Canadian Pacific Railway: Port Congestion, Increased Development of International Intermodal and Domestic Intermodal

With congestion at the ports of Los Angeles and Long Beach set to continue through 2022, Canadian Pacific Railway (Canadian Pacific, CP) is reportedly seeking customer opportunities to shift freight to Western Canadian and Atlantic Canadian ports, company executives said during its third-quarter earnings call.

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“Many shipping lines are concerned about making changes in the flow of cargo, and now that congestion has continued and is expected to continue into next year, the discussion of reconfiguring how cargo is moved needs to be accelerated,” said John Brooks, CP’s chief marketing officer, in a phone conversation with transportation analysts.

While CP expects challenges to international intermodal transportation to continue through 2022, the company said demand for international intermodal transportation will also remain strong, Brooks said.

The merger with Kansas City Southern (KCS) Railway will provide additional opportunities for customers seeking access to the Gulf Coast, while CP’s acquisition of the Maine – Quebec Railway (Central Maine & Quebec Railway ) provides the company with access to the U.S. East Coast via Atlantic Canada.

“Our team is working with shippers to find ways to get them out of congestion in the Los Angeles and Long Beach areas and take advantage of our capacity in Canadian ports. And we have two or three opportunities for chartering smaller vessels that we would consider bringing into U.S. East Coast or West Coast ports in the expectation of not only relieving congestion, but adding some revenue.” Brooks said.

“With our new transportation network being able to reach all of these ports, we see this as providing a tremendous opportunity for the future.”

In the meantime, one strategy CP will continue to pursue is to encourage existing customers to increase their use of rail to expand their domestic intermodal business, Brooks said, adding that CP’s demand management program allows customers to pay lower freight rates or surcharges depending on how they want their goods delivered to their distribution centers. It also allows CP to rationalize train lengths.

CP said its domestic intermodal revenue has been a record for four consecutive quarters. The railroad launched the Pacific Transfer Express in Vancouver on Sept. 1 in partnership with Maersk, and domestic intermodal traffic on its Atlantic Canada service through Saint John, New Brunswick, has grown 39 percent in a row.

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