great to have both the real you and the virtual you here with us today. We're in the last mile. It gives me great pleasure to announce the next speaker, somebody who probably needs no introduction. He spends a lot of his time with you. He's passionate about railroading. He even certified as a conductor and locomotive engineer. Ghislain Houle, our Executive Vice President and Chief Financial Officer. Hello? I think Dominique is still virtual over there. If I listen to his English, I think it's more virtual than We thought we'd change it up a little bit here have a fireside chat. For many of you who know Ghislain, he's pretty straight shooter. Listen, I think, you know, you and I have been at CN a long time. We've worked a lot together. I think we both agree that it feels really good to be back on track. Maybe you can start by recapping what's happened since our last Investor Day in 2019. Yeah, I can. First of all, I'd like to thank everybody to be here this afternoon, take some time to take interest into CN. I know we've taken almost two days of your busy time, so thank you. Thank you for everyone listening on webcast. I think, Janet, as usual, you've kept the best for last. obviously, I don't have much news to talk about because the slides have already been out there, and I've been already grilled by people on the breaks. Let me take a stab. By the way, congratulations on your new promotions. You're a bigwig now. You deserve it. Thank you. We did demonstrate a lot of resiliency since the last time we met in 2019. If you remember, that's, you know, four years now. How time flies when we're having fun. Really that resiliency started in 2021, but really kickstart in 2022. I mean, everybody will agree that we had stellar results in 2022. When you look at the slide here, I mean, we delivered 25% EPS. We have the best in the industry. We delivered a record of CAD 4.3 billion of free cash flow. ROIC of almost 16%, and by the way, these two metrics were higher than our financial guidance that we provided. Then we guided to an OR that started with a five, and I'm happy to report that we delivered 59.9, and we should have added a couple of nines behind the last digit here, but it was below, you know, 60%. Great, great work, great resilience. When you look at it, you know, what really changed in 2022? What changed is really, first of all, Tracy joined us in Q1. When she arrived, she had a purpose, was to push this organization with a very clear direction to get to a scheduled operating model. I mean, that was clear, and that purpose was intentional. What she did, she made a couple of people tough decisions that I think with hindsight, needed to be made to make sure that you had the right folks in the right positions. When you look at it today, I think those decisions were right. I mean, when you look at our operating performance in the first quarter, grant you, some people will say that we had a milder winter, which is true. With car velocity of 210, 211 car miles per day, up 30%, this is close to what we used to do, as you remember, in the summertime, that has to be stellar. What really hits me the most, because you and I were here when we were at the heart of being congested in January of 2018. I remember vividly, we had 35,000 more cars on the network, and we delivered 11% less volume. When you contrast this to Q1, we actually delivered 6% more volumes in terms of RTMs with 15,000 less cars. That has to be phenomenal. What does that do? Well, it does a couple of things. Number 1, it provides reliable service. You can't have reliable service if you can't start your trains on time. Reliable service is, you know, is what customers are looking for. Also, as you move more volume with less cars, about 40% of those cars are owned by us. We get the benefit of the car ownership and the car maintenance. With the customer side, on the 60% of the private equipment, they do get that benefit, but it gives a tool to Doug and the rest of the team to get more pricing and have that pricing being sticky. Finally, one of the things that changed is we do work in an integrated fashion. We were not as integrated that we should have been, you know, in the last few years. Marketing would sell, and operation would move what's coming at them. Under Tracy, and Doug talked about a little bit on the operating committee, you know, and this permeates down into the organization, is we look at all the business that comes on the network. We look at the OD pair, we look at the profitability, we make sure that we have the capacity and we have the resources to move that business to offer solid customer service, because the key here to us is to be disciplined and bring the top line to the bottom line. We were the best in growing the top line. We weren't able to bring it to the bottom line. We will not make that same mistake again, and we're integrated in doing so, and we're doing it together. As you said, the team laid out a really impressive growth pipeline this morning, and I think, you know, we understand not all of that will materialize. To your point, what was very clear was the way that we're working in an integrated fashion, and that we're gonna invest behind, you know, those opportunities that are real and will earn the return that we need and that our investors expect. Before we get into the three-year plan, maybe just so you could spend a little bit of time just letting us know how is 2023 shaping up. You mean the key drivers of the 2024, 2026 plan. You have those five key drivers that are behind the plan that we're gonna lay out. Obviously, the first is safety. You've heard Tracy talk about this. I think that, you know, safety is the core of what we do. You know, safety is in our DNA. I think I'm pretty pleased with the progress that we have done on safety. People, and you will agree as well, that we are not where we need to be. We need to really push on having a safety culture that aims for zero fatalities and serious injuries. I think that with six railroads in North America, we compete, but on the safety front, we need to collaborate in a meaningful way. I think that we need to share data, we need to share technology, we need to compare and improve our safety practices because Tracy said it well this morning, you know, safety is the industry's social license to operate. When you look at customers, I hope everybody in the room and on Webcast is excited about all the CN specific growth opportunities that are in front of us. There's lots of them. There's still some of them, lots of them that are still in Western Canada. We will have to be very disciplined on how we bring in that growth. That growth will have to fit in our capacity. We will not oversell on our capacity so that we can offer solid customer service. If demand is above the capacity, then we'll take the opportunity to get more price. There's also good opportunities