All right. Good morning once again. My name is Scott McDonald. I'm the Senior Vice President of Operations here at Canadian Pacific. Welcome to our Annual General Meeting and thank you very much for joining us.
Safety is core to everything we do here at CP. So if I just have your patients here for a few minutes as we run through the safety procedures here for our Royal Canadian Pacific Pavilion. First off, the building has a single stage fire alarm. If the alarm does go off, we will exit through the south entrance doors, which are right behind you. Our muster point will be in the west parking lot, which is between this building and our main headquarters.
As you go out the doors, you would turn to your right. If we have a medical emergency, all of the RCP staff in the building here are first aid qualified. There is a AED kit and a first aid kit just on the table behind the Mount Stephen car on your right hand side. As you entered the building, there are 2 washrooms in the foyer as you came in. If there are additional washrooms required, they are down the hallway on your right hand side.
You just have follow the signs. Last two points, there is no smoking anywhere in the building. And lastly, if I could ask everyone to please put your cell phones on mute for the rest of the AGM. Thank you very much for your attention. Okay.
Please note that the remarks that follow may contain a number of forward looking statements, which reflect current expectations of Canadian Pacific's management and are subject to a number of risks. We also refer to certain non GAAP measures. More information about non GAAP measures and forward looking statements, including associated assumptions and risks, can be found in our 2019 management proxy circular at Pages 988, as well as in our current Form 10 ks and Form 10 Q, all of which are publicly available, including on our website at investors. Cpr. Ca.
Now my pleasure to bring to the stage our Chairman of the Board, Mr. Andrew Reardon.
Thank you, Scott. Thank you, Scott, and good morning, ladies and gentlemen. My name is Andrew Reardon. I am Chairman of the Board of Canadian Pacific, the Board of Directors. It is indeed my pleasure to welcome you here today to the annual meeting of the Canadian Pacific Railway Limited here in Calgary.
This is now Canadian Pacific's 137th Annual General Meeting. I also want to welcome those who are listening to the meeting over our website over the web today. I would also like to take this opportunity to acknowledge the traditional territories of the people of the Treaty 7 region of Southern Alberta. With me on the platform today are Keith Creel, our President and Chief Executive Officer and Jeff Ellis, our Chief Legal Officer and also our Corporate Secretary. I now call the meeting to order.
I will act as Chair of the meeting and Jeff Ellis will act as Secretary of the meeting. I hereby appoint Mark Thompson and Elisa Rojo from Computershare Investors to act as scrutineers for today's meeting. The Secretary has deposited with me a statutory declaration establishing the sending of notice of the time and place of this meeting to each shareholder entitled to vote, each Director and to the auditors of Canadian Pacific, all as required by law. The scrutineers have confirmed with me that a quorum is present. The scrutineers' final report will be kept with the records of this meeting.
I declare that the meeting has been regularly called and properly constituted for the transaction of business. However, before we commence the formal business of the meeting, I would like to share with you a few thoughts, both with regard to the past year of 2018 and with respect to the future. As you know, after 42 years in the railroad industry, this AGM is my final one as Chair of the Canadian Pacific Board, a position for which it has been a real honor for me to serve. More importantly, it's my privilege to leave at this particular time after another milestone year of 2018. It was a record breaking year by all meaningful financial performance measures, 12% increase in revenue, volume growth of 8% and an operating ratio of 61.3%.
It was a year in which CP once again demonstrated why it is an industry leader. We entered 2018 with justified optimism and with Keith Creel at the helm in executing management strategy to win new business thus gaining the approval, but moreover the enthusiasm of both our customers and our shareholders. In the ever important area of safety, 2018 marked the 13th year in a row in which CP achieved the lowest level of Federal Administration, Railroad Administration, Recordable Train Accidents and moreover for the this particular year, we had a reduction of our injury rate by 11% to an all time CP low. Nevertheless, we lost members of the CP family, and almost incomprehensible loss, which Keith Creel will discuss in a few moments. Precision Schedule Railroad.
It's safe to say that PSR was perfected here at CP and continues to be perfected at CP. It has now become an operating model for the industry. Why? Because it works. However, what differentiates PSR at Canadian Pacific are the people we have selected and indeed we have selected a very elite group of senior management in this company to execute on PSR and to sustain that execution.
Further, the improved relationships with labor have created a foundation for even greater sustainable yields from PSR going forward. Diversity, it's a core value at Canadian Pacific and most importantly CP leads by example. CP continues to recruit and retain in all roles, people of indigenous heritage and conducts training for all employees to gain a greater understanding of the indigenous culture. CEP sits on the Canadian Board of Diversity Council. Our Board is a member of the 30% club, which is a bit ironic because we already have 40% of our Board comprised of women.
But today, we welcome Isabel Corbell as our new Board Chair. Highly capable and experienced, she will assume this position seamlessly with her characteristic poise and energy. Notably, she will also be breaking new ground as Canadian Pacific's 1st female Chair of the Board and also importantly, the continent's first female chair of a Class 1 railroad. Isabel, please stand. A stalwart.
Please note that after the formal business of today's meeting is terminated, I would like to share with you a few brief reflections on my role as Chair. Following that, Keith Creel will present his formal address to the shareholders, after which he will take questions regarding CP's operation. To expedite matters, a number of shareholders and proxy holders have agreed to propose and second motions with respect to the business of this meeting. So that will help speed the handling of the formal matters. However, we do not want that to discourage any shareholder or proxy holder from speaking to any motion after it has been proposed and seconded.
We ask only that you keep your comments brief and properly within the scope of the meeting. Further, if you do have any questions or comments at the proper time, please proceed to the microphones in the aisles and advise whether you are a shareholder or a proxy holder. Kindly keep your comments brief and ask only one question at a time. Shareholders who do not wish to address the meeting today, but would like to submit a question or a comment in writing may do so using the ballot. You can use the bottom of the ballot, a copy of which has been placed on all the chairs and then submit that to the scrutineers, raise your hand and they will come by and pick up your ballot with your comments and those comments will be responded to by management following the meeting.
There are 3 matters set out in the notice of today's meeting to the shareholders. We will conduct all the substantive business by way of a single ballot. If you are a registered shareholder or a proxy holder and you have advised that you wish to vote in person at this meeting, you should have received your ballot when you registered for the meeting. If you completed and returned your form of proxy or voting instruction, it is not necessary that you vote again at this particular meeting. However, if you wish to change your vote, you may do so by submitting a ballot.
Again, raise your hand and submit it to the scrutineers
in the
aisles following your completion of the form. Anyone wishing to vote at this meeting who does not have a ballot, please raise your hand and a ballot will be provided to you. I request now that the secretary provide the instructions in respect of completing the ballot. Mr. Secretary?
Each shareholder or proxy holder may use the ballot provided to vote on all matters at this meeting. In particular, 1, the appointment of an auditor by placing a mark beside either for or withhold 2, CP's approach to executive compensation, commonly known as say on pay, by placing a mark beside either for or against and 3, the election of directors by placing a mark opposite the names of the nominees for whom they wish to vote. The ballot should be clearly signed. If you are a shareholder or proxy holder and the space for your name has not been pre completed, please print your name. Ballots will be collected later in the meeting.
The first step in today's meeting is the receipt of the consolidated financial statements included in the 2018 annual report. A copy of the annual report has been made available to all shareholders either in hard copy or electronically. I now place before the meeting the consolidated financial statements and report of the auditor thereon for the year ended December 31, 2018. The first item of business is the appointment of an auditor. Max Dugay, may I have a motion?
