Calgary Alberta - Operations at Canadian Pacific Kansas City Ltd. will likely grind to a halt due to a strike expected in the second half of August, says CEO Keith Creel.
 
"We're far apart," he said Tuesday, referring to the railway and the union representing 3,300 workers, which remain at loggerheads over a new collective agreement.
 
"I'm just being transparent and honest. It's going to be a challenge."
 
A work stoppage is "most probable" toward the end of the month, Creel told analysts on a conference call.
 
Canadian Pacific as well as rival Canadian National Railway Co. are awaiting a decision from the country's labour board on whether some shipments would be considered essential services in the event of a strike by the Teamsters Canada Rail Conference, which represents about 9,300 engineers, conductors, and yard workers at the two companies.
 
Though no strike or lockout can take place until at least 72 hours after that decision is made, a ruling expected by 9 Aug 2024, the situation has cast a cloud over rail transport in the near term.
 
"You can imagine the impact, obviously, of most railroads in the nation being shut down," Creel said, warning of "mass chaos" if the railway can't alert their clients to a work stoppage several weeks in advance.
 
A year-over-year dip in container revenues in the most recent quarter stemmed largely from customers rerouting cargo ahead of the possible labour disruption, CPKC executives said.
 
Last week, CN lowered its forecast for earnings growth amid fallout from the strike threat as clients seek to steer clear of Canadian ports and rail lines.
 
However, Creel said a labour disruption will not affect CPKC's financial guidance so long as it lasts less than two weeks.
 
On Tuesday, the company reported a bump in revenues and shipment volumes in its second quarter, even as profits dropped amid higher costs.
 
Net income fell 32 percent to $903 million in the three months ended 30 Jun 2024 from $1.33 billion in the same period a year earlier, the railroad operator said.
 
Total revenues jumped 14 percent to $3.60 billion from $3.17 billion, while operating expenses rose nearly five percent to $2.34 billion, the company said.
 
Core adjusted combined diluted earnings increased 27 percent last quarter to $1.05 per share from 83 cents per share the year before, it said.
 
Meanwhile, freight volumes nudged up by more than one percent year-over-year to nearly 1.09 million carloads.
 
Canadian Pacific acquired Kansas City Southern in December 2021 in North American's first major rail merger in decades, but had to wait to merge operations until April of last year following regulatory approval of the deal.
 
Christopher Reynolds.