Canadian Pacific Kansas City’s “exceptional team of railroaders again delivered strong operating and financial results in the second quarter as we realize more of the value created by this unrivalled North American network,” said President and CEO Keith Creel in reporting the transnational Class I’s second-quarter 2025 results. Railway Age’s twice-honored Railroader of the Year also had much to say about the proposed Union Pacific-Norfolk Southern merger.
2Q25 Results
CPKC volume, measured in RTMs (revenue ton-miles), increased 7%, compared to 2Q24. Revenues increased 3% to C$3.7 billion from C$3.6 billion. The reported operating ratio (OR) decreased 110 basis points to 63.7% from 64.8%. The core adjusted OR decreased 110 basis points to 60.7% from 61.8%. Reported diluted EPS increased to C$1.33 from C$0.97. Core adjusted diluted EPS increased7% to C$1.12 from C$1.05. Federal Railroad Administration (FRA)-reportable personal injury frequency decreased to 0.77 from 0.84; however. FRA-reportable train accident frequency increased to 0.97 from 0.70.
“Our dedicated team pulled together to overcome challenges in portions of our southern U.S. network following our complex [information technology] system integration,” said Creel. “Across our network, we are focused on delivering the service our customers expect as we carry growing momentum into the second half of 2025. We are executing our strategy by capitalizing on a range of opportunities unique to our three-nation network, opportunities to grow our business by supporting our customers in reaching new markets. Looking ahead, we remain confident in our ability to deliver on our full-year guidance while realizing sustainable growth that provides value for our shareholders, customers and all stakeholders.”
Comments on UP+NS Merger
As expected, Creel was peppered with questions from analysts about Union Pacific’s proposed acquisition of Norfolk Southern, which he termed “the proverbial elephant in the room,” could impact CPKC. UP+NS will be the first major combination to be considered by the Surface Transportation Board under the new merger rules established by STB in 2001. The Canadian Pacific-Kansas City Southern transaction did not fall under those guidelines, due to KCS’s relatively small size.
Creel questioned if a U.S. transcontinental merger that could eventually result in four Class I’s—two massive East-West systems: UP+NS, followed by BNSF+CSX, plus CPKC and CN—is necessary and “in the public interest.” Shippers, he said, are concerned, as they well-remember the 2021-2022 service problems driven by crew shortages and other factors, not the least of which was the COVID-19 pandemic. He added that the railroads need to do more to develop interline commercial partnerships and improve interchanges by adding run-through trains. Those opportunities, he said, have not been exhausted—and that applies to CPKC as well.
“I guarantee there are some customers out there, sitting on the edge of their seats, looking at their existing supply chains, trying to hedge their bets, thinking, ‘What’s at risk?’” Creel said. In 2021 and 2022, “those customers experienced a lot of pain and suffering … They’d be irresponsible not to start looking at alternatives. A network that big, if it gets sick, is not isolated to a particular geographic region of the nation. The entire nation’s going to get sick. That’s the magnitude of this. This does not just affect UP and NS. UP and NS both know this, the regulator knows this, we all know this. This … could well and might likely trigger additional industry consolidation, an endgame scenario. They’re speaking to the entire industry. They’re speaking to every customer that ships on any rail network in North America, and it is a North American rail network. The gravity of this is not to be taken lightly. Rest assured, the STB will want to get this one right.”
UP and NS, Creel noted, despite claiming they will not be distracted, “will be under enormous pressure.” He added he “believes [UP CEO] Jim Vena to his word when he says he’s not taking this lightly,” that Vena understands how complex an undertaking this is.
UP+NS, Creel added, “cannot be judged in isolation,” and their STB merger application “must address a fundamental redrawing of the railroad map. The STB will give the merger a diligent, fact-based review under the untested 2001 rules. We will be a loud voice in the room, active observers and participants. We will participate in the discussions. And we will be heard and understood.”
The new merger rules require the applicants to demonstrate how their combination would enhance competition, not simply preserve it. Concessions will be sought, such as sole-served customers being allowed to access a second carrier. Creel noted that CPKC will, at the very least, seek unrestricted access to UP’s Gulf Coast petrochemical traffic as well shippers in St. Louis and Kansas City. Such access “would enhance competition and allow us to take traffic to Canada or Mexico, other points on U.S. system, or to interchange partners,” Creel said. “The strength of this network we put together allows us to compete and win in any of these scenarios.”
When asked if CPKC—already a transnational with a Canadian transcontinental network— would consider becoming part of a larger combination, Creel didn’t dismiss the possibility. It’s one of the options that would need to be reviewed “as part of our obligation to maximize shareholder value,” Creel said. “We won’t be confined by the traditional, so maybe expect the unexpected. Who knows?” Yet, he added, “The way we connect all three nations has given us a chance to create unique partnerships and alliances. [Southeast Mexico Express] with CSX is just one example.”
