Canadian Pacific Kansas City (CPKC) operations will likely be halted due to a strike planned for the second half of August, CEO Keith Creel said.
“We are very far apart,” he said Tuesday, referring to management and the union representing 3,300 workers, who remain at odds over the terms of a new collective agreement.
“I’m just being transparent and honest. It’s going to be a challenge.”
A work stoppage is “very likely” toward the end of the month, Creel told analysts on a conference call.
Canadian Pacific and its rival, Canadian National Railway Company (CN), are awaiting a decision from the country’s labour board on whether certain shipments would be considered essential services in the event of a strike by the Teamsters Canada Rail Conference, which represents about 9,300 engineers and yard workers at the two companies.
Although no strikes or lockouts can take place until at least 72 hours after the decision is taken – expected by August 9 – the situation casts a cloud over rail transport in the short term.
“You can obviously imagine the impact of shutting down most of the railroads in the country,” Creel said, warning of “massive chaos” if the railroad cannot alert its customers of a work stoppage several weeks in advance.
A year-over-year decline in container revenue in the most recent quarter largely came from customers rerouting cargo in anticipation of a possible labor disruption, CPKC executives said.
Last week, CN lowered its profit growth forecast due to the fallout from the strike threat as customers seek to avoid Canada’s ports and rail lines.
However, Mr Creel said a labour disruption would not affect CPKC’s financial forecast as long as it lasted less than two weeks.
Revenues up, profits down
Canadian Pacific Kansas City reported higher revenue and delivery volumes in the second quarter on Tuesday, although profits fell due to higher costs.
The rail operator said its net profit fell 32% to £903 million in the quarter ended June 30, from £1.33 billion in the same period a year earlier.
The CPKC said total revenue jumped 14% to $3.60 billion from $3.17 billion, while operating expenses increased nearly 5% to $2.34 billion.
The Calgary-based company says combined adjusted core earnings rose 27 per cent in the latest quarter to $1.05 per share, from 83 cents per share a year earlier.
Meanwhile, freight volumes increased more than 1% year-on-year to nearly 1.09 million carloads.
Canadian Pacific acquired Kansas City Southern in December 2021 in North America’s first major rail merger in decades, but had to wait to combine the operations until April last year after the deal received regulatory approval.