Canadian Pacific Kansas City expects service to return to normal by late July in former Kansas City Southern territory that has experienced congestion, delays, and missed customer switches since a May 3 computer cutover.
“CPKC’s level of service performance on the legacy-KCS network since May 3, 2025 — as reflected in part in the [first mile/last mile] and manifest [on-time performance] metrics — does not measure up to CPKC’s standards for the quality of service it provides customers or the efficient operation of its network,” the railway said in a July 20 letter that was posted to the Surface Transportation Board website Monday.
The letter was filed in response to STB Chairman Patrick Fuchs’ request for information about the service problems, including their causes and how and when CPKC (NYSE: CP) intends to fix them.
“While it is too early to offer firm predictions about the timing of a full return to the high level of service performance that CPKC strives to provide customers, CPKC anticipates that service levels for the vast majority of legacy-KCS customers will be in the normal range in the second half of July,” the Calgary-based railway said.
Congestion-related performance metrics — including terminal dwell, average train speeds, and number of cars online — began trending in the right direction in late May and now show that operations have “turned the corner,” CPKC told the STB.
Service metrics, including manifest on-time performance and local switching, have shown steady improvement in recent weeks, CPKC said.
“CPKC anticipates that improvements for some customers may take somewhat more time, and that many customers will need additional time to work through backlogs of delayed inbound or outbound shipments, but CPKC’s progress to date suggests that the legacy-KCS network will be functioning well by late July and sooner in many areas,” the railway said.
The problems began immediately after CPKC shut down the KCS information technology system on May 3 and began using the legacy Canadian Pacific system in former KCS territory.
Among the problems:
- Interchange information didn’t support processing of the cars without manual reworking of the data
- The system had trouble maintaining accurate railcar inventories for cars placed or requested for pickup at customer facilities, particularly those with complex track layouts
- Because of the car inventory issues, customers had trouble placing orders for empties or directing the movement of loaded cars
The data problems quickly snowballed into congestion and operational challenges.
“These issues in turn led to congestion at customer facilities, local serving yards, and classification yards across the legacy-KCS network as inbound railcars accumulated and outbound railcars could not be processed as efficiently as usual,” CPKC said. “That congestion was reflected in increased yard inventories, increased dwell times, reduced train speeds, and an increase in the locomotive and crew resources needed to move traffic over the legacy-KCS network.”
CPKC said it has taken “extraordinary efforts” to address and fix its service problems, including sending cross-functional “SWAT-like” teams to Beaumont and Port Arthur, Texas; Mossville/Lake Charles and Shreveport, La.; Jackson, Miss.; and Wylie, Texas.
“For example, CPKC’s Chief Operating Officer has been on location almost continuously at key points across the legacy-KCS network (including Shreveport Yard, legacy-KCS’s major switching facility; Jackson Yard, legacy-KCS’s second major switching facility; and Wylie Yard, KCS’s largest intermodal ramp). Two operating senior vice presidents similarly have spent several weeks as boots on the ground in the Southern Region supporting customers and front-line operating leaders,” CPKC said.
The teams worked with interchange partners to fix data issues for cars bound to the former KCS network, restored car data through an in-the-field census of cars located in yard, sidings, and customer facilities, and helped customers rebill cars and solve individual service problems.
They also helped local operating personnel understand how to use the new system to build work orders and assignments.
CPKC also adjusted its operations to ease the burden on congested terminals. Its yards at Nuevo Laredo, Mexico, and Davenport, Iowa, for example, built blocks that could bypass Shreveport Yard, the busiest on the former KCS system and a key hub for north-south and east-west traffic.
CPKC told the STB that it did not have underlying service problems before the computer system cutover, and emphasized that its legacy CP operations in the U.S. have continued to run smoothly. Separately, CPKC officials have said at recent investor conferences that operations remain normal in Canada and Mexico, as well.
The railway has not yet done a similar computer system cutover on former KCS de Mexico territory south of the border.
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