CALGARY, Alberta — CPKC’s first new service — a pair of intermodal trains linking Chicago and Mexico — will launch on May 11, carrying containers from new customers Schneider and Knight-Swift.
Daily hotshots 180 and 181 will link Chicago with Laredo, Texas; Monterrey, Mexico; and Mexico City. With third-day service to Laredo, fourth-day to Monterrey, and fifth-day to Mexico City, the trains will offer transit times that are competitive with over the road trucks and be the fastest cross-border intermodal service, CPKC Chief Marketing Officer John Brooks told investors and analysts on the railway’s earnings call on Wednesday afternoon.
Canadian National announced on Monday that it would team up with Union Pacific and Ferromex for new interline service linking Detroit and Canada with Mexico. The Falcon Premium service will connect a dozen CN terminals with the Ferromex terminals in Monterrey and Silao via the Eagle Pass, Texas, gateway. The three railroads said their service would operate over the shortest route with the fastest service.
CPKC CEO Keith Creel disagreed. “It’s not spin, it’s not rhetoric. It’s truly best in class service,” Creel says of trains 180/181.
“We’re not surprised that our combination triggered competition,” Creel says. “We said from the very beginning that this combination would create new competition. It’s going to create new options for shippers.”
Creel says the Falcon Premium service is shorter to Monterrey, but CPKC will deliver two days sooner. CPKC holds a slight mileage advantage to the Mexico City area, where Creel says 180/181 will provide service that’s roughly three days faster.
But the Falcon Premium service is targeting a slightly different market — primarily Detroit and Eastern Canada to Mexico — than CPKC’s Chicago-Mexico service. UP and BNSF Railway currently offer service between Chicago and points in Mexico via interchange with KCS de Mexico at Laredo and Ferromex at Eagle Pass.
Schneider and Knight-Swift — which partner with UP for intermodal service in the west — chose CPKC because it’s the only railroad that can offer single-line cross-border service to and from Mexico.
“We’ll ramp that business up, but you should expect it to be a $100 million-plus line of business for us,” Brooks says. There will be more new customer announcements coming soon, he says. CPKC executives have also said they expect the train to carry perishables, including Mexican produce northbound and Midwestern meat southbound.
CPKC officials have been busy tying the railroads together and preparing for a smooth integration since Canadian Pacific and Kansas City Southern officially merged on April 14.
CPKC Chief Operating Officer Mark Redd says performance metrics are starting to stabilize in Mexico after a bout with labor-related congestion this year. CPKC is taking a back to the basics approach, with a focus on yard dwell, reducing car fleets, and optimizing the number of locomotives in yards.
“We’ll just get the No. 2 pencil out and start railroading,” Redd says.
For the quarter, CP’s standalone operating income increased by 55%, to $829 million, as revenue grew 23%, to $2.3 billion. Earnings per share increased 37%, to 86 cents. CP’s operating ratio improved 7.5 points to 63.4%. Overall volume was up 9% on a carload basis or up 11% when measured by revenue ton-miles, the favorite metric of the Canadian railways.
KCS operating income rose 10.5%, to $408 million, while revenue grew 13%, to $1.1 billion, as traffic volume rose 2% for the quarter. The railway’s operating ratio increased 3 points to 65.6%.
CPKC will begin reporting combined financial results starting with the second quarter earnings release in July.
How many kids today know what a No.2 pencil is?
Plenty of room for new trains on the line north of Kansas City. Only three trains in the past 24 hours through Washington, Iowa, a manifest each way and a northbound coal train off BNSF. The northbound manifest ended with nine well cars carrying 11 containers – something I rarely saw until recently. They were marked for “Yanke” and “Bison”.
This will all work under one important condition…you dont derail every week.
If the 180/181 hotshot can get through just 1 month without a derail between Laredo and Bensenville, then they have done something.
Well, prior to the merger, CP and KCS didn’t derail every week, so…..