CPKC announces multi-year agreement with Schneider

Rhea-AI Summary

Canadian Pacific Kansas City (TSX: CP) announced a multi-year agreement with Schneider National Inc. to launch a new single-line intermodal transportation service connecting the U.S. and Mexico. This service aims to enhance reliability and capacity for Schneider’s customers, starting mid-May 2023, with Schneider acting as an anchor domestic intermodal customer on CPKC’s north–south corridor. CPKC plans to leverage its extensive rail network to provide truck-competitive intermodal options, backed by Schneider’s logistics expertise. The initiative includes the construction of a second span on the International Railroad Bridge to improve efficiency, expected to complete by the end of 2024. Both companies share sustainability goals focused on reducing greenhouse gas emissions through transitioning freight from trucks to rail.

Positive

• New multi-year agreement with Schneider National enhances intermodal services.
• Service expected to improve reliability in north-south transportation corridors.
• Schneider's expertise enhances CPKC's logistics capabilities in Mexico and the U.S.
• Construction of a second bridge span to improve operational efficiency by 2024.

Negative

• None.

CALGARY, AB, April 21, 2023 /PRNewswire/ - Canadian Pacific Kansas City (TSX: CP) (NYSE: CP) (CPKC) today announced a new multi-year agreement with Schneider National Inc., a premier multimodal provider of transportation, intermodal and logistics services, to provide new single-line intermodal transportation service on CPKC's north-south corridor connecting the United States and Mexico. 

"The CPKC combination creates compelling new transportation solutions for Schneider's current and future customers looking for more reliability and increased capacity in their supply chains," said Keith Creel, CPKC President and Chief Executive Officer. "Our team is eager to deliver truck-competitive services to Schneider on our newly-created, cross-border single-line network from Mexico into the United States.

"For many years, we've built trust with customers through our industry-leading east-west services across Canada and the northern U.S. We look forward to expanding that success to the vital north-south trade corridor on the newly-combined CPKC network," Creel added.  

Schneider will transition their Mexico-U.S. traffic to CPKC starting in mid-May and will serve as an anchor domestic intermodal customer on CPKC's north–south flagship intermodal service between Chicago and all major destinations in Mexico.

Schneider's growing customer base will be able to leverage CPKC's broad network of rail lines and terminals. These services, supported by Schneider's drayage capabilities and expertise in the U.S. and Mexico, will create service reliability in lanes that until now lacked single-line, truck-competitive intermodal options.

CPKC's International Railroad Bridge over the Rio Grande River at the U.S.-Mexico border at Laredo, Texas, offers a reliable alternative to congested highway ports of entry. A second span to expand the bridge's capacity and further increase the efficiency of cross-border train movements is currently under construction and expected to be completed by the end of 2024.

"It is a natural fit to pair CPKC's rail operating excellence and Schneider's superior dray execution to provide unparalleled service," said Schneider President and CEO Mark Rourke. "Our 30-plus years operating in Mexico and broad portfolio of services will bring an intermodal service offering into and out of Mexico that is comparable to the speed and efficiency of shipping over the road, but with the added benefit of sustainability." 

CPKC and Schneider have similar sustainability commitments and practices, including reducing greenhouse gas emissions by converting trucks to rail. Railways represent the most energy-efficient method of moving freight over land, helping to remove trucks from taxpayer-funded roads.

Forward looking statement

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 "financial expectations", "key assumptions", "will", "anticipate", "believe", "expect", "plan", "should", "commit" or similar words suggesting future outcomes.

This news release contains forward-looking information relating, but not limited, to, transportation, intermodal and logistics services of Schneider National Inc. ("Schneider"), the future growth of the business with Schneider, and related matters associated with the multi-year agreement between Schneider.