in Eastern Canada and the southern region where we do have capacity, and we can accommodate that growth with very little CapEx. I mean, Kelly talked about the electric vehicle supply chain opportunities in Eastern Canada. That's quite exciting. Obviously, I would be remiss not to talk about the UP-FXE partnership and also the EMP program that will serve to densify the southern region. To your point, I think not all of those will materialize the way we're forecasting. I'm a finance guy, and I heard our CMO say loudly that there's only 25% of those opportunities that have been negotiated and under contract as we speak. There's still another 75% to be negotiated. Hopefully, we'll get there. This would be over time. I think there's enough, and you would agree with this, that there's enough of them that I feel very comfortable that we will grow our volumes above the economy in the next couple of years. When you layer on the scheduled railroading model with the benefits to the customers that I've just talked about, I think we can be comfortable that we will be able to price above rail inflation. In terms of incremental efficiency, you heard Derek. Pat. Pat, talk about the detail of scheduled railroading and really how they intend to use technology to leverage and bring that scheduled railroading to the next level of efficiency and pick it up a notch. As you know, we're very intentional on how we invest in technology. It's not investing in technology for technology's sake, but it's to create value, first and foremost on safety, second on efficiency. With this in mind, I think I feel very comfortable that we will continue to improve our margins on a year-over-year basis. Develop the next generation of railroaders. Well, everybody will agree that we're exceptional in developing talent. We're the draft team of all the other Class I's in the industry. I think that we're good at that. I think this is an area that Tracy, myself, the rest of the leaders are spending a lot of time to develop people, to make them enterprise leaders. I hope that you had a chance to sit with them, a little bit, and see them yesterday on the trains or yesterday on dinner. I'm very happy, you know, to be working with them. I think you can feel that the team is gelling, that we're having fun together. We tease each other a little bit. I'm being careful not to tease Ed on some stuff because I've been told not to, but we're having fun together. I think that's the key. I think, yeah, I think we've already renamed, Pat and Derek, just make the plan, run the plan. they have- Maybe that's where I get confused. Maybe. I think that's the issue. There's a lot of people in the room, already kinda typing away on their computers. I think they're updating their models, some of them. Let's try and make sure that they get the base year right. What, what about 2023? What can you tell us? 2023, hopefully, most of you, if not all of you, listened to our earnings call last week. Obviously, we started the year on a very strong footing from the front tees. I think that when you look at our EPS growth, at 38%, the best in the industry with an OR of 61.5%. Volume growth steady at 6%, really supported by a more normal Canadian grain crop. I think that was great performance. Again, mild winter a little bit, but great performance. When you look at the volumes on a sequential basis, and we do provide our volumes every week, you can see weakening happening, and more so related to the consumer-oriented segments like intermodal. And when you look at industrial production, it's still negative on a year-over-year basis. Actually, it deteriorated on a month-to-month basis when you saw the latest consensus forecast that came out about a week or 2 ago. Based on that, we call that we're still in a mild recession. I think we are in it as we speak. We'll see what happens. We still upgraded our guidance from low single-digit EPS growth to mid-single -digit EPS growth, really on the back of the strength of our operating and financial performance of Q1. Great Q1. That's what helped the guide, but some uncertainty obviously remains in the context of the current environment. What are your key assumptions as we think about the three-year plan? Good point. I mean, the environment is tough to call, and there's some conflicting messages out there. I'm sure everybody on the call and in the room have their own opinion about what's gonna happen. I think we're assuming that, you know, the recession will be mild. We're assuming that we'll end 2023, be out of a recession, and over the plan period, we're assuming a North American industrial production of at least 2%, so we're assuming a supportive economy. As you see on the slide, we're assuming an FX of $0.75 and WTI of $80. These are the same assumptions as we're using for 2023, and really what that does is it neutralizes the impact of both of these metrics because we don't control them, and we don't know where they're gonna go. By having the same assumptions as 2023, we're taking out the noise of FX and WTI, and when we're talking about our 10%-15% EPS growth a little later on, it's really the true engine of what the business can provide. There's no noise on that front. Right. In the context of that kind of environment and the big reveal I think has already happened, as you said, but maybe you can give us a little bit more context on, you know, what we expect CN to be able to deliver financially. Yeah. Okay. As I said, I think that. I was hoping to surprise everybody, I guess I didn't. There's some securities laws around that. Yeah. Okay. All right. We have to abide by the law. We are gonna deliver a 10% to 15% EPS growth over the three-year period. We're very confident of that, and we will make the right investment at the right time to make sure that that growth is sustainable and profitable. We have a lot of shareholders in the room. We have a lot of shareholders actually that are dialed into the webcast. I think that they would expect me to ask you about CN's overall approach to capital allocation. Absolutely. Listen, we've, as you know, had a very consistent capital allocation policy for the years, and we're not changing it. First use of cash is to reinvest in the business. Second is to have a strong balance sheet, and we all know that having a strong balance sheet creates value, especially when you get into these uncertain economic volatile times and we're going into a recession. The key question, Janet, as you know, that we've been debating is how strong does it need to be? With the concurrence of our board, we've decided to increase our leverage from a debt to EBITDA from 2 times to 2.5 times. We'll do this over time, and we'll do this when economic conditions warrant. Shareholder distribution, obviously, I'm extremely proud of our dividend, that we've grown every year since we privatized. Typically, as you know, we've grown