I move that Deloitte LLP be appointed auditor of Canadian Pacific to hold office until the next annual meeting of shareholders.
Mr. Chairman, my name is Wen Yihui and I'll second the motion.
Is there any discussion on the motion? Hearing none, I declare the polls open for the vote on the appointment of an auditor. The next item of business is a non binding advisory vote to approve compensation of the corporation's named executive officers commonly known as say on pay. Jennifer Fox, may I have a motion?
I move that on an advisory basis and not to diminish the role and responsibilities of the Board of Directors that the shareholders accept the company's approach to compensation of the named executives of Canadian Pacific as disclosed in the company's proxy circular delivered prior to this 2019 Annual Meeting of Shareholders. Mr. Chairman, my name is Catherine Peixot and I second the motion.
Thank you. Is there any discussion on the motion? Hearing none, I declare the polls open for the vote on the advisory vote to approve compensation for the corporation's named executive officers. The next item of business is the election of directors in accordance with the articles and bylaws of Canadian Pacific. The Board of Directors has determined that 9 directors are to be elected at this meeting.
I now declare the meeting open for the nominations.
Mr. Chairman, my name is Chris De Bruin and I nominate the following 9 Canadian Pacific Director nominees. The Honourable John Baird, Isabel Corville, Heath Creel, Jillian Denham, Rebecca McDonald, Edward Monser, Matthew Paul, Jane Peverett and Gordon Trafton.
I advise that no further nominees have been nominated pursuant to the provisions of CP's bylaws. Therefore, I now declare nominations closed. Maria Bartovich, may I have a motion?
I move that the persons nominated be elected as Directors of Canadian Pacific, each to hold office until the close of the next Annual Meeting of Shareholders or until such person's successor is elected or appointed.
Mr. Chairman, my name is David Sheridan and I second the motion.
Is there any discussion on the motion? Hearing none, I declare the polls open for the vote on the election of directors. We will now pause so that the scrutineers can collect any ballots. If you have a ballot, kindly raise it so the scrutineers can recognize you and collect your ballot. We will pause for a moment or 2 while the scrutineers collect those ballots.
When you're under the spotlight, it's difficult to see scrutineers in the back of the room. I hereby declare that the polls have now closed with respect to all items of business. The scrutineers have provided a preliminary report based on proxies received prior to the meeting. I call on the secretary to report preliminary results of the votes. I note that the company will report the detailed final voting results, including those votes, any ballots submitted here at this meeting, once the tabulation is complete.
Mr. Secretary? I adopt the preliminary report of the scrutineers and declare the 9 director nominees duly elected directors of Canadian Pacific and each of the other matters passed. I directed the scrutineers report via next to the minutes of this meeting. Ladies and gentlemen, your duly elected directors of Canadian Pacific Railway are the following and I ask them to stand each one as their name is called.
The Honorable John Baird, Isabelle Carville, Keith Creel, Joe Dunham, Rebecca McDonald, Ed Monser, Matthew Paul, Jane Peverett and Gordon Trafton. Ladies and gentlemen, your Board of Directors. Now that we've completed the formal business of the meeting, I wish to offer a few final and brief thoughts. In particular, they pertain in a small way to the past, but also to the present challenges to capitalism, but most importantly, to the future of Canadian Pacific within our capitalistic society. Regarding the past, I have to tell you there is almost a primal urge at moments such as these to revisit the past mosaic of lives lived, historic achievements, various characters and indeed a glorious past.
Nevertheless, I submit that those parts of the Mosaic, while valuable and impactful indeed to this company, they pale by comparison to the future of this enterprise, which brings us to the present. On our North American continent, there is a growing discourse, challenging capitalism while proffering socialism and other extreme economic systems, which failed in the past and are failing rather dramatically at the present moment. Yet increasingly, particularly in the political theater in this discourse, emotion often displaces genuine informed debate and reasons economics. Peeping into this charged atmosphere frequently is the notion that the profit is somehow repugnant and society for the good of all would be better served where business to be controlled or in some cases owned by the government. Yet amid these proliferating challenges, as we know from the history of almost anything, there lies the opportunity to bring out the best that we have in the present structure.
Private enterprise remains the proven engine of social and economic growth in our world, driven by sound leadership in responsible capitalism. For it is responsible capitalism that effectively addresses the needs of our world, social or economic, by striking a fundamental balance between the legitimate interest of the risk taking investors, customers, employees, together with the concerns of other requisite stakeholders, environmental, social and the concerns of governance. Effective leadership in managing this fundamental balance ultimately ensures that the enterprise does the right thing in effecting its purpose. It is and shall remain the purpose of Canadian Pacific to serve its customers and to do so by doing what we say we're going to do. Thus mutually serving both of our customers and our shareholders.
As the Chairman and CEO of 1 of our largest investment companies recently related to me and I would like to quote him. Profits are in no way inconsistent with purpose. In fact, profits and purpose are inextricably linked. Profits are essential if a company is to effectively serve all of its stakeholders. This is precisely where Canadian Pacific stands today.
How so? As we all know, life ultimately is about relationships and the choices made amongst those relationships as governed by values. Business is no different. This management team led by Keith Creel operates upon a foundation of values, accountability, diversity and measured pride in the CP family. These values have become the grounding for the principles of safety, service, optimization of assets, cost containment and developing people.
But transcending these values is the principle of consequence leadership. At all times, the action or failure to act, where action would be appropriate by any member of the enterprise ultimately has consequences upon the CP family. I hasten to add that this notion of the CP family is not a trite nor a quaint slogan, but rather as initiated and perpetuated by Keith Creel. It is in essence a social compact in our shared prosperity manifesting a genuine concern for the CP family and each member in that CP family. In the calculus of capital allocation at Canadian Pacific human capital is critical and it is becoming the adhesive of this organization.
None of this is
intended to imply perfection. It's culture building, which calls for the contribution of each member of the organization and like perfection itself is a never ending albeit fluid journey to meet the needs of CP's investors and other stakeholders. But on this journey, CP can rightfully claim its character as a paragon of responsible capitalism. It follows then that the future of Canadian Pacific is extraordinarily bright. Before yielding the podium for the final time, I must express my profound respect for this management team, a proud community of railroaders who under the infectious leadership of Keith Creel have persevered and succeeded in the face of daunting frequently daunting circumstances.
I, together with this board, are grateful to you. Thank you. Keith Creel, I've been in this great industry for over 4 decades now, but serving you has been one of the richest rewards of my career. Early in our relationship, you proved your passionate leadership, the depth and incredible energy, honesty that is rigorous and frankly unyielding values at all
times. As others
have observed long before meeting, an individual oftentimes becomes a bit of a composite of their experience. And if that is so, and I believe that it is, then serving with you for me has been at once an education and a blessing. It's also been my special honor to serve with each member of this board. Each of you is remarkably talented and very importantly, you're always dedicated at all times to Canadian Pacific. I treasure our relationships and our success.
In the future as in the past, I know that this Board will sustain, but moreover, increase the confidence of our investors. And finally to our investors, I must convey my deep appreciation to you for the privilege of serving you. I have enjoyed personally engaging with so many of you over these recent past few years. But most of all, as your steward, most of all, I am grateful for your trust. Thank you.
At this point, I would love to ask my successor, Isabel Corvo to come to the stage. Isabel.
