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. Today's results show the success of our efforts to drive growth as the only railway connecting Canada, the United States, and Mexico," CEO Keith Creel said.
 
On a combined basis, which estimates the effects of the CPKC merger as if it had become effective on 1 Jan 2023, instead of 14 Apr 2023, CPKC's operating income was flat, at $1.2 billion, as revenue increased 2 percent, to US$3.5 billion.
 
Earnings per share increased 3 percent, to 93 cents.
 
The operating ratio was 64 percent, a 0.5 point increase compared to a year ago.
 
CPKC's freight volume increased 1 percent 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 percent.
 
Intermodal length of haul rose 12 percent 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 percent 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 percent in the quarter due to a surge in imports through Vancouver 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 percent and terminal dwell declined 10 percent.
 
Operations on CPKC de Mexico, which had experienced congestion last year, showed continued improvement, with car miles per day increasing 23 percent and the number of active cars online declining 15 percent 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 percent 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 22 May 2024 would also affect commuter rail operations in Vancouver, Toronto, and Montreal.
 
Bill Stephens.