our dividends in line with earnings. We like share buyback because it's a flexible residual tool to get to a targeted leverage level. As you know, we do have a current program this year with a budget of CAD 4 billion. We don't intend to change it. Due to the fact that we are in a mild recession, we're gonna be on the prudent approach for now. You know, we have a program this year of CAD 4 billion. Okay. Well, listen, as a longtime shareholder, I feel pretty good about that approach. I know you're a pretty big shareholder yourself, so I'm sure it's aligned with your thoughts as well. Mm-hmm. I'd feel even better, though, if you talked a little bit about the return on invested capital. I've heard you. We get there all the time. a lot also about, capital efficiency. Yeah. Can you give us a better sense of what does that mean? I mean, when we say capital efficiency, we talked a little bit this morning, we had some capital discussions. What's changed about our approach? Yeah. You know, a couple of things. Number one is we do. You saw the opportunities from the marketing team this morning, we do have, as you know, a detailed bottom-up demand plan that we work with Doug and the team to keep updated. We know what demand is in front of us. We know, you know, what's coming at us. We also have, and I think the operating guys talked about it, a smart network, which is kind of a simulation tool that helps us do what-if scenario and identify capacity at a granular level. If you remember, Janet, a few years ago, we used to do this through spreadsheets. Mm-hmm. Now we've invested into this application. It's a little bit the same as what the airlines are using to make sure that when we do capacity investments, whether it's the siding long track and when we put it is in an area where it will provide the most value to the operations and to the network. When you step back and look at capacity investments, if you look at capacity investments in Western Canada, with having Rupert being the gift that keeps on giving, investors have to, you know, expect that we will continue to invest year in, year out. We will continue to invest, recession and no recession, with a view of capital efficiency. What that means is, if you try to build too much in a given year, you get a lot of leakage. Engineering won't be able to get their work blocks. you know, you will pay overtime. Engineering, when you pay overtime, they're paid time and a half. You'll pay contractors premiums and therefore you get leakage. What I mean by capital efficiency is to be able to have 100% or as close to 100% of your investment in the ground. Then what you do is you sell to that capacity. You don't chase demand. You sell to that capacity, and again, if demand is higher, then you use this as an opportunity to get more pricing. Remember that in some parts of our network, the build period may be just a couple of months if you want to avoid having to build under snow. What happens if volume comes down? Yes, you will have invested maybe a little earlier, but it'll be time value of money because essentially in those corridor, you will need that capacity eventually. All of our commodities go through there. When we have capacity investments more oriented toward a specific customer or a specific commodity, then we de-risk those investments by getting some volume commitments and some customer skin in the game and some of those mechanisms that everybody is well aware of. gate those investments and make sure that we have milestones and goal lines at least every 9 to 12 months to make sure that we can pinpoint those benefits, that those benefits can be real, and that by having those real benefits, we can align them to as close to the capital outlay as possible. Again, I believe in technology, and I feel that the industry is lagging a little bit in technology, but it's not technology, you know, for technology's sake, it's to create value. Lastly, at CN, we've got the discipline that on bigger investments, as you know, we have internal audit going in and doing post-completion audits to make sure that they verify the return, and we get lessons learned for future investments. When you take this all into consideration, you know, we have a potential to invest between CAD 3.5 billion and CAD 4 billion between 2024 and 2026. Some of that will depend on the quality of the opportunity. It will depend on the profitability; it will depend on the cost of it. I mean, this is kind of a ballpark, but I would not set this in stone. It will depend on the opportunity coming at us, and some of this will be over time. We're very confident with the discipline, that we have and the capital stewardship that we have, that we will deliver during the next three years, 15%-17% ROIC, which is a key measure for investors. Mm-hmm. Definitely. Definitely. I know, I know some of the folks that are getting twitchy out there, and they want us to get to the Q&A period as quick as we can. Before we do that, you know, maybe I'd just like to give you a chance to kinda wrap up. There's a lot of information that we've taken in, yesterday and this morning. How do you put all those pieces together, and what does that look like for shareholder value creation? We made that last slide as a kind of a summary slide that people could fold and put them in the, in their back pocket when they go and have lunch at McDonald's. Really, I think that starting with EPS growth, I feel very confident that we will deliver 10%-15% EPS growth, and that's going to be driven by growing faster than the economy, pricing ahead of real inflation, and by improving our margins on a year-over-year basis. We'll have a disciplined investment program with a kind of a ballpark range of CapEx between CAD 3.5 billion and CAD 4 billion, and we will deliver 15%-17% ROIC. We will continue to deliver shareholder value with a consistent capital allocation approach. We will continue to grow our dividends mostly in line with earnings. As I said, share repurchases. We like it because it's a flexible and it's a residual tool to get to the 2.5 times leverage target. We'll do that over time and as economic conditions warrant. Maybe just to throw you off your game a little bit. Go ahead. I'll go completely off script and ask you just, you know, what were your key takeaways from this morning, just as you were listening to the team present? You know, what messages came out loud and clear for you? I think the important thing is, first of all, every investor will agree that we need to demonstrate we can grow organically. If anything, in the past, we've grown that. If anything, I think people would debate that maybe we've done that a little bit too much, especially more concentrated in Western Canada. The purpose this morning was to demonstrate that we have enough in the pipeline, we can grow organically. I hope we were able to demonstrate as well that with