So I know you stay there. These words are for you. It's your day. So Andy, you're about to conclude a 40 something year carrier in the railroad industry. That's quite an achievement.
So your leadership on the board was tremendous. We follow your lead. We passed through some weather, but with your help, we landed safely. So I was privileged over the last few years to travel with you to meet with our shareholders. They were quite impressed by your commitment to CP as I was.
So truly, on behalf of the Board, thank you.
Thank you.
I put these here just in case I needed them and I believe I do. Hopefully with my age, I get a bit more wisdom. Welcome. Good morning fellow shareholders, fellow railroaders. It's my honor once again to welcome you, I can't see you, welcome you to our beautiful headquarter campus once again here in 2019.
A year ago we sit here in the same building talking about the opportunities which I'll have an opportunity to touch on not knowing yet what we'd be able to achieve and having strong conviction we would be able to do it. But before I get into that, there's a statement here locomotives don't drive our business, people do. Thought it's important to start by adding emphasis. We're a railroad obviously, you need a locomotive. I'm not going to suggest that we don't, but it's truly not the difference maker for a company.
The railroad with the greatest locomotives is not necessarily the greatest railroad. The true ingredient that's enabled everything I'm going to speak to today and everything that enables the future and the success of this company going forward is having the people. That's the true horsepower that makes what we do happen day in and day out. And I can tell you now, I'm honored to serve and to work with what I know to be the best railroad team in this industry. They're unparalleled.
And our success is at the same time, there's not any one individual that does this. It's not me, it's not Nadeem. It's not the Chairman. It's us collectively. It's the Board of Directors.
It's the shareholders. It's the customers. It's each one of us collectively playing our part. We individually play our part, we collectively produce a result that serves the interest of our shareholders, our customers and our CP family. That's what our mandate is.
And as your CEO, I'm honored to be able to lead that and to serve that vision in this company. But my first order of business, I think it's only appropriate. Andy, I want to thank you for your gracious comments. I know they're heartfelt. I know that you're a man of character.
I want to thank you for your incredible dedication to this company and for your contributions. It's I can say this, I'll share this with you and we discussed this a bit last night. In our path in life, I'm sure each of you would agree Andy's point, we are the summation of the experiences and the people that we interact with. And I would suggest that we all have people that have influenced us. But I would also suggest that in our walk of life, you're placed in a path and I believe with a purpose, but our Heavenly Father to meet certain people in your life that have a profound, not just an influence, but a profound influence on the person, the human being that you become, the professional that you become.
So my life has started with my wife. 27 years ago, God knew I needed a strong, very capable, Christ filled lady to shape me, to lead me, to help me become the person that I am. And she's been in the cab with me, the locomotive cab for the last 27 years. So I thank you for that and I thank you for enduring this railroad way of life because it is a challenge. And you sacrifice day in and day out.
It's a family. You don't do it unless you love it and you only love truly and sacrifice for your family and that's what this certainly is. And then of course, Hunter. We lost Hunter a little over a year ago. We all know, don't need to say his last name, he's iconic in this industry.
If you've met him, you'll never forget him. If you knew him, you'll always love him. Maybe if you didn't know him, maybe you'll never understand him. But rest assured, I had the benefit of working with Hunter for almost 25 years. So certainly, he had an influence on the railroad leader, the railroad professional that I became.
And then there's a few select others that in that sphere and the year end my sphere. You've had an impact on me as a consummate professional. I've never met anyone in my railroad career in multiple boardrooms, dealing with multiple customers, dealing with the multiple business leaders that has an ability to disarm a situation and then as a statesman lead a discussion without animosity focused on the facts without a motion to come to the best decision possible for whatever the situation is. It's not an art, it's a blessing and you've blessed us with that stewardship during your time both as a fellow board member and certainly as well as a Chairman. So for that, I thank you, Andy.
Thank you so much. And then as we go forward, I can tell you this, there's going to be no goodbyes, Andy. I said this last night, I don't do goodbyes. You certainly will remain part of our CP family for life. Once a member, you're always going to be a member.
Your legacy, the contributions, they will not be forgotten. Your footprints are in the sand, your footprints are in this ballast for generations and generations and generations to come. Thank you. Thank you. And to your point, going forward now, we're honored to welcome another excellent talented Board colleague and leader and our new Board Chair, Isabel Corvell.
So congratulations, Isabel. We look forward to your strong leadership talents and I'm certain as a shareholder and I can assure to my fellow shareholders that Isabelle will continue to serve our company and our shareholders well. So congratulations Isabelle. And finally, I want to thank each of you as a shareholder for entrusting me with your support. It continues to be monitored to serve and lead this company over the last 2 years day to day with the greatest team of railroaders that this industry knows.
And that means those that are in this room, that means the other 12,992 that may not be with us today that are out affecting the business for our customers. Okay. Let's look forward and let's start to talk about a historic year. Bittersweet, when I think about it right now, I think about family. Andy mentioned this in his remarks and it's not a distinction that I take lightly.
These are jobs that sacrifice, they're jobs of commitment. Rest assured, the men and women of this company are some of the hardest working talented railroaders I've ever had the honor to work with in 27 years in this industry. But to stand here today and to say the tenacity shown by the CP family during the 1st few months of this year 2019 has inspired me as simply a gross understatement. People, perhaps more so than any time in my career and our family's career, have had an extremely challenging and a daunting start to this year. Tragically, on February 4, Andy touched on this.
Not very far from here in Calgary, a derailment near Field B. C. Resulted in a heartbreaking loss of 3 of our fellow railroad members. The impact and the sorrow of losing these 3 employees in this tragedy will not be forgotten within our CP family. Our thoughts, our prayers, our deepest sympathies are with the families, the friends and the colleagues of CP Railroaders, Dylan Paradis, Daniel Waldenberger Balmer and Andrew Dockrell.
In 2018, unfortunately as well we lost TPU Rail Roaders Tony Nynashev, Daniel Johnson and Robert Henley. Our thoughts as well, our prayers go out to their loved ones, friends and colleagues. Words simply don't do justice and can't express the sorrow that I personally feel and that I know that our CP family feels for the loss of these professional railroaders. In memory of these 6 men, I'm going to ask each of you to join me for a moment of silence. Thank you.
So I think about 2018 and the many things that I can share and the things that in some senses we could say we could celebrate, but it's hard for me to use that word, thinking about and reflecting on the loss of those employees. But at the same time, I'd be remiss not to be proud of what our CP family has accomplished for our customers, for each other, for our shareholders in 2018. It was a breakthrough year recording record results in many areas. Getting to where we are today meant we had to rebuild this engine. We transformed our operations, we've right sized our assets, we made strategic investments, continue to make strategic investments to improve our service.
We've entered new markets, we've repatriating market share, much to chagrin to many of our competitors. We're winning new business. Our record operating metrics this past year and consistent safety performance demonstrates what our 13,000 strong family of CP Rail Roaders are capable of doing as we execute an industry leading operating model for our customers, for our shareholders, for the economy. It has enabled this company to truly transform. But a transformation truly never ends.
It's all about evolving and a continued evolution. Now let's pause for a brief moment. Let's enjoy a brief video that sort of documents at a high level to illustrate some of our transformation starting right here at our Calgary headquarters campus.
At Canadian Pacific, everyone is a railroader, which is why in 2012, at Canadian Pacific, everyone is orders in Calgary, Alberta, from leased office space in a downtown high rise to company owned land at our Ogden Yard in the city suburbs. For over a century, Ogden Yard has been one of the workhorses in CP's network of facilities. Building and repairing CP locomotives and railcars was the order of business for decades. What is now CP's headquarters building was once an old railcar shop.
