NEW YORK — Canadian Pacific Kansas Metropolis CEO Keith Creel seems to be on the uncertainty swirling round North American commerce and sees alternative.
CPKC (NASDAQ: CP) has rather a lot using on the end result of tariff spats involving the U.S., Canada and Mexico: The 2023 merger of Canadian Pacific and Kansas Metropolis Southern was a $30 billion guess on North American commerce.
If tariffs in the end make U.S. markets much less enticing to firms based mostly in Canada and Mexico, then these firms are going to search for new markets, Creel says.
“In case you’re a Canadian producer or a Mexican producer in search of a brand new market that may not be america, we’re the land bridge that makes it doable,” he instructed an investor convention Wednesday. “That was by no means earlier than doable with out this merger. And that’s distinctive to our railroad. No different railroad can try this. So we will create these markets.”
One instance, he says, is delivery Canadian-produced French fries to Mexico. CPKC this week started hauling 20 reefer containers per week of McCain fries from Calgary, Alberta, to a cold-storage facility in Laredo, Texas, from which they’ll be trucked to Mexico. As soon as a brand new chilly storage facility opens on CPKC in Monterrey later this 12 months, the containers will keep on CPKC rails for all the journey.
CPKC additionally has begun dealing with shipments of Canadian aluminum, refined fuels and plastics to prospects in Mexico. “The Mexicans are motivated because the Canadians are motivated to create this market. And we turn out to be the bridge,” Creel mentioned.
CPKC has modeled varied situations involving tariffs and commerce. Even within the worst-case state of affairs, the railway can hit its goal for double-digit earnings development this 12 months, he says.
Though the Trump administration goals to cut back U.S. commerce imbalances, Creel says the economies of the U.S., Canada and Mexico are inextricably linked. “These three international locations have by no means been extra built-in than they’re immediately,” he mentioned, noting that nearshoring of manufacturing to Mexico has solely accelerated because the pandemic uncovered weak spots in international provide chains.
“And on account of that, billions of {dollars} have been invested, particularly in Mexico, to assist de-risk provide chains, to convey merchandise nearer to market, to the consumption market, which is the U.S.,” Creel mentioned.
As soon as commerce disputes are ironed out, CPKC will likely be in a novel place to serve all three international locations with single-line service, Creel says.
For now, the tariff noise is just not having a adverse influence on CPKC’s cross-border visitors.
“We’ve received robust demand in autos, we’ve received robust demand in intermodal, we’ve received robust demand in lumber, we’ve received robust demand in power, chemical compounds and plastics. All these markets are robust and so they’re there,” Creel mentioned.
The continuing commerce disputes, nevertheless, are serving as motivation for CPKC.
“Historical past offers you challenges, however you would be outlined by the way you reply to them, not by the challenges themselves,” Creel mentioned. “So it simply signifies that we get keen, we get hungry. And I’ll let you know the extra I take into consideration this, I get extra enthusiastic about it.”
Final month the CPKC advertising workforce started a cold-calling marketing campaign concentrating on as much as $350 million in potential new income.
“During the last three weeks, we’ve gained $20 million in new enterprise,” Creel mentioned. “To me, that’s entrepreneurial, that’s aggressive, that’s hungry, that’s making a novel consequence with a really distinctive community.”
In the meantime, CPKC is specializing in continued improvement of its merger-related cross-border companies.
Amongst them: the closed-loop completed car service mannequin that solves auto rack provide issues at Mexican meeting crops, Mexico Midwest Categorical premium intermodal service, temperature-controlled cross-border intermodal, and intermodal auto elements shipments between the Southeast and Mexico.
Creel spoke on the J.P. Morgan 2025 Industrials Convention.
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