The forward-looking information contained in this news release is based on current expectations, estimates, projections and assumptions, having regard to CPKC's experience and its perception of historical trends, and includes, but is not limited to, expectations, estimates, projections and assumptions relating to: changes in business strategies; the fuel efficiency of railways and CPKC's operations; the impacts of existing and planned capital investments; North American and global economic growth; commodity demand growth; sustainable industrial and 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; geopolitical conditions; applicable laws, regulations and government policies; the availability and cost of labour services and infrastructure; the satisfaction by third parties of their obligations to CPKC; carbon markets, evolving sustainability strategies, and scientific or technological developments; and capital investments by third parties. Although CPKC 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, CPKC'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 and strategic opportunities; general Canadian, U.S., Mexican and global social, economic, political, 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, including competition from other rail carriers, trucking companies and maritime shippers in Canada, the U.S. and Mexico; North American and global economic growth and conditions; industry capacity; shifts in market demand; changes in commodity prices and commodity demand; uncertainty surrounding timing and volumes of commodities being shipped via CPKC; inflation; geopolitical instability; 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; disruption in fuel supplies; uncertainties of investigations, proceedings or other types of claims and litigation; compliance with environmental regulations; labour disputes; changes in labour costs and labour difficulties; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; sufficiency of budgeted capital expenditures in carrying out business plans; services and infrastructure; the satisfaction by third parties of their obligations; currency and interest rate fluctuations; exchange rates; effects of changes in market conditions and discount rates on the financial position of pension plans and investments; trade restrictions or other changes to international trade arrangements; the effects of current and future multinational trade agreements on the level of trade among Canada, the U.S. and Mexico; climate change and the market and regulatory responses to climate change; anticipated in-service dates; success of hedging activities; operational performance and reliability; customer and other stakeholder approvals and support; regulatory and legislative decisions and actions; the adverse impact of any termination or revocation by the Mexican government of Kansas City Southern de México, S.A. de C.V.'s Concession; public opinion; 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; acts of terrorism, war or other acts of violence or crime or risk of such activities; insurance coverage limitations; material adverse changes in economic and industry conditions, including the availability of short and long-term financing; the pandemic created by the outbreak of COVID-19 and its variants 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 realization of anticipated benefits and synergies of the CP-KCS transaction and the timing thereof; the satisfaction of the conditions imposed by the U.S. Surface Transportation Board in its March 15, 2023 decision; the success of integration plans for KCS; the focus of management time and attention on the CP-KCS transaction and other disruptions arising from the CP-KCS integration; estimated future dividends; financial strength and flexibility; debt and equity market conditions, including the ability to access capital markets on favourable terms or at all; cost of debt and equity capital; improvement in data collection and measuring systems; industry-driven changes to methodologies; and the ability of the management of CPKC to execute key priorities, including those in connection with the CP-KCS transaction. The foregoing list of factors is not exhaustive. These and other factors are detailed from time to time in reports filed by CPKC with securities regulators in Canada and the United States. Reference should be made to "Item 1A - Risk Factors" and "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements" in CPKC's annual and interim reports on Form 10-K and 10-Q.

Any forward-looking information contained in this news release is made as of the date hereof. Except as required by law, CPKC 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 CPKC

With its global headquarters in Calgary, Alta., Canada, CPKC is the first and only single-line transnational railway linking Canada, the United States and México, with unrivaled access to major ports from Vancouver to Atlantic Canada to the Gulf of México to Lázaro Cárdenas, México. Stretching approximately 20,000 route miles and employing 20,000 railroaders, CPKC provides North American customers unparalleled rail service and network reach to key markets across the continent. CPKC is growing with its customers, offering a suite of freight transportation services, logistics solutions and supply chain expertise. Visit cpkcr.com to learn more about the rail advantages of CPKC. CP-IR

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SOURCE CPKC

FAQ

What is the significance of the CP and Schneider agreement announced on April 21, 2023?

The agreement enables CPKC to provide single-line intermodal service between the U.S. and Mexico, enhancing reliability and capacity for customers.

When will Schneider start transitioning its traffic to CPKC?

Schneider will begin transitioning its Mexico-U.S. traffic to CPKC starting in mid-May 2023.

How does the new agreement impact CPKC's operations?

The agreement expands CPKC's intermodal network and increases service reliability in previously underserved lanes.

What are the sustainability goals associated with the CP-Schneider partnership?

Both companies aim to reduce greenhouse gas emissions by shifting freight transportation from trucks to rail.

What infrastructure improvements are planned as part of the new service agreement?

CPKC is constructing a second span on the International Railroad Bridge to enhance cross-border operational efficiency, expected to be completed by the end of 2024.