Canadian Pacific Kansas City Limited (CP) Business Profile

What it does

Canadian Pacific Kansas City, or CPKC, operates a freight railway connecting Canada, the United States and Mexico. It sells transportation to businesses that need to move commodities, industrial products, vehicles and consumer goods. Its network serves business centres across all three countries.

A shipper can use CPKC to move bulk goods such as grain or coal, merchandise such as chemicals or finished vehicles, or containers carrying retail and other products. Bulk traffic often travels in a dedicated train from one origin to one destination. Merchandise can travel on mixed freight trains or dedicated trains, while intermodal service moves containers by rail as part of a journey that can also include a truck or ship.

The railway also connects customers that do not have their own rail facilities through truck-to-rail transfer sites. In automotive transportation, it uses a network of facilities to help deliver finished vehicles to dealers. Its services connect inland producers and consumers with ports as well as with destinations within North America.

CPKC is headquartered in Calgary. Keith Creel is its president and chief executive officer. The company operates its integrated network as one rail transportation segment.

How it makes money

CPKC earns most of its revenue by transporting freight. Revenue changes with the volume and distance of freight moved, freight rates, fuel surcharges and foreign exchange rates. It also earns non-freight revenue from asset leasing, switching freight between railways, passenger-service contracts, rights agreements and logistics services.

Although CPKC reports revenue across several business lines, it manages financial and operating performance as one integrated rail segment. Grain generated $3.2 billion in FY2025, energy, chemicals and plastics generated $2.9 billion, and intermodal generated $2.7 billion. Other freight lines include automotive, coal, forest products, potash, fertilizers, sulphur, metals and minerals.

Customers pay for individual shipments, including fuel surcharges where applicable. The surcharge program responds to fuel-price changes and is based primarily on public diesel prices in Canada and the U.S. and a public fuel price in Mexico. Surcharge revenue therefore varies with both freight volumes and fuel prices; changes in the timing of recovery can also affect results.

Rates are subject to regulation in parts of the network. For western Canadian export grain shipped to the ports of Vancouver and Thunder Bay, CPKC can set rates for individual movements, but a regulatory formula limits aggregate revenue. In Mexico, the company can set rates on a non-discriminatory basis up to registered maximum rates.

Freight demand also follows a seasonal pattern. Revenue is typically lowest in the first quarter, when winter conditions constrain capacity, and highest in the fourth quarter, when grain moves after harvest alongside fall fertilizer and retail goods.

Customers and how it sells

CPKC serves grain producers and shippers, industrial and energy businesses, automakers, retailers and manufacturers. Its network moves Canadian grain to export ports and to domestic destinations, U.S. grain to Mexico and other markets, and finished vehicles among production facilities, dealers and ports. It also carries coal from Elk Valley Resources’ mines in British Columbia toward export terminals.

The company was not dependent on any major customer for its revenue or operations in 2025. In FY2025, Canada accounted for 48.0% of revenue, the U.S. for 34.0%, and Mexico for 18.0%.

In domestic intermodal, CPKC markets directly to retailers and manufacturers in Canada. In the U.S. and Mexico, it delivers those services mainly through intermodal marketing companies. International container traffic connects inland markets with ports including Vancouver, Lázaro Cárdenas, Montréal and Saint John.

CPKC and CSX Corporation also offer the Southeast Mexico Express corridor, connecting shippers in Mexico, Texas and the U.S. Southeast. CPKC has a contract with LDC for grain crush production at Yorkton and a coal agreement with Elk Valley Resources.

Suppliers and costs

CPKC’s operating costs include employee compensation and benefits, locomotive fuel, materials, equipment rents, and depreciation of its rail infrastructure and equipment. Changes in freight volume also affect variable expenses such as fuel, equipment rents and crew costs. The company had 19,479 employees at the end of FY2025, and most employees belong to labour unions.

Materials include items used to maintain track, locomotives, freight cars and buildings, as well as software support. Equipment rents include charges for using other railways’ freight cars, intermodal equipment and locomotives, net of recoveries for other railways’ use of CPKC equipment.

