CALGARY, Alberta — Canadian Pacific Kansas City’s first-quarter financial results reflected the progress the railway has made in the year since the Canadian Pacific-Kansas City Southern merger, executives said today.
“One year into our historic combination, I am proud of what our dedicated family of railroaders has accomplished as we deliver on the benefits of our unrivaled network — spurring competition, increasing safety, and connecting more markets for our customers,” CEO Keith Creel said. “Today’s results show the success of our efforts to drive growth as the only railway connecting Canada, the United States, and Mexico.”
On a combined basis — which estimates the effects of the CP-KCS merger as if it had become effective on Jan. 1, 2023, instead of April 14, 2023 — CPKC’s operating income was flat, at $1.2 billion, as revenue increased 2%, to $3.5 billion. Earnings per share increased 3%, to 93 cents. The operating ratio was 64%, a 0.5-point increase compared to a year ago.
CPKC’s freight volume increased 1% in the quarter based on revenue ton-miles, which rose thanks to longer lengths of haul on the combined network. On a carload basis, traffic declined 3%.
Intermodal length of haul rose 12% thanks to the combination of losing short-haul Mexico-U.S. traffic and growing international volume as well as the Midwest Mexico Express cross-border intermodal trains that link Chicago and Kansas City with points in Mexico. The MMX service has grown 24% per week since February.
Chief Marketing Officer John Brooks says CPKC was glad to see the short-haul business leave because it chewed up capacity at the railway’s terminals in Mexico and at the Laredo border crossing. Now that capacity is available for longer-haul business.
BNSF and J.B. Hunt moved their cross-border traffic off CPKC de Mexico in favor of a Ferromex routing via the Eagle Pass, Texas, gateway late last year.
The longer lengths of haul also was helped by energy, chemicals, and plastics traffic moving from Alberta to the Gulf Coast and Mexico, along with growth in international intermodal, grain, and potash traffic, Brooks says.
CPKC will gain additional long-haul business when its auto ramp in Wylie, Texas, in the Dallas-Fort Worth area, opens in June. The facility will enable CPKC to haul finished vehicles from Ontario assembly plants to Texas rather than interchange the business at Chicago.
International intermodal volume was up 14% in the quarter due to a surge in imports through Vancouver, British Columbia, as well as Lazaro Cardenas on Mexico’s west coast.
The combined railway’s operating metrics improved for the quarter, as average train speed rose 13% and terminal dwell declined 10%. Operations on CPKC de Mexico – which had experienced congestion last year – showed continued improvement, with car miles per day increasing 23% and the number of active cars online declining 15% despite the railway carrying record gross ton miles in Mexico.
CPKC placed three new sidings into service on its north-south corridor in the U.S., along with two new sidings in Mexico, as part of the railroad’s plan to spend $275 million on merger-related capacity improvements, Chief Operating Officer Mark Redd says.
In addition, the new bridge across the Rio Grande at Laredo, Texas, is 65% complete and remains on schedule to open by the end of the year. The single-track span will double capacity at the busiest U.S.-Mexico rail gateway.
Creel said CPKC hopes to reach a contract with the Teamsters Canada Rail Conference, the union that represents the railway’s engineers, conductors, and dispatchers in Canada. With the two sides far apart and negotiating with federal help, union members are currently voting on a strike authorization.
“This is truly something that I hope can be avoided,” Creel says of a potential work stoppage in Canada.
The union has thus far been opposed to a proposal that would shift engineers and conductors to an hourly pay rate and scheduled days off.
“We will not do a bad deal,” Creel says.
A strike, which could occur as early as May 22, would also affect commuter rail operations in Vancouver, Toronto, and Montreal.
So Ancora tells NS shareholders they want out of intermodal, but CPKC is making money and growing in it.
Well, when your numbers are the lowest to begin with any growth at all will make money…
I did find Keith Creel’s “our unrivaled network” comment quite interesting. Its only unrivaled because no other American routing is so circuitous and subject to so many other railroads to avoid choke points. And its north/south routings are mostly based on trackage rights rather actual ownership of the rails used. Yep that is really unrivaled…
And finally, that picture of a CP and KCS locomotive side by side is a pretty picture. When, though, is CP finally going to acknowledge KCS as their merger partner (not their merger conquest) by painting up a few locos in the new CPKC livery we all saw when the merger was finally announced. Or is this just an example of the longer they don’t “…paint so fast” (as in the old Santa Fe/Southern Pacific proposed merger colors), that everyone will just forget about that homage to KCS in the form of a redesigned golden “beaver shield” acknowledging KCS and KCSdM along with CP and a little strip of black on an otherwise red locomotive with white lettering in large block letters spelling CANADIAN PACIFIC !?! Yeah, that’s what I thought…
Congratulations to You and Keep Up the Good Work You Surprised The Competition