the scheduled operating model and the discipline that we will have, it will not just about being able to grow the top line, but more so grow the bottom line. It may happen that we may not grow as much as investors have seen us grow in the last two years, but the key for us is to bring more to the bottom line and to have discipline. I hope people were able to see that we're integrated. The last thing that I hope that investors saw was that they will have confidence in the team that will deliver the plan. At the end of the day, it's all about people. When Tracy joined us, the first thing she did, she made some key people changes, and decided who was gonna stay on. You and I were lucky. Maybe we're next, I don't know. She decided we would stay on. For now we're good. We'll see. We better keep performing. It's about the team, and it's about having fun together, and that's what it is. To trust each other. I think that was the purpose. To show that when you and I and others are retired, that there's another level that's coming up that will be able to manage this company. CN will be stronger than any one of us. Mm-hmm. We like to think that we're indispensable, but we all are dispensable. I hope that people see that there's a second line of management in here that will be able to take the reins and probably maybe do better than what we've done. Mm-hmm. For sure. For sure. I know you're all getting impatient. We're gonna just take a really quick five-minute bio break, give us a chance to reset the stage, and then we're gonna dive right into the Q&A, okay? You got five minutes, and we'll get right back underway. I know there's people that have to ask the question, we'll be right back. Okay, we're back. We're gonna go to questions, but I just wanna make a couple comments first as I've listened to the discussion today, both here from the stage and, as well as over lunch and in the hallways. First, wanna make an announcement that there will be a press release out shortly. We have a new CFO coming in. Listen, what I hope that you've seen today is why I'm feeling so good about the team that we're building and especially why I'm so confident about the next generation of talent that's coming up. Thank you for the way that you've engaged with them all. They're the future of our company, and you'll be seeing all of them more as we go forward. As I reflect back to where we started today, here's what I hope you heard. We're running a scheduled operating plan. Did you catch the part about the plan is sacred? There are just T-shirts for you all to pick up on the way out that says, "The plan is sacred." This is the way we're gonna run our railroad. It's changed the way that we operate, and it's changed the way that we go to market and do business with our customers. It also is creating. It's what is driving our customer service, which is at brand new levels. It's driving our efficiency and our car velocity. It is providing that platform that we've been talking about today for growth. Whether that growth is growth that exists now on trains that are running or whether it's growth of adding new train starts in corridors that have the capacity. Doug's team is connected into this, and they're selling into that capacity, whether it be on trains or in corridors. As you heard Doug talk about and just talk about where we have high quality opportunities to expand our network, to expand our capacity in order to facilitate that growth, we're gonna do that. We're gonna do it in a very disciplined way. Nothing gets on this railroad if it doesn't go through this process. In this process, as we build, as we've built it over the last year, is not gonna be based on any of the wonderful personalities that you met today. It's structural. The plan is sacred, if you want new business on the plan, you've heard Gis and Doug talk about the process that we have to do that. If we're gonna build capacity, we build it because we understand what it's gonna cost and how we're gonna put that steel in the ground. We understand the return and the business that Doug bringing to it and when it's gonna be available for us. We don't put the business on the property until the capacity is available. This is a discipline that we're driving. What I hope that you heard today as well is that we're pretty optimistic that the growth opportunities, some pretty cool growth opportunities out there, that we're getting ourselves organized on, they're gonna go through this process. as we, as we work through those, there is growth and volume here that will come into our operation that will exceed kind of the pace of the growth of the economy, and we're pretty excited by that. It's the foundation of what's gonna allow us to drive the returns that Gis spoke to you about a moment ago. as we go forward, I'm pretty excited about what we're heading into. I like the team that we have, and it's developing. They all have their role in it. We all know what our role is, and as we go forward, we're going forward with discipline, and we're doing it together. We'll take your questions now. Okay. Who's deciding what question? Okay. Hi. Good afternoon, and thanks everyone for hosting this. Brandon Oglenski from Barclays. Tracy, I guess, you know, you guys are committing to what seems to be a pretty big step-up though in capital spending and investments on the network. You did just say, you know, you wanna have the capacity before you bring on the business, but what can you do if maybe you don't convert all those business wins, you're investing in the capacity? I guess, what's the fail-safe if it doesn't deliver maybe as you think? Part of the process will be is understanding what the opportunity is. You heard Kelly today talk, for example, about northern British Columbia. We're putting a little bit of money in that area this year. It's based on a really good understanding of what Kelly's doing in the market, and there's actually a few others working on it. What are the frac sand volumes, and when do we get a commitment on those? What are the forest products volumes that will move? What exactly does that volume look like? We haven't contracted it yet, but we will risk adjust that and put the capacity into the ground in a thoughtful paced period and stage-gate it. We will have multiple decisions along the way based on where we know that, you know, that volume growth is and the probability of it, materializing. Thank you. Chris Wetherbee from Citi. Maybe it'd be helpful if we could think about that volume growth and sort of how it comes onto the networks. You guys are pretty thoughtful about breaking it out in terms of carloads, so I'm guessing there is probably a cadence that you assume as you think about the next few years. So maybe you could help us a little bit with that, and I guess that would be the increment above what you think the economy can do. And then kinda going back