Locomotives idle at the CPKC railyard in Calgary, on Aug. 22, 2024.Jeff McIntosh/The Canadian Press
The head of Canadian Pacific Kansas City Ltd. CP-T says the railway formed to link Canada, the United States and Mexico can withstand a trade war ignited by U.S. President Donald Trump.
Mr. Trump says he will impose 25-per-cent tariffs on imports from Canada and Mexico on Saturday, prompting threats of retaliation from the target countries and raising fears of economic recessions spurred by rising prices and collapsing trade.
CPKC, formed in 2023 with CP’s US$27-billion takeover of Kansas City Southern railway and its U.S. and Mexican routes, relied on cross-border traffic for 41 per cent of its 2023 revenue.
Still, Keith Creel, the railway’s chief executive officer, told analysts on an earnings conference call on Wednesday, the freight carrier has recently weathered a pandemic and the renegotiation of the North American free-trade agreement. These events helped drive customers to bring home manufacturing operations, a trend known as near-shoring that bolsters the business case for a North America-wide carrier.
“This is a railroad built [for] forever, not a railroad built for 48 months,” Mr. Creel said.
CPKC reissued its 2025 outlook on Wednesday, predicting adjusted earnings growth of 12 per cent to 18 per cent, and freight volume increases in the range of 4 per cent to 6 per cent.
Mr. Creel said the integrated supply chains in North America are durable. “You can talk about automotive. … How many engines and transmissions are built in the U.S. to go to Mexico so they can produce the vehicle that comes back to the U.S. that goes to the consumer market? We’ve got 75 per cent of production capacity in the U.S. and 25 per cent that’s got to come from somewhere else based on what we consume on an annual basis. So that type of interdependence, that type of need is woven into this economy.”
Mr. Creel said he was encouraged by the steps taken by Canada and Mexico to improve border security after Mr. Trump’s threats and predicted “exceptional growth” in trade among the three countries.
Mr. Creel made the comments shortly after CPKC reported financial results for the fourth quarter and full year of 2024.
In the three months ending Dec. 31, CPKC, which reports in Canadian dollars, said revenue rose by 3 per cent to $3.9-billion, from the fourth quarter of 2023. Profit rose by 18 per cent to $1.19-billion, or $1.29 a share, from the year-earlier quarter, CPKC said in a financial statement released after markets closed on Wednesday.
CPKC hauled more carloads of grain, automotive products, and energy and chemicals, compared with the same quarter of 2023. Coal, shipping containers and metals were among the categories that saw declines.
Annual revenue climbed by 16 per cent to $14.5-billion.
CPKC’s share price on the Toronto Stock Exchange has been volatile but is now at the same level as six months ago.