CPKC business mix as a result of the Canadian Pacific and KCS merger
In March 2021, Canadian Pacific Railway and Kansas City Southern Railway (KCS) announced a stock and cash merger of both companies to create the first United States-Mexico-Canada rail network named Canadian Pacific Kansas City (CPKC). The fusion of both railroad companies is projected to lead to a more diversified business mix, with merchandise cargo projected to represent just under half of the company's activities. Bulk cargo, at 36 percent, will be double the current share of revenue streams it represented for Kansas City Southern in 2020.
Canadian Pacific and KCS in the North American market
Out of the seven leading North American railroad companies, Canadian Pacific Railway and KCS ranked sixth and sevenths respectively, based on both operating revenues and transported carloads. At about 6.06 billion U.S. dollars (7.7 billion in Canadian dollars), Canadian Pacific’s total revenue was over double KCS’, which amounted to 2.63 billion U.S. dollars. The difference in revenues is a stark contrast with the fact Canadian Pacific only transported just over 550 more carloads than KCS in 2020.
A closer look at Canadian Pacific
In 2020, both companies had operating expenses which made up over half their revenue. Canadian Pacific’s operating ratio has been steadily decreasing to 57.1 percent in the 2020 financial year, demonstrating the efficiency of the company. That same year, close to 98 percent of Canadian Pacific’s revenue was freight revenue. 21 percent of this income was intermodal, while about 7 percent of this intermodal revenue came from domestic cross border and other international transport. However, the merger of the two companies opens up the market to a network of about 20,000 miles and a new business expected to be worth around 8.7 billion U.S. dollars of combined revenues.
Out of the seven leading North American railroad companies, Canadian Pacific Railway and KCS ranked sixth and sevenths respectively, based on both operating revenues and transported carloads. At about 6.06 billion U.S. dollars (7.7 billion in Canadian dollars), Canadian Pacific’s total revenue was over double KCS’, which amounted to 2.63 billion U.S. dollars. The difference in revenues is a stark contrast with the fact Canadian Pacific only transported just over 550 more carloads than KCS in 2020.
In 2020, both companies had operating expenses which made up over half their revenue. Canadian Pacific’s operating ratio has been steadily decreasing to 57.1 percent in the 2020 financial year, demonstrating the efficiency of the company. That same year, close to 98 percent of Canadian Pacific’s revenue was freight revenue. 21 percent of this income was intermodal, while about 7 percent of this intermodal revenue came from domestic cross border and other international transport. However, the merger of the two companies opens up the market to a network of about 20,000 miles and a new business expected to be worth around 8.7 billion U.S. dollars of combined revenues.