to that CapEx question. When you think about the CAD 3.5-CAD 4, is that very much sort of set in stone, or do you have the ability to sort of gap down or above that if you need to based on that path of volume? Doug, why don't you start? I'll clean up. With respect to when do the volumes come on, it's all project dependent, right? Some of these things we know, like you could see the drone footage of the facility that we're building in Macaire today. That's coming on, right? Some of the others are, I'll say, more aspirational, like the customers have had serious discussions with them, but no contracts are signed. We don't have commitments against capital yet, any of that stuff. You know, I'll say overall, we're pretty confident with the pipeline that's there that we're gonna be able to hit the targets we're looking at. The range, this is why we range these things, right? The range is 10%-15%. You know, if it's a slower pace, some of it's dependent, as Doug says, on the projects and the timing. It's a collection of projects, so it could all move around. Your other question was around capital. The... You know, this is what we've put in the model based on the assumption of getting a certain amount of volume. That capital will only be activated as we go through the process, as we do the rigor around the high-quality revenue opportunities that Doug is bringing forward. If they don't make muster, then we won't be initialized in the capital. Thank you. Ravi Shanker from Morgan Stanley. Two quick ones. Doug, thank you for all the color on the end market commentary, there was not much discussion on nearshoring. How do you think about what that means for the CN network in terms of the puts and takes, maybe tailwinds in terms of incremental volumes, but also maybe headwinds for international intermodal volumes? Also, Tracy, for you, going after all that growth is you're gonna need more people. It's been a big kind of topic of discussion that this entire industry has struggled to attract people to come back to work for them. How do you make CN a great place to attract talent, especially diverse talent? Because I know ESG is important to you. Thank you. I'll take the nearshoring one. We've seen very little nearshoring to date, right? The biggest ones I'll say has been more the automotive industry, and a lot of that's probably from the Infrastructure Act in the U.S. How has it impacted the market? Not dramatically. A lot of parts still move within North America already. We haven't seen a lot of big change in flows or volumes because of it, so we're not really seeing anything dramatic change in our 3-year plan. Thanks for the question on people, because I think it's one of the most important things that, as you've heard today from a number of us that we spend our time thinking about. If you think about the management ranks, you know, what I wanna do is what we want in this company is people like us who wake up being excited around how you drive the economic growth of the North America and how you imagine the next level of supply chain and supply chain integration and what's possible with technology when you apply it to this industry. That's the story we wanna use. I talked a little bit this morning around we want this to be a culture where you can come and really make a difference. It's not command and control. It's not top-down. We're gonna do this a little bit differently because we're moving quickly, and you know and this next generation is different. I'm pretty excited about the prospects. I would say as we've gained some momentum, we're getting a lot of inbound phone calls on things like that, and that's always a sign to me when we're starting to do things right, and when our phone starts to ring. If you think about the workforce out on the front lines, you know, our crew base, our folks in engineering, our folks in mechanical, you know, this is a bigger challenge across the industry. This is work that we need to do with our union leadership and with our workforce to think about how we can structure our work and the changes we can make in order to make us more attractive. In the United States, we're already a scheduled operation. It makes us more attractive than the next guy because we have schedules for our crews where you're kind of five days on, two days off. We found that we're attractive as a place to work, even for existing employees in the railroad industry over the past couple of years. In Canada, we're not there yet. We're a mileage-based system from a locomotive engineer and conductor perspective. With the new legislation coming in on work rest rules, you know, we are at the table with our union leadership to talk about how we can structure their work that's gonna minimize the impact on them being away from home, and it's gonna make sure that we have the availability of the workforce to run our operation. Going forward, one of the limiters on our planned capacity may be people, right? It will treat it the same way as we would locomotive or track capacity. We'll only sell to the capacity that we have. I personally think it would be a shame if the growth of the economy slowed because none of us could get enough people. That's in the future where we need to really lean in to what technology can offer us on that front. I think there's gonna be lots to talk about on that in the future. Hi, Ariel Rosa with Credit Suisse. Everyone was excited about these partnerships that you've recently announced. I was wondering if, to what extent you see further opportunities to collaborate with some of your Class I peers. Last week, your main competitor on that U.S.-Canada-Mexico lane suggested that their time is actually faster in transit. I'm curious how you respond to that or if you see yourselves as having any disadvantage because of that need to interchange. Thanks. What do you think? Go for it, Doug. We did take a look at the transit time. They're up on a comparison model now. They're about the same. That's fine. You know, the only thing I'll say is the FXE UP service exists today. The CN service exists today. We'll see how all that works out. In the end, our goal is to take trucks off the road, right? Our competitor, if they do the same thing, there's lots of market share there for both of us. I want this to be a company that is to reduce overall emissions. You can reduce, Walter, as you said, emissions by 75% by moving from truck to rail. It's a systemic issue, a systemic advantage. It is, you know, we at CN, we're pretty hard at our fuel efficiency, and so we sit about 15% better fuel efficiency, fewer emissions, than the other Class Is. What we're finding, Doug sells that, but we're finding we're getting a lot of inbounds on that as well. Our customers want to be able to calculate their fuel emissions, and we've got a new version of our calculator up on our website. That's becoming something that the entire