April 01, 2022
Class I

CEO PERSPECTIVE: Supply Chain, Market Reach and Sustainability

Written by Keith Creel, President and CEO, Canadian Pacific Kansas City

Keith Creel, President and CEO, Canadian Pacific

As part of a special series in Railway Age’s March 2022 issue, 11 North American railroad CEOs address what must be done to grow and gain market share from competing freight transportation modes. Keith Creel, President and CEO of Canadian Pacific, is the 2nd to share his perspective.

I have found that growth comes from designing a product that meets customer needs, followed by consistently delivering. This has been a key outcome of our Precision Scheduled Railroading (PSR) execution. I am convinced that PSR, to be most effective, must grow and evolve as our industry evolves. In the three decades I’ve worked in this business, and even in the five years I’ve served as CEO of this iconic company, much has changed. There are new considerations our industry may not have been as focused on in the past that now draw my attention on a daily basis. I want to go over two of these considerations and explore why they’re essential to growing our top line.

The first consideration is market reach in evolving supply chains. In performing the due diligence that came with our efforts to acquire Kansas City Southern (KCS) over the past year, we analyzed the freight markets connecting Mexico to the U.S. Midwest. Every day, an armada of trucks sets out to link auto parts and assembly plants spread across the Midwest and Mexico. These are long hauls that are naturally conducive to rail economics, but because no single railroad connects these regions, manufacturers are forced to rely heavily on trucks.

We believe that a combined CPKC (Canadian Pacific Kansas City) network can convert 64,000 truck shipments to rail shipments that today clog publicly maintained highways and border crossings as they move between Mexico and the Great Lakes region. Canadian Pacific has many routes that provide direct, competitive transportation services, and our proposed combination with KCS will significantly expand our ability to provide seamless links between major freight markets.

The second consideration is sustainability. Railroads feel the effects of climate change directly. Wildfires, floods and other natural disasters can and have shut down our rail lines. This extreme weather, including droughts like we saw in western Canada last year, directly impacts customers’ output.

Our customers tell us they want to do business with companies that are pursuing a low-carbon future. Railroads are, of course, already a more environmentally responsible option than trucks, as evidenced by our fuel economy being four times that of trucks. However, we know we need to do more. What we hear from our customers, our shareholders, our communities and our employees is that we need to work diligently toward a future where we reduce our emissions and do our part to combat climate change.

We must take concrete and measurable steps now to invest in a low-carbon future. Last year, CP installed a solar farm at our headquarters in Calgary that is expected to generate more power than we consume annually at our head office. We’re also pioneering the development of zero-emissions locomotives that use hydrogen fuel cells to power their traction motors. This groundbreaking project will generate critical industry knowledge and experience that will inform commercialization and future development.

In pursuing our sustainability goals, we are embracing a network-wide innovation mindset. We know that changes like this will take time, but our world-class team of railroaders is taking the challenge seriously and leading the way for others. The tenacity of our CP railroaders has seen us through adversity many times during my tenure, and I look forward to seeing what comes next.