CP completes 2020-2021 Canadian crop-year; sets fourth consecutive record for shipping Canadian grain and grain products
Canadian Pacific (TSX: CP) (NYSE: CP) announced its record grain transport for the 2020-2021 crop year, moving 30.62 million metric tonnes (MMT), a 3.7% increase from the previous record of 29.52 MMT. This marks the fourth consecutive year of record grain movement. The company attributes its success to the 8,500-foot High Efficiency Product (HEP) train model and customer investments. However, demand decreased significantly in the latter months, falling nearly 15% compared to last year. As of July 31, CP submitted its 2021-2022 Grain Service Outlook Report, outlining future grain transport plans.
- Achieved record grain transport of 30.62 MMT, a 3.7% increase from the previous record.
- Fourth consecutive year of record grain movement.
- Implementation of 8,500-foot HEP train model, increasing capacity by over 40%.
- Plans to add 1,600 high-capacity hopper cars by the end of 2021.
- Demand for grain transport declined nearly 15% from previous year during May to July.
CALGARY, AB, Aug. 3, 2021 /PRNewswire/ - Canadian Pacific (TSX: CP) (NYSE: CP) today announced it hauled more Canadian grain and grain products in the 2020–2021 crop production year than any other crop year during CP's 140-year history. Working in close collaboration with customers and other participants in the Canadian grain supply chain, CP moved 30.62 million metric tonnes (MMT) this crop year, exceeding last year's record of 29.52 MMT by 1.10 MMT, or 3.7 percent. This is the fourth consecutive year that CP has broken its annual movement record. Including grain moved in containers, CP moved a total of 31.21 MMT, up 3.4 percent from last crop year.
"CP's team of exceptional railroaders, dedicated to providing our customers with service excellence, and the strong execution by our customers and terminal operators, has enabled the supply chain to move more grain than ever before," said Joan Hardy, CP Vice-President Sales and Marketing, Grain and Fertilizers. "The challenge created by the COVID-19 pandemic over the past 17 months has underpinned the value of strong communication and supply chain collaboration. Despite a sharp reduction in demand this spring, CP and our customers have again broken our movement record, and we celebrate that achievement across the supply chain."
CP's 2020–2021 grain movement was 15 percent ahead year-over-year through the critical fall peak, providing the grain customers excellent service at the time when it is most important to their supply chains. This continued through the winter months. At the end of March, CP had moved 14 percent more this crop year compared to the record movement last crop year. However, because of market conditions and a tight supply of grain, demand started to fall off in April. Through May, June and July shipper demand was almost 15 percent below the same period last year, and 25 percent below the fall peak demand levels.
This year's successes are a testament to the efficiency of the 8,500-foot High Efficiency Product (HEP) train model and investments made by CP's customers. An 8,500-foot HEP train can carry in excess of 40 percent more grain than the 7,000-foot train model when combined with the additional capacity of CP's new high-efficiency hopper cars. Customers are actively investing in their elevator networks to accommodate 8,500-foot trains. Today CP serves 25 elevators qualified to load 8,500-foot HEP trains, 13 of which became qualified during the 2020–2021 crop year. By the end of 2021, more than 40 percent of the CP-served unit train loaders will be 8,500-foot HEP qualified, increasing capacity and efficiency in the grain supply chain for customers and stakeholders.
"What a tremendous accomplishment for CP and I want to congratulate everyone involved in achieving this major milestone. Investments like these help position Canada as a world leader in innovation and demonstrates CP's commitment to ensure the safe, efficient transportation of grains, while providing opportunities throughout the entire value chain. The grain sector is a powerful driver for the Canadian economy, and Canadian farmers are known around the world as efficient and reliable suppliers of high quality products."
- The Honourable Marie-Claude Bibeau, Minister of Agriculture and Agri-Food
CP continues to take delivery of high-capacity grain hopper cars as part of a half-billion-dollar commitment in 2018 to purchase 5,900 of the newest-generation railcars. The new cars can carry 10 percent more grain by weight and 15 percent more by volume than the older Government of Canada cars they are replacing. Today, CP has more than 4,600 owned and leased new high-capacity hopper cars in active service, with plans to add 1,600 more by the end of 2021. This capacity upgrade has increased the amount of grain CP was able to transport in each railcar by more than 1 metric tonne from a year earlier, and by almost 3 metric tonnes since the start of the fleet renewal program in 2018.
"CP's record performance and focus on innovation is driving the future of grain transportation for the benefit of the entire supply chain and Canadians from coast to coast to coast. As the federal minister of transport, I welcome the submission of the 2020−2021 Grain Service Outlook Report. May we continue to work together to achieve great things."
