MAXIMIZING EFFICIENCY IN THE GRAIN SUPPLY CHAIN

21ST ANNUAL FIELDS ON WHEELS

CONFERENCE

OUR FOUNDATIONS DRIVING CHANGE AND IMPROVEMENT

8,322 8,915

Q3'15 Q3'16

Average train weight (tons)

184

202

Q3'15 Q3'16

Locomotive productivity (GTMs per Available HP)

6,944 7,418

Q3'15 Q3'16

Average train length (feet)

22.2

23.9

Q3'15 Q3'16

Average network speed (mph)

151.3 152.6

Q3'15 Q3'16

Car miles per car day (miles)

OPERATING PERFORMANCE

1% better 10% better

8% better 7% better 7% better

0.948 0.936

Q3'15 Q3'16

Fuel Efficiency (U.S. Gallons per 1,000 GTMs)

1% better

CP CONTINUING TO FOCUS ON RAILWAY EFFICIENCIES

REVENUE BREAKOUT GRAIN CONTINUES TO BE CP’S LARGEST LINE OF BUSINESS

A STRONG GRAIN FRANCHISE

CP HAS A DIVERSE GRAIN PORTFOLIO WITH MULTIPLE OUTLETS

SUPPLY CHAIN EVOLUTION CP 15 YEARS AGO: TWO DISTINCT GRAIN SUPPLY CHAINS WITH LITTLE COOPERATION AMONG STAKEHOLDERS

• Canadian Network

• Primarily singles and 56 car blocks

• Segregated fleet focused specifically on Canadian Grain

• Canadian Wheat Board involved in marketing of Canadian export grain

• US Network

• Primarily Domestic blocks (within US) moving east over Chicago & Midwest

• Single cars were the norm

• Dedicated US fleet

• Very little PNW destined traffic

Producer

Grain Elevators

Railways

Export Terminals

Vessels

SUPPLY CHAIN - TODAY

• Asset velocity and utilization

• Minimize loading time at elevator – Load on placement

• Minimize transit time to/from the port

• Minimize unloading time

• Reduce switching at both ends – “Hook and Haul”

• Efficiency

• Maximize cars / train

• Maximize tons per car

• Planning and Execution

• Managing correct train into correct slot

• Port Terminals

• 24/7 rail car unloading

• All weather vessel loading

INDUSTRY TAKING A COLLABORATIVE APPROACH TO BUILD CAPACITY AND EFFICIENCY ACROSS THE SUPPLY CHAIN

CROP EVOLUTION CROP SCIENCE AND MARKET DEMAND HAS INFLUENCED THE MAKE-UP OF THE CANADIAN CROP

57

77

63 63

73

2012/2013 2013/2014 2014/2015 2015/2016 2016/2017E*

Western Canadian Principal Field Crop Size (MMT)

Crop Types (%)

Wheat 31%

Canola 25% Special

Crops 13%

Barley 12%

Durum 10%

Other 9%

2016

2001

Wheat 36%

Canola 13%

Special Crops

9%

Barley 23%

Durum 11%

Other 8%

Producer

ELEVATOR IMPROVEMENTS

• Elevators moving from ladder tracks to loop tracks to promote efficiency of spotting and loading

• No switching required by train crews

• Standard track infrastructure moving from 112 cars to 134+ cars

• Less trains to move the same volumes

• High Throughput Elevators now able to load in 8 hours or less.

• Promotes power on operations

Grain

Elevators

NEW ELEVATORS AND INVESTMENT IN OLD FACILITIES DRIVING SUPPLY CHAIN EFFICIENCY

66%

11%

11%

7%

4% 1%

Capital Breakdown 2016E

Basic Replacement

Network enhancements

Rolling Stock

Information Technology

PTC

Other

RAILWAY CAPITAL INVESTMENT

20 20 22

23

~16

2012 2013 2014 2015 2016E

Capital Expenditures (percent of revenues)

$1.2B

Railways

CP CONTINUES TO INVEST IN EFFICIENCY

NETWORK CAPACITY PROJECTS FOCUS ON DRIVING LONGER TRAINS AND IMPROVED TRAIN SPEED (VELOCITY)

North Line: 22 sidings (new or extensions) to handle growth and improve

efficiency

Western Canada: Additional sidings & siding extensions to improve

efficiency with improved siding spacing and support for long train

operations

1

2

3 Eastern Canada: Additional sidings & siding extensions to improve

efficiency.

Terminals: Infrastructure upgrades to drive improved efficiency

1

2

3

Railways

RAILCAR IMPROVEMENTS

• Migrating fleet to higher capacity cars

• Current fleet is 40% Hi-cap cars

• New Hi-Cap cars are shorter with higher capacity

• Moving more grain with less cars

• 7,000’ Low-cap train has 112 cars (10,400 Tons)

• 7,000’ Hi-cap train has 123 cars (12,800 Tons)

• Replacing Government of Canada hoppers with Hi-cap cars could increase annual supply chain capacity by 3.9 MMT, while freeing up additional system capacity

• Containerized Grain a “Growing Market”

• Working with Customers to grow the market

• Available at CP Intermodal facilities

• Working closely with 3rd party “stuffing” facilities

Railways

DRIVING EFFICIENCY THROUGH THE MOVEMENT OF MORE GRAIN IN LESS RAILCARS

COMPETITIVE DEDICATED TRAIN PROGRAM – A CONTRACTED AGREEMENT

• What is the Dedicated Train Program?

• It is a contractual agreement between CP and its customers

• Provides Unit Train shippers with dedicated train capacity

• Run in continuous train service

• Assigned to a customer for the crop year (1 year term)

• What are the benefits of the DT Program?

• Customer controls origin placement

• Ability to lock in capacity for designated corridors

• Some flexibility to load on either side of the border and to multiple ports

• New auction program allows customers to bid on CP freight via email

• 3 Auctions set for 2016/.17 crop year

• CP ran its first auction in June 2016 (4 Sets)

• Sets can be billed as 25 car blocks to non unit train destinations

DT PROGRAM BRINGS SHARED RESPONSIBILITY TO MANAGING THE SUPPLY CHAIN

Railways

PORT DEVELOPMENT – VANCOUVER

• Port Metro Vancouver developed under the CWB

• Multiple grades of wheat

• Small rail blocks (many short tracks)

• Terminals making significant strides to increase capacity

• As commercial markets open up further investment occurring

• Recent Upgrades

• Richardson nearly doubled storage capacity in 2015

• Pacific Terminals new ship loader Fall 2016

• Columbia Containers 2018 (will be unit train capable)

• Despite improvement, still further opportunities

• Ports are not working 24 hours a day 7 days a week

• Weather continues to impact unloading

Photo Courtesy of Richardson International Ltd.

Export Terminals

SIGNIFICANT INVESTMENT AT PORT FACILITIES THOUGH STILL OPPORTUNITY FOR EFFICIENCIES

Seaway Closure

SUPPLY CHAIN SCORECARD – CPR.CA COMMITTED TO TRANSPARENT COMMUNICATION TO MOVE SUPPLY CHAIN FORWARD AND DELIVER FOR OUR CUSTOMERS

PREPARED FOR SUCCESS IN 2016/17 CROP YEAR

• Strong coordination with supply chain partners

• CP velocity up 30 percent

• Cars, locomotives and crews are back online

• Supply chain partners have invested in greater capacity

• Our Dedicated Train Program (DTP) is driving results for customers

CP IS READY TO DELIVER FOR ITS CUSTOMERS AND FOR CANADA

Q & A