North American trade disputes an opportunity for CPKC, CEO says

NEW YORK — Canadian Pacific Kansas City CEO Keith Creel looks at the uncertainty swirling around North American trade and sees opportunity.

CPKC (NASDAQ: CP) has a lot riding on the outcome of tariff spats involving the U.S., Canada and Mexico: The 2023 merger of Canadian Pacific and Kansas City Southern was a $30 billion bet on North American trade.

If tariffs ultimately make U.S. markets less attractive to companies based in Canada and Mexico, then those companies are going to look for new markets, Creel says.

“If you’re a Canadian producer or a Mexican producer looking for a new market that might not be the United States, we’re the land bridge that makes it possible,” he told an investor conference Wednesday. “That was never before possible without this merger. And that’s unique to our railroad. No other railroad can do that. So we can create these markets.”

One example, he says, is shipping Canadian-produced French fries to Mexico. CPKC this week began 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. Once a new cold storage facility opens on CPKC in Monterrey later this year, the containers will stay on CPKC rails for the entire trip.

CPKC also has begun handling shipments of Canadian aluminum, refined fuels and plastics to customers in Mexico. “The Mexicans are motivated as the Canadians are motivated to create this market. And we become the bridge,” Creel said.

CPKC has modeled various scenarios involving tariffs and trade. Even in the worst-case scenario, the railway can hit its target for double-digit earnings growth this year, he says.

Although the Trump administration aims to reduce U.S. trade imbalances, Creel says the economies of the U.S., Canada and Mexico are inextricably linked. “These three countries have never been more integrated than they are today,” he said, noting that nearshoring of production to Mexico has only accelerated since the pandemic exposed weak spots in global supply chains.

“And as a result of that, billions of dollars have been invested, especially in Mexico, to help de-risk supply chains, to bring products closer to market, to the consumption market, which is the U.S.,” Creel said.

Once trade disputes are ironed out, CPKC will be in a unique position to serve all three countries with single-line service, Creel says.

For now, the tariff noise is not having a negative impact on CPKC’s cross-border traffic.

“We’ve got strong demand in autos, we’ve got strong demand in intermodal, we’ve got strong demand in lumber, we’ve got strong demand in energy, chemicals and plastics. All those markets are strong and they’re there,” Creel said.

The ongoing trade disputes, however, are serving as motivation for CPKC.

“History will give you challenges, but you could be defined by how you respond to them, not by the challenges themselves,” Creel said. “So it just means that we get eager, we get hungry. And I’ll tell you the more I think about this, I get more excited about it.”

Last month the CPKC marketing team began a cold-calling campaign targeting up to $350 million in potential new revenue.

“Over the last three weeks, we’ve won $20 million in new business,” Creel said. “To me, that’s entrepreneurial, that’s aggressive, that’s hungry, that’s making a unique outcome with a very unique network.”

Meanwhile, CPKC is focusing on continued development of its merger-related cross-border services.

Among them: the closed-loop finished vehicle service model that solves auto rack supply problems at Mexican assembly plants, Mexico Midwest Express premium intermodal service, temperature-controlled cross-border intermodal, and intermodal auto parts shipments between the Southeast and Mexico.

Creel spoke at the J.P. Morgan 2025 Industrials Conference.

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