It makes great business sense. The functional warehouse that probably had a lot of things that we didn't need, we're able to rationalize the space to convert an unused asset and make it what will become part of the fiber of this company for
the next 150 years. Moving nearly 1500 employees to Ogden Yard meant regrading the land, pouring concrete for parking lots and roads, and transforming old buildings into usable office space to prepare for the new occupants. During this construction, the company also embarked upon tremendous operational changes to earn back customer and shareholder
The first 4 or 5 years were really tough sledding hard work to restore the financial strength of the company. Now we're focused on growth. So as we grow forward, as we invest back into the business so that we can grow the business, we've got a bright future ahead for us.
The transformation of CP's Ogden Yard into our new head office campus is symbolic of the company's incredible turnaround. Using land and buildings already owned by CP, the yard is now a multipurpose facility humming with activity. An automotive compound, an area for lumber transloading, along with CP's track evaluation and maintenance groups occupy space. Train engineers and conductors receive train handling and rules instruction at the training center, including using our state of the art on campus locomotive simulator. Simulation meets reality on the training center's outdoor training tracks where every railroader can learn new techniques or simply sharpen their current skills.
CP Police Service headquarters is next door to the Royal Canadian Pacific and our new corporate rest house. And CP's heritage cars can be seen alongside today's modern equipment, marrying the company's historic roots with our confident future.
We've got a talented family of railroaders that we're rebuilding bridges, we're reconnecting day in and day out, we're getting closer to customers, we're getting closer to our CP family internally as we grow forward. So these are exciting times in Canadian Pacific. And this facility itself is just symbolic of some of that excitement and what we all stand to be proud for.
CP has a lot of road ahead, a lot of room to grow. We have high expectations for what is still to come and eager to put in the work to get there. Without a doubt, we are a different railroad. Today, we're the progressive, highly efficient, driven railroad that's delivering for our customers. We are a family of passionate and hardworking railroaders, and together, we are building a bright, exciting
future.
So I'm sure you can understand the pride that runs through our veins here at CP when you watch that. We're not only excited about where we're headed, where we came from, the potential that lies in front of us for long term value creation is immense. Journey to get here today hasn't been easy, but we're convicted to keep leading forward. Rest assured, this company will not become complacent. As a family of railroaders doing more, doing better, always innovating, it's built in our DNA.
It's the way we're wired. I remain humbled and honored to lead and serve our company in 2019 and I'm extremely excited about the opportunities on the horizon. But before I speak to those, let's talk about a bit of 2018 success. So as I said, there are several milestones to highlight that were made possible by our exceptional team of railroaders over the past year. A year ago, we said here in 2018, we're in the midst of a pretty challenging time in our labor negotiations with our running trades employees as well as our signal employees on the Canadian side of the property.
I'm proud to say that we're now in a period of labor stability across our entire network. With long term labor agreement secured on both sides of the border, we built trust and a solid foundation for our growth, which our customers depend upon. Our 2018 results in this space are proved positive that we are collectively working together toward those common goals. Our next major labor contract fortunately in Canada doesn't come due until 2021, which gives us as a team a significant amount of time to continue focusing on investing and deepening relationships with our employees, with our customers and even more so throughout the entire company and the communities we operate in and through. Sustainable profitable growth, that's a word I want you to remember.
I say it all the time. It's in my mantra every time we have a meeting. I don't often think there's probably a meeting we don't have that that's not said. It's what we're seized with and focused on at CP. It's a key ingredient to our success.
The operating model that we operate day in and day out has been and it continues to be fundamental to that success. We're going to remain steadfast in our commitment to the foundations of precision scheduled railroading, which are providing service above all else, controlling cost, optimizing assets, operating safely is the starting point in developing our people who make all of that possible. The full year results we proved produced prove the formula works. I going to highlight a couple of those. In 2018, we generated record revenues.
We busted through a $7,000,000,000 revenue mark that's never been busted through Canadian Pacific. Thank you. Which was a ceiling that was best about 12% performance versus the previous year. On the operating ratio side, the adjusting op ratio was 61.3, again, the lowest yearly adjusted operating ratio in this company's 138 year history. Combined, the performance in 2018 resulted in a 14% increase in adjusted operating income, deleting earnings per share of $13.61 and adjusted diluted earnings per share of $14.51 an astounding 27% increase.
2018 was the best ever year as well at CP for personal injuries as well as the 13th consecutive year CP has reported the lowest train accident frequency ratio in the Class 1 industry. Now let's speak to growth. A record performance in 2018 was not limited to operations. We said 2 years ago, we had fixed the engine and we were on a mandate for growth. That was the challenge the sales and marketing team were given the mandate they were given in partnership with the operations team the balance of the teams within this company.
Our sales and marketing team went to work. They're winning the right business with the right customers. That's key for profitable sustainable growth. It takes discipline, but the formula also is critically important, but it's simple. We grow with the customers who value what we do.
They value our service offering and want to build success together over the long term. It has to work for us and work for the customer for it to be a partnership that sticks, that creates long term value for both partners in the relationship, a win win situation. In 2018, we identified the right opportunities to take full advantage of the strengths. We sweated our assets and we leveraged the strengths of this franchise. We continue to grow it at a low incremental cost.
We gave our customers access to our network that has capacity that's fluid, which is a very especially in 2018 and even now a very unique asset, especially in the Canadian property to have a completely fluid, reliable network provider. The shortest routes to the key markets built long term value for CP and our customers in their markets. Last year, we actually saw revenue growth across every business line, not 1 or 2 or 3 every business line in this company. In bulk, we delivered record volumes of Western Canadian grain and grain products to Vancouver this past November. October was the company's best month in our history for shipping grain and grain products to all destinations up until recently April.
Fresh off the presses, our investment in our new 8,500 foot high efficiency product grain train will enable us to move more grain and maintain a leadership position in this space as we grow forward. In close collaboration with K Plus S Potash Canada and Canpotex, we also moved record volumes of potash. And currently on the intermodal side, our revenues increased 13% last year. We grew with our existing customers, which are critically important to us and we won our new business with shippers like Ocean Network Express. In fact, 2018 overall was a record year also for our domestic intermodal franchise.
We're confident in this space that will continue to grow when and if the opportunities make sense for our network. On the automotive side, again revenue was up an impressive 11% in spite of a weaker demand environment overall for the automotive industry in North America. And even with these headwinds, we were poised and continued to succeed. In merchandise, our growth in forest products leveraged the strength of our Vancouver, Toronto and Montreal transload capabilities. And even in if you exclude crude shipments, our energy, chemicals and plastics portfolio generated double digit growth, largely the result of our marketing team, very talented focused team led by Coby Bullard selling our service and adding incremental volume.
So then I'll just talk
about 2019. The impressive results we produced in 2018 were that in and of itself pretty impressive, but not limited to 2018. We carried that momentum that we created into this year. Already this year in 2019, we've renewed contracts with some of our largest customers and we're developing new relationships to deliver sustainable profitable growth. On the bulk side, record 1st quarter revenue for Canadian grain, 1st quarter record for Canadian coal and potash volumes were up 4% versus last year.