Fuel expense depends on prices and workload. CPKC’s shipment-level fuel surcharges help respond to changing fuel prices, but the timing of recovery can affect results. In the third quarter of 2026, fuel expense rose year over year as average fuel prices and volumes increased.

The company also maintains the track, buildings and related facilities used under its Mexican concession. It pays the Mexican government an annual concession duty based on gross revenues.

Competitive position

CPKC competes with other railways, trucking companies, ship and barge operators, and pipelines. The mix of alternatives varies by market, and competitors can put pressure on both prices and service. CPKC responds with offerings that include truck-to-rail transfer facilities, train services and other logistics services.

Canadian National competes for coal traffic moving toward Vancouver. Under CPKC’s expanded agreement with Elk Valley Resources, the company expects to reclaim some traffic previously handed to Canadian National at Kamloops for delivery to Vancouver’s North Shore. CPKC also works with CSX Corporation on the Southeast Mexico Express service.

CPKC opposes the proposed Union Pacific–Norfolk Southern merger. If the transaction is approved, CPKC plans to seek protections for gateways and shipper access, as well as removal of restrictions that it says hamper independent railroads’ ability to compete.

Our reading: The single railway spanning all three countries is a meaningful competitive advantage for cross-border movements because it can offer routes without transferring freight between railways. Our reading: Its port connections and transfer facilities extend its reach, but the strength of those advantages varies by route because shippers can also use other railways and transportation modes. Our reading: The Mexican concession supports its position on northeastern lines, although its exclusivity is subject to other rail rights and has a defined term.

Growth opportunities

CPKC’s growth opportunities include moving more freight across its combined Canada, U.S. and Mexico network, adding intermodal services and extending customer relationships. The company expects Canada–Mexico land-bridge revenue to exit 2026 above its level when the railroads were combined.

Intermodal is one area of expansion. CPKC’s Southeast Mexico Express service with CSX connects Mexico, Texas and the U.S. Southeast, while its Mexico Midwest Express connects the U.S. Midwest and Mexico. In the third quarter of 2026, international intermodal volumes increased 11.0%, supported in part by shipments through Vancouver. Southeast Mexico Express volumes rose 30.0% sequentially in the same quarter.

The company also has an expanded agreement with Elk Valley Resources that will bring more of the coal journey to Vancouver onto CPKC’s own route. A new contract with LDC at Yorkton is tied to grain crush production.

CPKC uses longer and heavier trains and improved asset utilization to move more volume with fewer locomotives and cars. It says it has invested in network capacity, locomotives and other equipment ahead of growth. The company expects volume growth in 2026.

Structural risks

• Trade and freight demand: Changes in global economic conditions and international trade policies could reduce demand for commodities and other freight. Freight revenue also varies with customer volumes, rates and the length of journeys.
• Safety and environmental exposure: As a common carrier, CPKC must transport dangerous goods. Derailments or other accidents can release hazardous materials, potentially causing harm and leading to remediation costs, damages and claims.
• Regulation and the Mexican concession: Operations face economic, safety and environmental regulation across three countries. Revocation or termination of the Mexican concession in certain circumstances would prevent CPKC from operating under it and materially affect results.
• Workforce and supply chain: Availability of qualified personnel could affect operations, while supply-chain disruptions could reduce efficiency and increase costs. Most employees are unionized, and collective agreements require negotiation.
• Weather and climate: Extreme weather or natural disasters could interrupt service and increase costs. Winter conditions already reduce capacity under the company’s operating plan.
• Integration and fuel: CPKC may not realize the expected savings, growth opportunities and other benefits of the Kansas City Southern acquisition. Fuel-price changes and the timing of surcharge recoveries can also affect operating results.

Bottom line

Our reading

CPKC is an integrated freight railway whose business rests on moving a range of goods across a network spanning three countries, with cross-border routes and port access providing opportunities to win traffic. [item1] Its results depend on freight demand, service execution and fuel recovery, while regulation, safety obligations and the Mexican concession place conditions on how it operates. [item1, item1a, item7] The company has invested for growth, but realizing the benefits depends on filling that capacity and delivering the anticipated acquisition opportunities. [call_prepared, item1a]