![After Megamerger, Canadian Pacific Kansas City Rail Ends 2023 on High](/sites/default/files/styles/hart_news_article_image_640/public/image/2024/02/after-megamerger-canadian-pacific-kansas-city-rail-ends-2023-high.jpg?itok=Xd-HossX)
Canadian Pacific Railway merged with Kansas City Southern in April 2023 to become Canadian Pacific Kansas City. (Source: Shutterstock)
Calgary-based Canadian Pacific Kansas City Rail (CPKC) reported a strong finish to a year in which the company took a unique position in the North American marketplace.
“Standing alone, these are certainly unique and impressive results,” said Keith Creel, CPKC’s president and CEO, during the company’s fourth-quarter earnings call on Jan. 30. “Even more so when you think this is a railroad in the early stages of an integration, working against the challenging macro environment, all at the same time.”
Company executives reported CA$3.8 billion (US$2.82 billion) in fourth-quarter revenues, up from CA$3.3 billion in revenues from the third quarter. Leaders attributed the growth to a 4% increase in freight volume. For the year, net income generated by the company came in at CA$3.9 billion, CA$410 million more than in 2022.
Canadian Pacific Railway merged with Kansas City Southern in April 2023 to become Canadian Pacific Kansas City. The company is the first and only single-line railway serving Canada, the U.S. and Mexico. Collectively, the company operates about 20,000 miles of line, including crude-by-rail service to all three countries.
While overall freight increased, the company did not see the amount of crude traffic that leaders had expected, said John Brooks, executive vice president and chief marketing officer.
![CPKC](/sites/default/files/inline-images/Source_%20CPKC.jpg)
“Our Q4 numbers [for crude] were off a little bit. We had some facility issues that really drove that,” Brooks said. “I can tell you we've got a 2024 plan that is stronger in the crude oil rail space. We expect our [energy recovery unit] business to continue strong, and we've picked up a couple of other business opportunities.”
On its earnings report, the company lumped oil and gas shipments into the same category as chemicals and plastics. Overall, the category increased by 79% year-over-year, which leaders pointed out was not surprising considering that the Kansas City Express network was added to the CP line.
The energy, chemicals and plastics segment continued to be one of the highest revenue categories for the company, bringing in CA$717 million in revenue in the fourth quarter, behind only grain cargo revenue, at CA$844 million.
Company officials were non-committal in discussing how the energy freight segment would change once the Trans Mountain Pipeline expansion (TMX) goes into service.
The Canadian and U.S. crude transportation network is expected to undergo a major disruption once the TMX begins shipping up to 890,000 bbl/d of crude from Alberta to the Canadian west coast. The project has a current in-service goal of second-quarter 2024 following recent delays due to some construction mishaps, which moved the date back from the first quarter.
CPKC executives said they were tracking the situation but had not locked down any concrete opportunities.
“The phones are ringing a fair amount around TMX and those issues,” Brooks said. “But it's just really not an area we’re chasing. If the right opportunity presents itself, we'll go after it. So, I think all of that — you put that into the mix, probably there's a little bit of upside in 2024, but not massive.”
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