supply chain is focused on. What we're looking at is creating the capacity and the services that will provide the service level to take, you know, those volumes off truck. I'll let you, Doug, finish that one off. If you go back to my slide, I did on the interline relationships, there's a number up in the corner. Almost all that is truck conversion, right? That's the easy answer there. Secondly, I'm trying to remember. Oh, yeah. If the customers, it's getting much easier to have these conversations because a lot of them are starting to measure their Scope 3 emissions this year. They're coming to us and saying, "Help us measure." That's why we have the new, I'll say, carbon calculator that it's up on our website. It actually gives the customer all of their CO2 emissions for all of their business, not having to put them in one at a time. It's a great little tool for that. Now they're saying we gotta measure it by the end of the year, and next year we gotta start reducing. We need your help. We're in a pretty good position to start converting some of that over to rail. Okay. It's Konark Gupta from Scotiabank. Two questions, one for Tracy and one for Ghislain. Tracy, like I know you've been just in the seat for about 1 year now. You've done a pretty good job. I just wanna kinda really understand how do you approach, you know, the future of CN, the next leaders that come in, you know, during your time and after your time, how do they carry the legacy that you're building here in terms of, you know, focusing on schedule, rail loading and working in teams basically the way you're doing. For Ghislain, you know, 2.5 times leverage ratio, something it's kind of unheard of, CN years ago. You've been very conservative with the balance sheet historically. You know, how do you kind of see that in light of what you are doing, the kind of amount of risk that you think the balance sheet could be taking with that kind of leverage ratio target? Thanks. You want me to start or? Why don't you start? Obviously, as we've said before on the use of balance sheet, we like a strong balance sheet. I've always said to investors that why a strong balance sheet in case there's a recession or on very uncertain times economically, and I've lived when we were in 2009 on the recession, and we were very happy to have a strong balance sheet when the liquidity markets just froze. The other reason was in case there's a big strategic opportunity, we wanted to jump forward very quickly. We know loud and clear, we did that on our unsolicited offer for KCS. We used our balance sheet there. Everybody will know that the fact that, you know, will there be a big acquisition in the rail industry in the next couple of years? Probably not. Now you sit back and you say, well, how strong does it need to be? I think that at one point, I wanna make sure that people don't perceive that we may have a lazy balance sheet. That's why it's important to move it up. I think at 2.5 times, we're still gonna be one of the best balance sheet in the rails. And we'll see how we go. And we will be prudent. Like now we're calling for a recession or a mild recession, we're not changing our share buyback program that we have this year. We'll do this over time. As people have been long-term shareholders of CN, we are not knee-jerk type of people. We don't do knee-jerk type of reaction. We'll see how it goes, but I think that going to that level is the right level to go at this point. As we, I'll just answer your first question there. As we go forward, you know, it's kinda nice to be externalized as I came into the company because it was very clear with the benefit of looking at it from the outside what needed to be done on the operating model, as I said earlier, and on how we organize ourselves. We as railroads, we tend to organize ourselves functionally, but the work that we do runs across functions. We run one plan. It's the only plan we run. Everybody has a role in it. It's not just operations and commercial and finance. HR plays a role. You know, the legal and regulatory folks play a role. IT plays a role. Everybody runs the same plan. It's not, as I said, it's not a matter of just getting the right people who believe it or like to work this way. We are creating structures and kind of protocols and controls around how we do this. It is that and the way that we're bringing up this next generation of what works. What I want these guys to know is why this works. It's because we all have levers in our hand and just get the right setting of each of them that makes the whole thing work. It's about creating that, institutionalizing it with structure. Yeah. Thanks for the presentations and, you know, all the helpful backdrop on the specific things on volume growth. Doug, I wanted to see if you could outline for us what kinda high level what portion of that growth is single rail served and what portion is competitive one way or another with another railroad. Tracy, just your thoughts on competitive dynamic in Canada. I think, you know, there's a sense that there's growth in Canadian rail markets. Do you think both railroads in Canada can have strong growth stories, or do you think that there's, you know, kind of a one's gonna grow better than the other and, not both will necessarily prosper? Thank you. I'll start off, Tom. There's no fixed%. It's each project is dependent, right? You look at the one Buck talked about, fuels into Toronto. All the fuel facilities are open to interswitching at origin. Anyone could have built the Toronto fuel distribution center, but we partnered with someone to do it. Essentially that fuel facility in Toronto back yard is ours, so it's closed from that perspective, but it was an open market. Someone could have built it somewhere else on another railway. When you look at all of them, grain's a great example. We usually use the 90-90 rule. 90% of farmers are within 90 km of a competitive elevator. It all starts in a truck. A 100% of grain effectively is competitive. There's not really a good answer to what you're asking. You'd have to look at every project specifically. The Canadian economy. If I share the question. The Canadian economy needs both railroads operating really well. As I think about, you know, as we go forward. There's a lot that we can do to make each other better, right? I always have great respect for our competition. You never underestimate your competition. If you do that well, you're always raising your game. We need both of us. I think that my expectation is we'll both be disciplined enough, and we've demonstrated that we'll be disciplined enough, that on the things that we should be doing together, we will do together and well. On the areas where we should be competing, we'll do that. What we're gonna compete on is the quality of our service and the quality with the way that we work with our customers and continue to