And as I said a moment ago, April was an all time record month for Canadian grain and grain products. It was our 2nd best ever month on the entire network from a gross ton mile standpoint. In our history, while the merchandise space had mixed results in the Q1, the Energy, Chemicals and Plastics portfolio saw revenue growth of 18%, Forest Products up 7% this past quarter as we continue to drive and improve asset utilization, driving center beams and boxcars to meet our customers' demand. And again, automotive revenues. We continue to succeed in the space, up 3% in the quarter, largely driven by a customer that we've won on this journey over the last few years transforming this company named Globus as we completed the start up of our Wolverton auto compound in January.
Very exciting as we grow forward in Vancouver, we challenged the team last year to create a new automotive compound, which is unique to the industry, unique in the space and in a very quick time span in a matter of months. We've designed, we planned, we approved, we sold to an anchor customer and in the last 3 months we've built and actually finished ahead of budget and ahead of time and opened up our facility in Vancouver within our yard facility with an anchor tenant in Ford Motor Company. This facility in and of itself has the capacity to accommodate 168,000 bins annually. Rest assured, it's going to be a meaningful driver for our profitable growth as we sustain our success in the automotive space for years to come. And then finally on the Intermodal side, overall revenues so far year to date are up 2%.
In domestic, the operating team specifically in spite of those challenges that I talked about with this extreme first quarter weather, they onboarded Dollarama, which is a large domestic intermodal customer here in Canada, Q1 and as a result, we hit a record in March for both revenues and volumes in the domestic space. And on the international side, we continue to see steady growth with RPMs up 7%. So overall, at a very high level, the highlights of our continued strength in this franchise, working with our customers, parking with our customers as we continue to grow, which will continue to drive strong value for our shareholders as well as our customers and for our CP family. Now let's talk about sustainability. As I said a minute ago, people drive our business, which means not only do we have to invest in the physical plan and our capacity, we have to invest in the true capacity, the horsepower of the people that work in this company.
You can implement precision scheduled railroading in any railroad. In fact, it's become, I'd say, the color of the day in this industry. Many railroads and I encourage them are implementing or have in the process of implementing precision scheduled railroading. And I applaud their success and I hope that they continue to succeed. But at the same time having done this for a few years and having worked in this environment and led this kind of transformational change, if you don't have the right people that can execute, You're not truly going to succeed in a precision scheduled railroading environment.
Individually, as I said, we play a role, but it's our collective efforts that drive the success. To sustain our talent, we've introduced to help us on this journey innovative coaching programs to continue to grow and develop our people to build the leaders of tomorrow. The programs teach our people the impact of their actions, the consequences on our business and those around them. Every behavior has a consequence, be it positive or negative and obviously we want it to be a positive one. By consistently reinforcing the positive behaviors, we began to see more of the behaviors that we actually desire and less of those that we do not.
In a strategic effort to grow our future leadership team, we've also implemented a strategic program where we've identified over 60 people in 2018 in this company that possess the core skills and drive required to lead CP into a new chapter of growth. These talented leaders participated in that professional coaching development translated their learnings from the classroom into the field and they continue to improve their efficiencies of their teams. Currently, we have another class that's been identified and being trained. They'll graduate in July. Once they graduate, the entire CP family will a leader either directly or indirectly who has completed this leadership development program.
As we grow the skills and abilities of our people, I believe as a leader and I know to be true, as our leaders get better, this organization will get better. It will get stronger. So now let's talk about values. To further reinforce our foundations, we felt it was important in our journey this year to be very specific about what we believe in, what we stand for, what our corporate values are to ensure not only our leadership team clearly understands that every employee, every man and woman that works in this company be it on a lead in Vancouver or be it on a lead in Montreal or be it in the corporate headquarters understands how we work and why regardless of the role they play on this team. So to bring focus and to bring clarity to that, we've identified as a leadership team our core values.
Andy mentioned them, accountability, diversity and pride. I'll go through a highlight briefly each one. Accountability, simply said, it's doing what you say you're going to do. You tell the customer if you make a commitment, you keep it. You don't overcommit and under deliver, you deliver.
If we tell each other we're going to do something, we do it. That's how you create value and trust with your customers, especially in this business, which is critical for those customers, for those business partners to trust you with their freight, to essentially trust you with their jobs, to determine their success and their own individual responsibilities. Accountability also extends to the way we treat each other, the way we respect each other, the way we fulfill our roles and our obligations as part of our team to each other so that we can collectively succeed. The way we focus on safety, the way we execute day in and day out. Diversity.
Our value diversity means essentially harnessing the power of different perspectives and collaboration. It means a workforce that's more engaged. It means someone that comes to work. I don't care what race. I don't care what gender.
I don't care what your culture is that you came from. When you come into this place, we're 1 and the same. We're all focused on one common vision. We all have the same opportunity and collaboratively when we combine our talents, the output is going to drive innovation and it will drive results. We're leveraging this diversity to drive change also throughout every level of organization, including as Andy said and Isabel certainly illustrates at the Board level.
In addition to be a member of the 30% Club, which is a leading international organization whose members are committed to better gender balance at all levels of those organizations, as Andy said and Isabelle demonstrates, today we make history and we're proud of that history. To have the 1st female chair of Canadian Pacific, but also the 1st female chair of any Class 1 railway in the industry. Pride. Let's talk about pride. It lives in our hearts.
It's woven into the way we think. Anybody that knows anything about this company understands how much pride exists in this company, how much pride exists in the knowledge knowing that this company helped transform a country not only provides service and commerce to a nation. We understand that. And with that comes a serious sense of responsibility to continue to provide service to this country, to continue to drive commerce for not only Canada, but also North America. We're proud of that responsibility and rest assured this team embraces it and we'll hold true to making sure that we fulfill that commitment.
And from a product standpoint, I can tell you that it's there's nowhere more evidence than my executive team, your executive team, our executive team. Again, there's not another team and I've been and I've dealt with day in and day out and over the years executives across this entire industry. I would put this team up against any of them any day of the week. I'm proud to be working alongside each of you each day. I'd like to introduce each one.
There's a few that can't be with us today that are out interacting with customers and leading our business. I'm going to call their names out first and then I'm going to start calling out those leaders that are here. I'd like for you to stand up, remain standing and if I could ask everyone, please wait until I finish so that we can give them a little bit of admiration and appreciation and applause as they justly deserve. So let me start with Robert Johnson. He's our EVP, Operations.
Robert can't be with us here today. Hopefully, I'm sure he's likely listening on the telecast. Mr. Jonathan Waba, VP, Sales and Marketing for Intermodal and Automotive Business Unit. Ms.
Joan Hardy, VP in Sales and Marketing for our Grain and Fertilizers Business Unit Mr. Mike Mohan, VP Sales and Marketing for our Regional Sales and Transload Business Unit. Now let's go to those that are here. If you could please stand Mr. Nadim Belani.
This is our Executive Vice President, Chief Financial Officer Mr. John Brooks our Executive Vice President, Chief Marketing Officer Mr. Tony Marquis, Senior Vice President, Operations East Mr. Scott McDonald, Senior Vice President, Operations for the System Mr. Laird Pitts, Senior Vice President and Chief Risk Officer Mr.
Jeff Ellis, Chief Legal Counsel and Corporate Secretary Mr. Mike Rediker, Vice President, Chief Information Officer Mr. Chad Ralstad, Vice President, Human Resources Mr. James Clements, Vice President, Strategic Planning and Transportation Services Mr. Justin Meyer, Vice President, Engineering Mr.
