CPKC’s first-quarter profits rise despite trade war

Volume was up 4% based on revenue ton-miles, or 3% when measured by carloads and intermodal containers. The growth was driven by CPKC’s grain, coal, potash, automotive and intermodal traffic. Shipments of forest products; energy, chemicals and plastics; and metals, minerals and consumer products all declined.

CPKC’s cross-border automotive and steel traffic, as well as soybean exports from the U.S. to China, are the most at risk from ongoing trade disputes, Chief Marketing Officer John Brooks says.

But as tariffs raise trade barriers between the U.S. and its North American neighbors, there are opportunities for CPKC to develop new traffic linking Canada and Mexico.

“We stepped into this trade storm that we’re facing to become market makers. We’re seeing opportunities with new trade flows between Canada and Mexico,” Creel said.

They include sending more Canadian refined fuels, liquefied petroleum gas, plastics and grain to Mexico — and handling more shipments of appliances, furniture, food products, finished vehicles and auto parts from Mexico to Canada.

“CPKC uniquely serves as a land bridge between Canada and Mexico,” Creel said of the network, which was the product of the 2023 merger of Canadian Pacific and Kansas City Southern.

CPKC also is urging the governments of Canada and Mexico to adopt policies that would support growth in trade, such as streamlining some regulations affecting cross-border grain moves. “We’re hearing from both governments a genuine desire to see the Canada-Mexico trade relationship mature and deepen, and we’re playing a major role in supporting that agenda,” Creel said.

A 60-day CPKC sales blitz, involving discussions with 500 customers, drummed up $100 million in new merchandise and energy, chemicals, and plastics business that will move via CPKC’s Canada-Mexico land bridge across the U.S., Brooks says.

Creel says he had discussions with the CEO of a Canadian retailer about how to replace products imported from the U.S. Many of the products, he says, were actually produced in Mexico and trucked across the U.S. border for processing or packaging before being trucked to Canada.

“​​When you’re a railroad that can uniquely connect the origin and destination, and the middleman is redundant or not necessary … that creates opportunities,” Creel says.

Meanwhile, CPKC’s cross-border Mexico Midwest Express intermodal service, which links Chicago with points in Mexico, continues to grow. Volume was up 42% for the quarter. More growth is on the way thanks to Schneider’s first moves of auto parts.

For the quarter, CPKC’s key operational and safety metrics all improved.

Related:

First look: CPKC earnings