Calgary Alberta - The work stoppage by members of the International Longshore and Warehouse Union at Canadian West Coast ports may have cost CPKC $80 million in lost revenue, executives said during the railway's second-quarter earnings call.
 
CPKC will "work hard to claw back" that lost revenue over the remainder of the third quarter and in the fourth quarter, Chief Marketing Officer John Brooks told investors on the Thursday afternoon call.
 
The railway has been deploying a number of "self-help" strategies to drum up additional business once demand recovers, such as ramping up activity through the Port of St. John in eastern Canada to offset softer macro-economic demand occurring in the international intermodal space, according to Brooks.
 
Another self-help strategy has been to be aggressive in looking for intermodal opportunities, according to CPKC President and CEO Keith Creel.
 
"We're in the same boat as what you've heard from the other rails in terms of the intermodal business. But we are on a three-week blitz, with over 3,000 cold calls. We've got boots on the ground. We're blitzing all our major territories. We're not sitting idle. I do see the intermodal challenges persisting, but we're going to make self-help. We've got the fastest intermodal service in our north-south superhighway. We're going to continue to put more footage on that train," Creel said.
 
CPKC intends on capitalizing its access to Mexico through the merger and the network of the former Kansas City Southern de Mexico, and it sees opportunities for the automotive segment, for the frac sand and steel businesses, for forest products and for its reefer service.
 
"We're out working with these customers to create these long-haul cycles with our center beams, opening up new markets. We're deep into creating a whole new mousetrap in the Texas and Dallas market around transloading, stuff that probably you won't see a lot of needles moving in that space in the near term given the headwinds, but as the housing construction area bounces back, it's an area where we're going to be ready, and I think we're set up for success when that comes back," Creel said.
 
For the railway's operations in Mexico, CPKC sees opportunities to improve service and control costs, and the railway has a team that will be going there to hash out ways to improve commercially and operationally, Creel said.
 
CPKC executives acknowledged that the railway is "carrying surplus head count," which translated into higher expenses for the quarter.
 
But the railway is eyeing anticipated volume growth starting in the back half of this year and ino 2024.
 
Investors should expect "a much better expense and productivity performance in the back half of the year," said CFO Nadeem Velani.
 
"Obviously, if we'd have known this market softness would have been here, perhaps we would have hired a little bit later and trained a little bit later. But nevertheless, we have very unique growth opportunities that are counter to the macro-environment. They give us great confidence that it doesn't make a lot of sense to lay a lot of employees off and risk losing them when demand to haul potash and grain picks up," Creel said.
 
Velani noted that there were several one-time expense items in the second quarter, such as a litigation settlement and an expensive derailment that cost a combined $45 million.
 
Joanna Marsh.