Mike Foran, Vice President, Market Strategy and Asset Management Mr. Ian Gray, Vice President, Financial Planning and Accounting Mr. Kobi Bullard, Vice President, Sales and Marketing, Merchandise and ECP Mr. Tracy Miller, Vice President, Corporate Risk U. S.
Mr. Myron Becker, Chief Labor Officer Mrs. Megan Appelstin, Assistant Vice President, Investor Relations and Pensions Mr. Robert Pelleg, Administrative Chief and Mr. Jeremy Berry, Managing Director, Communications and Media Relations.
Ladies and gentlemen, we could not do this, any one of us alone. Collectively as a team, it's our honor to serve and to lead all those others that support us. We're a small representation that comes with large responsibility. But I'm telling you, each one of you, I couldn't be more honored than to railroads with you day in and day out. So thank you for what you do for this company and for our shareholders.
Okay, let's spend some time talking about safety. Our first priority, our obligation at CP. It's foundational to how we operate in this company. It's ingrained in everything we do. Despite having the lowest Federal Railroad Administration Reportable Train accident frequency for the 13th consecutive years, I say this often and I remind ourselves, it's a journey.
It's not a destination. We will always be required to pursue a vision of safety excellence that strives to have 0 injuries and 0 accidents every day we operate. To do that, we must and we will remain steadfast in our commitment to safety across our operation on a journey continually finding ways to innovate to drive improvements and to learn. I can tell you over the past 2 years, we've been busy leveraging technology to improve the safety and the reliability of our network like never before. We've got a network of more than 4 50 wayside detectors where we collect and analyze valuable data to anticipate issues with locomotives, railcars and track infrastructure so that we can take preventative measures before accidents occur.
Our predictive analytics have reduced our online failures by more than 90% and we're just getting started in this space. We've got a strong collaborative team leading this initiative led by Doctor. Kyle Mulligan. I believe he's actually in Washington D. C.
Today representing Canadian Pacific for the industry to talk about a lot of these technologies. And also to symbolize that conviction in 2019, we've increased the weighting of our safety performance measure within the short term incentive plan targets for all of our officers to 20%. This change reinforces our commitment to safety and our focus on maintaining our leading industry position regarding safety performance. So now in my comments, I'm going to shift my focus to 2019 and beyond. As an investor, you want certainty and accountability as a railroader and an investor and a shareholder, we do as well.
Precision Scheduled Railroading is proven to deliver in any economic environment and it's allowed us to grow faster than our industry peers. We're driving both stronger margins and top line revenue growth, profitable, sustainable growth. We're focused on strong free cash flow. We do three things with our free cash. Our priorities are investing first back in the business.
We give it back to our shareholders through dividends and share repurchases and we pay down our debt. Our capital investment strategy has everything to do with running the business for safer and better, including margin improvement, productivity and service reliability. In 2018, we invested a record $1,600,000,000 in replacing our depleted assets and enhancing our network and our equipment. As our business continues to grow in 2019 again, we will invest another $1,600,000,000 in our capital programs that represent attractive rates of return. On the quarterly dividend front, we increased 15.5% in 2018, returned nearly $350,000,000 to our shareholders.
Just yesterday, I'm happy to approve or happy to state and thank the Board for demonstrating their support and for this team and this company demonstrating our support and appreciation to our shareholders by increasing the dividend by 27 point 5%, which is a meaningful increase in our payout returning cash to our shareholders. What does that say? That says given the market volatility, in spite of that, in spite of the challenges we've gone through in 2018, when we talk about the opportunities that we know believe to be possible that we will convert in this company, It gives us strong confidence in our financial performance. 2018, we retired 4,300,000 of our common shares. If you look back in total, since 2014, we've retired 38,000,000 of our shares, which represents about 26% of our public float as of December 31, 2018.
Returning more than $9,200,000,000 to shareholders in dividends and share purchase when you combine the 2. In March, we announced we're issuing 400,000,000 dollars of 3.15 percent notes due to 2029. This offer represents CP's first return to the Canadian debt capital markets with a public debt offering in Canada that dates back to 2011. That coupon rate of 3.15 is also a testament to our company's strong financial position to our people and to the bright future that's ahead. The future is bright at this company.
We continue to build up our momentum in 2018 to deliver for our shareholders, for customers and for our family. As I said, there's no denying the challenging winter conditions we had in the Q1. It tested this team in many ways, but our people stood tall and we persevered. I continue to be inspired by the strength and the fortitude of our people and the resiliency of our network. From the ground up, we've got the right team in place.
We've got a smart dedicated Board of Directors, we've got a strong leadership team that knows how to execute and this entire CP family is committed to our collective good. I can tell you my 27 years of railroading, I've never been more confident in a team's ability to convert the opportunities that lie ahead for this company. I see no end to our growth as we create these opportunities for ourselves, our winning combination of people, our culture, our strategy, it all equals to a future that's exceptionally bright. There's never been a better time to be a railroader or a shareholder at the Canadian Pacific. Thank you very much.
So with that said, I'd like to get away from the formal comments and have more of an open Q and A. I encourage any shareholder any issue, concern, question that you might like to be addressed, I'd like to invite Mr. John Brooks, our Chief Marketing Officer as well as Mr. Nadim Balani, our Chief Financial Officer to join me on the stage for any of the tough questions. Okay.
Thank you. Larry? Okay. I thought you'd go to the phone. That's going to call us.
Good morning. My name is Mallory McCready, and I'm a CP shareholder. I have a question for Mr. Creel today. In 2018, CP was able to secure long term labor agreements with a number of unions.
What's the state of labor negotiations on both sides
of the border for 2020?
2020, we're in a good shape. And let me back up. Those of us that work here clearly understand. The officers as well as our fellow family members, our craft employees, this change we've gone through the past 5, 6 years has not been easy. We haven't gotten it all right.
There's been some, for the lack of a better term, some broken eggs. When you do the right thing that's right overall collectively for the business, often that will not be the easy thing or the popular thing. But we're not here in this position of responsibility to be elected. So in spite of those challenges, in spite of some of those, I guess, strained relationships that were created, this company has came to a good place. We set and negotiated with TCRC last year our Running Trades employees in Canada, which in all honesty have faced tremendous change through this transformation and negotiated a 4 year deal.
I sat there myself with our team. Myron and I were there with a few other Robert Johnson. I didn't know that we'd get there, in all honesty. And it took compromise at the end, both CCRC's leadership standpoint as well as our convictions to meet in the middle. We met a compromise, which is what a negotiation is truly supposed to be.
And it was based on a belief that we have an opportunity to grow together, that we have a very unique time in our history to compete with a competitor that's very capable, but at the same time, does not have the capacity and the capabilities that we represent in this company. And they understood that. So we got there. We got over the line, which was not only important internally to continue to heal and grow together as a family, but it sent a strong powerful message externally to our customers because quite frankly, our customers were getting very, very worn down with our lack of ability to provide them assurance in our business because every time, of course, you have a strike, you break our ability to be able to serve those customers. So we're in a great place in Canada.
As I said, we're not going to let us know on our rules. We're not going to sit here and assume that we've got there because we have it. This is a big company. It's a big family. I would probably argue that anybody here would agree.
There's always going to be some level of tension, some level of dysfunction, some level of opportunity to improve relationships, and we're seized with doing that. We're not going to compromise our principles. We're not going to sell our souls. We're not going to buy labor peace. We're going to earn labor respect, and we're going to bring our family along by educating them, letting them know what's in it for them, what's in it for us.
