CPKC Profits Rise Amid Trade Issues, Grain Crop Outlook
Canadian Pacific Kansas City (CPKC) reported elevated profits for the fourth quarter, driven by favorable freight volumes, as the railway continues to emphasize its Precision Scheduled Railroading (PSR) operating model. Chief Executive Officer Keith Creel highlighted the company’s strategic focus during the earnings call, stating, “Our story is about continuing to do what we do best: Controlling what we can control, and executing our PSR model, which remains key to setting CPKC apart and allows us to shine in times of uncertainty.” The company anticipates this approach will remain a key differentiator throughout 2026.
For the quarter under review, operating income demonstrated a 3% increase, reaching $1.19 billion, alongside a 1% rise in total revenue, which amounted to $2.89 billion. Adjusted earnings per share climbed by 3%, finishing at 98 cents. Notably, the company maintained consistent expenses. CPKC’s operating ratio registered 58.9%, a record for the quarter and an improvement of 0.8 points compared to the fourth quarter of 2024.
The fourth-quarter volume displayed stability based on revenue ton-miles, but evidenced a 1% growth when measured on the basis of carloads and intermodal containers. Specifically, the coal and intermodal segments were the only business divisions that experienced growth. Grain and potash carloads remained static, while CPKC’s other business segments saw a decline. Chief Marketing Officer John Brooks attributed the headwinds impacting CPKC’s Canadian forest products traffic, as well as cross-border steel shipments, to sustained U.S. tariffs. However, the company is optimistic about forecasted bumper grain harvests in both Canada and the United States, expecting these to significantly boost volumes during the current year.
A particularly notable development was the continued growth of the railway’s Mexico Midwest Express flagship intermodal service, which connects Chicago with points in Mexico. Volume in the fourth quarter increased by 40% year-over-year, according to Brooks. CPKC and CSX (NASDAQ:CSX) are set to initiate dedicated intermodal trains linking Mexico and Dallas with Atlanta, Charlotte, N.C., and Jacksonville, Fla. These “SMX trains” are scheduled to launch in the coming months, promising the fastest and most reliable service in these lanes. Brooks stated that discussions are ongoing with one domestic intermodal customer who intends to utilize the service for up to 80,000 loads per year – equivalent to 219 containers per day.
The railway will leverage the CPKC-CSX interchange at Myrtlewood, Ala., a former Meridian & Bigbee short line now functioning as a critical link between the two Class I systems. Over the past two years, this franchise has outperformed industry benchmarks in both revenue and earnings growth. Creel emphasized the company’s outlook for continued industry-leading performance through 2026, underpinned by a favorable setup. CPKC projects revenue ton-mile growth of approximately 5% this year, alongside earnings per share expansion of 10% or higher. The railway intends to commit $1.96 billion U.S. to capital projects in 2026.
Chief Operating Officer Mark Redd highlighted the ongoing implementation of centralized traffic control and the addition of extended passing sidings along the railway’s north-south corridor between Shreveport, La., and Chicago. CPKC’s key operational metrics showed improvements across the board, with car miles per day increasing by 7%, reaching 136. The railway also implemented enhancements to its safety metrics in 2025, realizing a 3% reduction in the personal injury rate and a 16% decrease in the train accident rate – statistics that lead the industry in North America. For the full year, CPKC’s revenue ton-miles increased by 4%, while volume grew by 3% when measured by carloads and containers. CPKC’s 2025 operating income rose by 8%, finishing at $4.13 billion, and revenue climbed by 4%, reaching $11.12 billion. Earnings per share increased by 13%, concluding at $3.33. The 2025 operating ratio was 62.8%, a 1.6-point improvement compared to 2024.
The company’s focus on operational efficiency and strategic investments are expected to contribute to sustained growth and profitability. Industry trends, including trade dynamics and agricultural yields, will continue to play a significant role in CPKC’s performance. FreightWaves subscribers can access the latest rail freight insights via the Rail e-newsletter. Related coverage includes intermodal competition impacting Norfolk Southern’s quarterly earnings, a clean sweep in weekly rail freight improvements, BNSF’s $3.6 billion capital plan for 2026, and OmniTRAX’s naming of Dreier as chief commercial officer.