operate. Yeah, I think I don't worry about that at all. Thank you. Thanks. Hey, it's Ken Hoexter. Thank you for hosting the two days. Great information. Appreciate it. carloads have been down the last couple of years, right down 1%, 5.5%. You had an up 2% year, but flat this year. If, if I just look at that and yet think about Ed Harris's creation of the capacity and getting back to the schedule, but yet now I wanna come back to Brandon Oglenski's CapEx question, right? We're jumping up almost half a billion, $1 billion of CapEx. Just what are we thinking in terms of the creation of capacity? you know, are we thinking about it in the wrong way that you still need to go and add that much capacity? Maybe it's back-end loaded for all the opportunities rather than we're thinking more and evenly distributed. Maybe just walk us through, 'cause I think investors are really struggling with, you know, at least the text we're getting, right, in terms of the amount of CapEx increase versus what your growth- Our former CFO will take that question. The former CFO. I think the key, as I said, is in Western Canada, we need to continue to invest. We don't let the number drive the investment. We actually let, you know, capital efficiency drives the investment. We go to the operating team and the engineering team and say, "How much can you build to get 100% on the ground?" We do that year in, year out. Frankly, some of the capital investments that we need to make in Western Canada gets a little bit more pricier because we've been investing year in, year out, and some of it gets a little bit because it gets a little bit more complicated. There's a lot of lead time. before you actually go and build, you know, like a double track or a siding in Western Canada, you could have a lead time of 2-3 years. that's what we're think about in terms of Western Canada, is year in, year out, but 100% capital efficiency, 100% of that, you know, money in the ground. there's capital that we have for modernization. I was asked at the break whether we are in the market to get new locomotives. Ed will tell you we have 10 new locomotives coming on board. We don't like their reliability of these Tier 4s, but we are, you know, monetizing a bunch of locomotives to make sure that, again, we continue to rejuvenate our fleet. There's investments in IT, you know, and it's across the board. I wanna reassure everybody that we're not going to an investment level or a CapEx level relative to revenue that you've seen in 2018 and 2019. We're not going there. We are gonna inch up from last year. Last year was 16%, 17% or so. We are inching up. Like Tracy said, some of this will be dependent upon the opportunity that comes out of... This is not all set in stone. Depending on the opportunity and profitability and whether it materializes or not, then we'll decide what to do and what not to do. As you know, Ken, we've decided for the last two years or the last year and this year, we're not providing guidance on CapEx. I think it was prudent for us to give you a ballpark so that you can see with all these growth opportunities where we're going. Like I said, we're inching up, but we're far from going to what you've seen the numbers on a relative basis to revenue in terms of 2018 and 2019. This would indicate 19%. Is that kind of a good run rate in that ballpark? We're inching up. Got it. Yeah. Thank you for the presentation. This is Fadi Chamoun from BMO. Just along the same lines, does it matter which type of mix of business you're underwriting going into the next two, three years? I think, Doug, your line about half of the opportunity being intermodal, the other half being cargo business effectively in bulk. If the opportunity manifests itself more so in intermodal, how do you allocate that capacity to the mix of business that you have? Are you in a different between all these growth opportunities or your capital allocation is gonna be dependent on that as well? I am focused on whoever signs my contract says they're gonna guarantee the volume, so I get the commitment and the dollar return to invest, and that's what we do. Let me just come over top of that. We'd like, and you heard Doug talk about it today, we like a really diverse portfolio, and we wanna be part of driving the economic growth of the continent. It depends on where that's happening. Right now, bulk's moving and some of the, you know, the more consumer-centric stuff is a little bit softer. As we look at the opportunities, it's always gonna be, as Doug says, the quality of that opportunity. Quality means that we're gonna get a return on it. We're gonna be able to price it at a certain level. That's what it's gonna take to come onto this network. Hi, David Vernon with Bernstein. Thanks for entertaining us this week and taking our questions. Two questions for you on the pace of resource additions, maybe a little bit of overlap from what Ken was saying, just laying, and then a question for you, Ed. The CAD 3.5 billion-CAD 4 billion, are we gonna enter this 2024, 2025, 2026 period at the lower end of that range and grow with revenue to the higher end of the range? Or are we coming in- Yes. higher and lower? No. It's what we have modeled right now, and again, it'll depend on, and it's a ballpark measure, and it depends on the opportunity and the quality of it, but it would grow. It would grow from CAD 3.5 in 2024 to CAD 4 billion in 2026, if everything materializes. That's helpful. Thank you. Ed, I don't wanna leave you out of this conversation. He's not complaining. You're way over my head right now. If I could keep it very simple. Doug's got us, I get a carload growth CAGR of around 5%. From where you're gonna end this year to where you're gonna end 2026, if Doug's crystal ball is accurate, how many more heads are we gonna add? How should we think about the pace of labor addition in relation to the volume growth? Well, now you are getting over my head. That's a far-out project for us. You know, we're gonna add heads as we need to. We've got a good pipeline for our additional people. We've got a good mechanical pipeline, as Gis said, about our locomotive strategy. The modernization plan will protect us. I'm not concerned about 5% next year or 5% the following year. I think we can absorb that without any problem at all, without any issue. Gis, don't take any of my basic capital away from me. That's important. We have time for two more questions. That's mine. Okay. Thank you very much for the great discussion. Maybe, Benoit, you make this one in French. No, no. I just wanna be polite. You send it to Tracy. Yeah. No, it's okay. Now I really am gonna look for a job. Benoit Poirier from Desjardins. Great discussion about the capital deployment. If I look at Tracy's predecessor, he made some talk-in opportunities in the trucking industry. How should we be thinking going forward about whether you