- The Honourable Omar Alghabra, Minister of Transport
On July 31, CP submitted its 2021–2022 Grain Service Outlook Report to the Honourable Omar Alghabra, Canadian Minister of Transport, outlining CP's ability to move grain during the upcoming 2021–2022 crop year, taking into account the total volume of grain expected to be moved. To find out more about CP's preparations for the new crop year, click here.
Note on forward-looking information
This news release contains certain forward-looking information and forward-looking statements (collectively, "forward-looking information") within the meaning of applicable securities laws. Forward-looking information includes, but is not limited to, statements concerning expectations, beliefs, plans, goals, objectives, assumptions and statements about possible future events, conditions, and results of operations or performance. Forward-looking information may contain statements with words or headings such as "will", "anticipate", "believe", "expect", "plan", "should" or similar words suggesting future outcomes.
This news release contains forward-looking information relating, but not limited to, our operations, priorities and plans for the new crop year, the anticipated efficiency and capacity of the HEP train model and associated facilities, the anticipated impacts on capacity and efficiency of the HEP qualification of CP-served train-loading facilities, anticipated timing of delivery of the newest-generation railcars and anticipated investments in and completion of HEP qualification of train loaders by third parties, including the percentage of CP-serviced unit train loaders that will be 8,500-foot HEP qualified by year-end.
The forward-looking information contained in this news release is based on current expectations, estimates, projections and assumptions, having regard to CP's experience and its perception of historical trends, and includes, but is not limited to, expectations, estimates, projections and assumptions relating to: North American and global economic growth; commodity demand growth; agricultural production; commodity prices and interest rates; performance of our assets and equipment; sufficiency of our budgeted capital expenditures in carrying out our business plan; our ability to complete our capital and maintenance projects on the timelines anticipated; applicable laws, regulations and government policies; the availability and cost of labour, services and infrastructure; the satisfaction by third parties of their obligations to CP; the anticipated impacts of the novel strain of coronavirus (and the disease known as COVID-19); and capital investments by third parties. Although CP believes the expectations, estimates, projections and assumptions reflected in the forward-looking information presented herein are reasonable as of the date hereof, there can be no assurance that they will prove to be correct. Current conditions, economic and otherwise, render assumptions, although reasonable when made, subject to greater uncertainty.
Undue reliance should not be placed on forward-looking information as actual results may differ materially from those expressed or implied by forward-looking information. By its nature, CP's forward-looking information involves inherent risks and uncertainties that could cause actual results to differ materially from the forward looking information, including, but not limited to, the following factors: changes in business strategies; general North American and global economic, credit and business conditions; risks associated with agricultural production, such as weather conditions and insect populations; the availability and price of energy commodities; the effects of competition and pricing pressures; industry capacity; shifts in market demand; changes in commodity prices; uncertainty surrounding timing and volumes of commodities being shipped via CP; inflation; changes in laws, regulations and government policies, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; changes in fuel prices; uncertainties of investigations, proceedings or other types of claims and litigation; labour disputes; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; currency and interest rate fluctuations; trade restrictions or other changes to international trade arrangements; climate change; various events that could disrupt operations, including severe weather, such as droughts, floods, avalanches and earthquakes, and cybersecurity attacks, as well as security threats and governmental response to them, and technological changes; and the pandemic created by the outbreak of the novel strain of coronavirus (and the disease known as COVID-19) and resulting effects on economic conditions, the demand environment for logistics requirements and energy prices, restrictions imposed by public health authorities or governments, fiscal and monetary policy responses by governments and financial institutions, and disruptions to global supply chains. The foregoing list of factors is not exhaustive. These and other factors are detailed from time to time in reports filed by CP with securities regulators in Canada and the United States. Reference should be made to "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements" in CP's annual and interim reports on Form 10-K and 10-Q.
The forward-looking information contained in this news release is made as of the date hereof. Except as required by law, CP undertakes no obligation to update publicly or otherwise revise any forward-looking information, or the foregoing assumptions and risks affecting such forward-looking information, whether as a result of new information, future events or otherwise.
About Canadian Pacific
Canadian Pacific is a transcontinental railway in Canada and the United States with direct links to major ports on the west and east coasts. CP provides North American customers a competitive rail service with access to key markets in every corner of the globe. CP is growing with its customers, offering a suite of freight transportation services, logistics solutions and supply chain expertise. Visit cpr.ca to see the rail advantages of CP. CP-IR
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SOURCE Canadian Pacific
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