And collectively, we can continue to grow and thrive in this space with this great strong franchise that we have. It's just a matter of as leaders making sure we communicate that and prove to our employees, our sales alike, that we can be trusted and that we can deepen our relationship. So that's what we're focused on doing. And on the U. S.
Side, we're really in pretty good shape. The U. S. Side, I believe we've got had 6 agreements. I was just there last week.
We did an inspection trip. It was I didn't know I was walking into a labor relations negotiations when I went into the tool house, but I think we're coming to a good conclusion there. And just this morning, I approved a tentative deal that will give us labor surety and stability for the next 3 to 4 years. Was it 6 of the 7 or 5 of the 6? Okay.
So 5 of the 6. This morning, when I got up, it was 6. Now it's down to 1. So we're seized with making progress there. And again, it gives us a place in a time of labor, peace and stability, so we can work on deepening internal relationships, identifying new ways to grow as a company and grow together as a family.
So I'm very, very happy with where we are today. Especially a year ago, I would have aspired and had a vision and a belief, but maybe not as strongly convicted that we would have made this much progress, but still much more work left to do. So thank you. Thank you for that question.
My name is Fateh Punja. I'm a shareholder.
Good morning.
Good morning. First thing, a word of confidence to the leadership who manage the enterprise. A job well done.
Thank you.
However, there's one thing that keeps me awake at night and that has to do with the tank cars. There are 2 issues related to on this issue. Number 1, the retirement rate of 0.1 cars, how is that proceeding? Number 2, NDP government, the past NDP government had ordered a few 4,000 cars or so. How is the new government transition going to impact that plan?
Any ideas?
Yes. I'm going to let John get to the specifics of some of the commercial things we're doing because I too have the same concern that you have and it's not a new concern. We likely I wouldn't argue, I know this to be true. Hunter was never bashful about speaking his peace. I can tell you, if I go back 6 years ago, we sat in the boardroom down at the Palliser Hotel and literally almost banned chemical shipments on this railway until we figured out that we'd go to jail if we did it because we didn't feel comfortable most specifically about hauling crude oil in some of these cars because of the concerns that what may happen, given the very tragic accident with that knowledge that occurred back in Atlantic.
But we realized that we have a common carrier obligation. The law says we have to haul these products. We want to haul them the safest we can. So we took and have taken and continue to take, I think, leading positions in the industry pushing back to the people that actually own the cars. Unfortunately, we don't own the cars.
The only tank cars that we own at CP are the tank cars that we haul our own diesel fuel and fuel loads in that we consume in our locomotives that are in our property. So it's a very small level of cars relative to the overall population. So since we don't own, we can only create standards and rules of what we expect our customers to provide in the safest car possible to be on our railway, and we do that through commercial levers. We'll create tariffs. We'll create surcharges to disincent an employer or maybe make it economically challenging to put anything but the safest car that is available as these new cars are built and added into the industry on our railway.
So with that said, and keep that in mind, I'm going to let John speak to a couple of the exact examples specifically that COVID and his team put in our contracts to try to protect us to a deeper degree in that space. Yes. So I guess first I
would say and thank you for the question. We are excited to work with Premier Kenny on the crude by rail shipments and the contract we have with the Alberta government. So we're anxious to sit down and certainly a part of that contract was to ensure that we have as safe as transportation as we could provide for that movement. So that will be a big part of it. As Keith said, the tank cars specific that would move that crude by rail are not controlled by Canadian Pacific.
They're controlled by our shippers. But certainly, it's paramount in all the commercial arrangements that we put together that we try to enforce the highest degree of tank car available in the marketplace to move that good. So I can tell you that is an active discussion between me and Keith. And certainly with Koby and our customers on not how only we make sure we have the best equipment online, but also we're taking the most proper and expeditious routes to haul the crude by rail or other chemicals across our property.
Let me add the emphasis to one other thing. Okay. I think it's important we point this out as well. As a control guy in a business, you're better to control what you can control. We can't control the type car necessarily.
We can try to influence it. But we're seized and focused on controlling those things within our control to mitigate the risk when we do have to haul chemicals. I can tell you now there's not another railroad in this industry that spends more money or is more committed, not by words, but by actions inspecting our railroad, making sure that we go above and beyond. We not just exceed, we triple, quadruple and sometimes 7 times what the regulatory requirement is, what the law says that you're required to do when it comes to inspecting our track. From hiring and employing track inspectors, certain territories where we have to haul a crude car specifically that we call dark territory that's not signaled.
We inspect that track daily. The regulations require that you inspect it weekly. So Justin Meyer and his team of professionals are out there every day looking at that track, making sure it's safe to operate on. In addition to that, technologies we invest heavily. We have RFD.
RFD is ultrasonic rail flaw detection. So they're unfortunately, it's not a perfect sign. Still is not a perfect product. There are internal defects that the human eye can't see. There's technology that we deploy, we own, and we also invest heavily in contractors to go out and again exceed regulatory expectations, continually doing ultrasonic rail testing so that we can find internal flaws in the steel before potentially a locomotive or railcar does.
So there are multiple layers that we don't just throw our hands up and say we can't control. We try to control what we can. We influence what we can. And ultimately, that's part of the rest of TMY through the execution of our people in this culture and this company that we have enjoyed overall the safest railway from a frequency severity and accident ratio in this North American industry for 13 years, and it's part of our continued success going forward.
Thanks for the clarification.
Thank you.
Good morning. My name is Justina Babsky and I'm a CP shareholder. Nadine, this question is for you. Your first Analyst Day was in 4 years and outlined strong targets for 2018 to 2020. How do you see the company tracking so far?
Thanks, Justina. So we did align very strong targets. So remind you, we highlighted mid single digits RTM growth, volume growth, double digit EPS growth, ROIC in excess of 15%, and solid returns to shareholders in terms of our capital allocation as well as continued operating ratio improvement. If you look at what we finished 2018 with, Steve mentioned, 12% revenue growth. We led the industry in terms of volumes, continued to improve the operating ratio as low as 61.3%.
I'm particularly proud of how we performed in terms of our return on invested capital in excess of 16%. So a very strong performance in 2018. I think in the back half of twenty eighteen, our operating ratio was closer to 57% over that 6 month period. So, certainly strong momentum, strong start to the beginning of that plan. We had a challenging Q1, but as we announced, April was one of the strongest workload months in the history of Canadian Pacific.
Certainly, on the grain side, it was the month that we moved the most grain ever. And what we're very excited about is our ability to have a unique growth story. Certainly, there are challenges in the macro environment and uncertainty, but we have a specific story at CP that we're excited about. Keith mentioned some of the opportunities that we've capitalized on, whether it's on the automotive side with Globus. Our strategy was to leverage our industry leading service that our 13,000 family of railroaders provide day in, day out for our customers, leverage the our ability to grow within the network, our network capacity and grow in a sustainably and profitable fashion, and we're doing it.
So these customers are choosing us to be their valued provider and for a reason. To John and team are executing our strategic playbook and selling that capacity but not overreaching, selling and holding ourselves accountable that we will deliver what we can do, and we've been rewarded. So it's early in the plan, but some of the key wins that we've had, whether it's on the intermodal side, automotive side, merchandise side. I think we announced a deal with Inter Pipeline recently. That will be a 7 year deal that will be moving plastic pellets out of Northern Alberta to the U.
