2021 performance trails behind other Class I railway companies
Canadian Pacific Railway is considered a Class I railway company in North America, which encompasses companies with 2021 operating revenues of more than 900 million U.S. dollars based in the United States and Canada. It was the sixth leading North American railroad company based on operating revenue in 2021, behind its main Canadian competitor Canadian National Railway, but right above Kansas City Southern. With close to 5.7 million carloads transported, Canadian National Railway was the Canadian market leader, hauling under three million carloads more than Canadian Pacific Railway.Canadian Pacific Railway’s 2021 operating ratio had increased back to its pre-pandemic level, up from 57.1 percent in 2020 to 59.9 percent in 2021. This increase showcased a rise in operating expenses and a slight decrease in the overall efficiency of its operations. These higher costs were partly due to steadily rising Western Canadian Select crude oil price—a situation forecast to worsen due to the market uncertainty brought on by the Russian invasion of Ukraine.
Looking ahead with Kansas City Southern
After an unsuccessful attempt at acquiring Norfolk Southern Railway in 2015, CP shifted its interest toward KCS. In March 2021, Canadian Pacific Railway and Kansas City Southern Railway announced a shares-and-cash merger of the two companies under Canadian Pacific Kansas City (CPKC). Freight revenue for CPKC was forecast to be around 8.7 billion U.S. dollars based on 2020 combined revenues, with merchandise transport as its projected business mix’s primary source of income.With a rail network present almost equally in the United States and Mexico, the KCS merger allows Canadian Pacific to expand its reach across the North American region. Until then, CP operated mainly across Canada, with part of its rail network also located in the Northeast and Midwest regions of the United States. On a financial level, CP’s acquisition of KCS made its 2021 total assets skyrocket to just under 68.2 billion Canadian dollars (some 54 billion U.S. dollars). KCS is the second U.S. railroad company to become a subsidiary of Canadian Pacific Railway after the Canadian freight rail operator gained full ownership over the Soo Line Corporation and its Soo Line Railroad in 1990.
