Canadian Pacific Kansas City reported higher quarterly profits as volume and revenue both increased despite ongoing economic uncertainty and trade tensions in North America.
“CPKC (NYSE: CP) once again created profitable, sustainable growth in the third quarter, while navigating challenging macroeconomic conditions,” CEO Keith Creel said in a statement Wednesday. “Through our powerful network and unique partnerships, we are providing strong service and bringing innovative solutions to the market for our customers. I remain confident in our ability to continue delivering on our long-term value proposition.”
Operating income grew 11%, to US$930 million, as revenue increased 3%, to $2.65 billion. Earnings per share increased 12%, to $.72.
CPKC’s operating ratio improved 2.6 points, to 63.5% as expenses declined 1%.
Overall volume was up 5% when measured by revenue ton-miles, or 4% when measured by carloads and containers.
Bulk revenue ton miles were up 7% on U.S. grain shipments to Mexico and strong demand for potash and coal. Merchandise was flat, although CPKC carried record automotive volumes, the product of its closed-loop auto rack operating model that links assembly plants and auto ramps in Canada, the U.S., and Mexico.
Domestic intermodal volume was up 13%. Contributing to the growth was the launch of refrigerated shipments from the Americold cold storage facility at the railway’s Kansas City intermodal terminal, Schneider cross-border traffic, auto parts, and the new interline service with CSX that links Texas and Mexico with the Southeast.
CPKC and CSX (NASDAQ: CSX) in January will raise track speed to 49 miles per hour on the former Meridian & Bigbee short line, allowing the railroads to launch truck-competitive 30-hour intermodal and merchandise service between Dallas and Atlanta, Creel says. The Meridian & Bigbee acquisition in 2024 allowed the railroads to connect their networks via a new interchange at Myrtlewood, Ala.
International intermodal volumes were up 10% on growth in traffic from the Gemini alliance of Maersk and Hapag-Lloyd through the ports of Vancouver, British Columbia; Saint John, New Brunswick; and Lazaro Cardenas in Mexico.
“While we are certainly not immune to the many challenges in the freight environment, we continue to drive differentiated growth with our unique and resilient North American franchise,” Chief Marketing Officer John Brooks says. “We are delivering mid single-digit volume growth while pricing to the value of our capacity and our service. Now, looking forward, we continue to be well-positioned to outperform the industry and the macro on the strength of this franchise, paired with our unique synergies and self-help.”
The railway’s key operational metrics improved for the quarter, with average train velocity up 1%, terminal dwell down 2%, and average train length and weight up 2%.
Chief Operating Officer Mark Redd says Wabtec has delivered 91 of 100 new ET44AC locomotives CPKC expects to receive this year. The new power has improved reliability of CPKC’s 100-series intermodal trains in Canada.
CPKC’s personal injury rate improved 3% for the quarter, while its train accident rate declined 19%.
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