S. And so we're excited about our opportunities across the book of business. We're excited about our opportunities to grow at a low incremental cost and continue to take the operating ratio lower, although that's not the end game. That's the output of good railroading, turn on invested capital, kind of a longer term view of how we see our performance and inspect how we're compensated, and it's a key factor that our shareholders value and why they invest in our company as well. So we're excited about the first, I'll call it, 7 months
of the
plan, but we have a lot of work to do, and it's a long term plan. So we're going to continue to stay focused. As Keith said, we're not going to be complacent. We're going to continue to focus on executing it and doing it and continue to value shareholders. And I think the testament the board is very supportive in terms of rewarding shareholders with the dividend increase.
I think that shows the confidence that they have in the team's ability to execute. So more to come.
The team is proud of you for not letting me. The cat's out of the bag that I would love to speak to. There are a couple more things. Just stay tuned. Pay attention to the press.
Pay attention over the next several weeks to a month. There's some exciting things this team has signed, memoranda of understanding with customers' potential, new customers on that we can't speak to yet because it's not yet okay for it to be public. But we're excited about those opportunities. And rest assured, they'll reflect some of the recent success that we've had, the continued success that we're going to continue to enjoy, and they will be accretive to driving earnings growth in 2020, 2021, 2022 and beyond. So again, strong conviction about the future of this company from our business opportunities and our ability to run this company, do well for our shareholders, for our customers and for ourselves and our CP family.
I'll add one point to that. As Keith talks about and we heard a number of times already this morning about the CP family, if you think about really strategically how we're growing this company and how we approach our product in the marketplace, it's really a very collaborative effort. And as much as CP family is safety and how we work together on a day to day basis, it's also you see it every day in how we're growing and who we grow with and how we create that constructive tension
that, as
a shareholder, you expect from us, whether it's between the finance team and Nadeen's group on how we spend our capital to build our business or with Mike Forn and how we deploy assets and resources to drive our customers' business. Doing all those elements in a disciplined way is what got us where we are today and will have no doubt drive us, as Keith spoke to, some exciting things that we've got to unveil here yet in 2019.
Hello. My name is Ken Brown. I'm a shareholder and a pensioner for 29 years.
All right.
Yes, pretty good. We haven't had your financial guy over for lunch for a while, but maybe we'll work it out.
He's tight. He's tight. I apologize all the time. He's trying to make up a lot of extra snow removal in the Q1. I'll talk to him about that.
Next week, we're having Hungarian sausage. What are those other things? Perogies, sour cream, cake and ice cream.
And you're the marketing guy.
Next Tuesday. Anyway, the question is for Keith. How has the requirement for handbrakes on the Hill affected our operations this year?
Well, fortunately, we've not had to invoke the handbrakes. I've got a pretty strong view on that. I know that Transport Canada felt like they needed to act. And I know that in their mind, they're acting in the best interest. And I can't sit here and tell you exactly where this is going to end.
Part of that is more challenging because when you apply as a railroader more hand brakes than are necessary, you're injecting additional risk. To climb up and down the side of that railcar when it's 30 below 0, to tie a hand brake that doesn't need to be tied and then also to climb back up on that railcar and untie that handbrake and release it. Energex more risk, and it's all about balancing and doing the safest thing, but I don't want our employees to be required to do something that's unnecessary. So far, because we minimized the time that's occurred, it hasn't had a being hit back on us, but I'm concerned about it every time it does occur. We're doing some things also to the health, though.
We're innovating in this company. I talked about I call him Doctor. Mulligan because he is. He's an extremely intelligent engineer, came from the aerospace industry that leads our team of innovators from a science standpoint, from understanding data, from knowing what does and doesn't cause an effect in the workplace. He's given us an ability to model and see opportunities in areas for us to improve safety and minimize that impact even more so than before.
We're doing things that lead the industry something we call cold wheel or cold brake detection. So we all understand in the industry, we regulated brake tests we do on these trains. We have tests that we do also out the train brake test before we depart the terminal. But it's not perfect technology. So with technology, we're taking that set of network of detectors that I talked about, the 450.
Those measure not only a hot bearing, hot wheel, as we call it in the industry, they also will measure cold temperatures. So he's taken the science, applying it to our fleet, Cars that don't measure or not as hot as they should be because they may not be breaking the way an average car on that train is breaking will give off not the right heat that it should be giving us, so it indicates itself as a car that needs to be looked at. Today's world, the history of our industry, that hasn't been applied. We took that same technology and applied it to our coal fleet as a pilot program. I don't know, Scott, when did we start that?
4 or 5
years ago, we've taken the reliability and the effectiveness of the breaking on those coal sets to a level unheard of. We're now applying that same technology to our grain fleet and to our potash fleet, and we'll evolve it to the entire merchandise fleet as we go through this. So long answer to the question, so far, no huge impact. We're going to continue to invest in technology. We're going to make strategic investments on the Lagan sub to allow a space before we get to the top of that hill at Mount Stephen to be able to pull the train in and if we have any concerns to affect a brake test to get to a position on that train where ideally, we never have to have an emergency application and we never have to tie a handbrake on the heel.
That would be euphoria to me, and that's what we're striving and that's what we're going to pursue. Now is that reality? Likely not. It's much like our safety experience, but it is our pursuit, and it's what we're working hard to achieve. Thank you for bringing that up, and I want to make an offer.
Your commitment and your trust and loyalty coming every year, I want to tell you about something. You probably have
you heard about the sale, Kirk, yet? Do you love these cars, the RCP fleet as much as I do?
I want you to connect with James. We're in the process now. We found a 3 quarter dome car. It was built by SP, originally built, I think, by Budcar in the '30s, and then SP converted it into a 3 quarter dome car, they did 7 in 1954. There's one that still operates, and it's ran on the Panama Railway.
We tried to buy to supplement our RCP fleet to respect our tradition. They wouldn't sell it, obviously. So I challenged James and team. I said no was not an acceptable answer. They made 7, found the other 6.
Well, he found 1. The rest are destroyed or not serviceable. We found 1 in the desert in California last, I think, maybe January or February of 2018. We brought it here to Ogden on a flat car. I went and inspected it yesterday.
We started a year ago. It's about James thinks 3 weeks, I think. If he does that, I'm going to give you an attaboy. But by the end of May, this car is going to be, to me, I would suggest, if you get into this, and I do, I love it, the nicest heritage railcar in the world, not Canadian Pacific, not North America in the world. So I want James, you to invite the pensioners and unveil this car.
I want them to see it first before even our leadership team sees it. So if you'll give them the dates, then I commit you to the date to finish it.
We're going to give you
a meal and experience that you haven't seen in a long time, and you'll be the first one to see this car. And it's all enabled and part of what we do for our CP family, what we do for this industry to respect our tradition and to respect each other. 150 years from now, somebody's going to be riding that car, and they're going to say, Gosh, those guys and gals at CP back then really got this right. Is it special?
Speak to you, so.
He's worried about how we're going
to pay for it, but we're it's an investment. That's for sure. It'll pay it'll be the gift that keeps on giving. Did we have any other questions?
Well, let me wrap
this up. Again, I'll finish the way I started. I want to thank you for your trust. It's our honor to serve you, fellow railroaders, fellow shareholders. We're going to work hard in 2019
to do what
we said we're going to do. We're going to convert these opportunities. Rest assured, our objective is to make sure that as a shareholder, you're rewarded for the trust you placed in us, and we do not, do not plan on disappointing you. We look forward to seeing you again in 2020. It's hard to say 2020.
Here in the Ogden headquarters, we'll once again, we'll hold our AGM next year. Thank you very much, and have a great, safe, productive afternoon.