see some talk-in to provide some growth opportunities aside your core business? On the other side, do you see some opportunities to monetize some assets? This is my first question. Question number 2, we've been talking a lot about market share gain from the railroads over the trucks for a decade. For the railroad industry, what do we need to see in order to accelerate the market share gain from truck to railroad, Tracy? Thanks, Benoit. I'll try and then you guys can clean up for me. The market share piece, we'll start at the second. I would tell you that railroads, you find all of us the same. We're willing to invest capacity in high-quality ratable business. You know our emissions efficiency story. We're attractive from that perspective, and you should see us, and we're focused on it, picking up more and more of that truck conversion as we go forward. It's important that we have some visibility on its ratability and the quality of it. We will build for that kind of thing. We're not in the business of catching sporadic bursts. It's where, you know, it's not the kind of the way that we do business. Remind me the first one. It's on, probably TransX. Oh, yeah. You heard, I think it was Doug talk earlier today. Did you cover TransX? We took a good hard look at TransX. I like that business, I gotta tell you, and it's doing really well. I think it's doubled. We've doubled the profitability since we've acquired it in 2018. One of the reasons I like it is because when we think about our customers, and we should look at all of this through our customer's lens, of the service that it provides. It's got a great niche reefer business that gets us into a market that is service sensitive and that we can deliver to. As we looked over the last year at all of our growth opportunities, what we found was, we have enough core business. We're gonna keep TransX, at least for now. Well, we can always make a different decision later. Right now, our plan is to keep it, and we're gonna grow our core. In the future, if we have other opportunities that we think allows us to provide unique service offerings to our customers that have high value, you know, we're gonna look at them. Just to answer for you the conversion question. Consistency of regulation will be the biggest thing, right? If regulations are consistent, you're gonna see more and more customers reduce their Scope 3 emissions and keep converting. That's what we're aiming for, and that's why we think it'll come off the road. Final question. Thanks. It's Scott Group from Wolfe Research. Just a couple of follow-ups for you, Ghislain. In this environment of flattish fuel FX, as you laid out, how should we think about incremental margin? How quickly do you wanna get to that 2.5 times leverage? When I look at the return on capital guidance, it's basically flat from where it is ended last year. What are the opportunities to drive returns higher? I think, as I said, I think we don't have a number on margins or a number on OR, but we're committing to improve our margins on a year-over-year basis. That's for sure. On going to 2.5 times, I think, as I said, we'll do this over time. We'll see how the economy will develop. We'll see how uncertain it becomes or how certain it becomes. Will we be prudent? Investors will see you will not see this jacked up in a one-shot 2.5. You'll see this, you know, as economic times are more favorable and this and that and the other, and we get comfortable with it. As you know, at CN we've been a little bit prudent, and we will continue to be a little bit prudent. I think eventually with good economic conditions, I think going up at that level makes a lot of sense. What was the- Can you back up? The return on invested capital, I think, as you know, like, the return doesn't move a whole lot on a year-over-year basis because, again, you have such a big investment base on which you get the return on. We are at, you know, we were at 15.9. We think we're gonna get to 17. Will we be able to do a little bit better than that? Hopefully, maybe. I don't know. I think right now at this point, from our lens and what we see, I think in the 15-17 range is a good range. To your point, because remember, last year we had 25% EPS growth. That drove ROIC, like, jacked up quite a bit. In that plan now, we're back to a more reasonable 10%-15%, so ROIC won't move as much as it did between 2021 and 2022. Okay, thank you. We've got one more thing for you today. It'll take just a few minutes but let me just tell you a short story first. As I came into the company, one of the things I wanted to do was get us all working more together. You know, there's some things that you can do to go that head-on, and there's some things that you gotta do that, you know, that are a little bit more organic. I'm a believer in the power of music and how it can make you feel and how it can do these types of things. As I was getting to know various people around the organization, I came across one of our IT leaders. Name is Mark. I discovered this guy's a musician, right? He's got a studio in his home. He writes music. He plays music. We got thinking together around what some of the possibilities were. We had a town hall last fall, and it was elected with virtual town hall, and we take questions by Slido. The last question that came in was, if you had one word to describe kind of the future, what you're thinking, what would that one word be? We went around the table. When it got to me, my word was together. When that afternoon, Mark walked into my office, and he put down on my table a song that he had started to write about us, and it was entitled Together. That's launched kind of a little quiet project that we have that we're just gonna show you here as we as we leave today. S-3, Homewood, over. Permission to go through the limits. CM 934, permission to go through the limits. Railroads are as important today as they were when the coasts were connected and commerce could move beyond the bounds of our great rivers. The railroads then published schedules leading the country to be organized into time zones. It is a railroad that served as a symbol of the 19th-century revolution in technology. 100 years later, they literally enable our everyday lives and support our collective prosperity. At our railroad, we do it together at home, in our communities, and every day with our team, together. Togetherness, the drum, the heartbeat, right? We use that by drumming, by singing, to help others in whatever way they need, right? It's the whole purpose of drumming and singing is the purpose of healing. It's a symbol of life, but it also it's working by trying to bring everybody together to work together. That's the only way we got to keep going, right? There's no stopping once we do that. We just gotta keep doing it. Thank you. Thank you for joining us today. Have a safe trip home. Thanks so much.