CPKC: April 14 Combo; C-Suite Set

Canadian Pacific and Kansas City Southern will officially combine on April 14 to form CPKC. Pictured is a CP train with KCS locomotives at Guelph Junction, Ont., Feb. 6, 2016. Stephen C. Host photo.

On April 14, 2023, Canadian Pacific and Kansas City Southern will officially combine to create Canadian Pacific Kansas City (CPKC), North America’s first transnational railroad, connecting the U.S., Mexico and Canada. The U.S. Surface Transportation Board on March 15 rendered its final decision approving the merger. CPKC’s executive leadership team is now in place.

Keith Creel, currently CP President and CEO, will become President and CEO of CPKC. Subject to formal appointment by the new company’s board of directors, CPKC’s 11-member executive leadership team, all reporting to Creel, are:

• Nadeem Velani, Executive Vice President and Chief Financial Officer.
• John Brooks, Executive Vice President and Chief Marketing Officer.
• Mark Redd, Executive Vice President and Chief Operating Officer.
• John Orr, Executive Vice President and Chief Transformation Officer.
• James Clements, Executive Vice President Strategic Planning & Technology.
• Jeff Ellis, Executive Vice President Chief Legal Officer and Corporate Secretary.
• Warren Erdman, Executive Advisor Strategic Projects.
• Laird Pitz, Senior Vice President and Chief Risk Officer.
• Mike Foran, Senior Vice President Network & Capacity Management.
• Chad Rolstad, Vice President of Human Resources and Chief Culture Officer.
• Oscar Augusto Del Cueto Cuevas, KCSM President, General Manager and Executive Representative.

Pat Ottensmeyer, KCS President and CEO, will continue as an advisor to Creel through the remainder of 2023 “to ensure continuity on key initiatives predominantly involving the combined company and Mexico.” Both are former Railway Age Railroaders of the Year, sharing the honor in 2022 and independently honored in 2021 (Creel) and 2020 (Ottensmeyer).

“Our new combined railroad will create a truly unique single-line network connecting three nations and instantly injecting new competition into the North American rail industry when our supply chains have never needed it more,” said Creel. “The public, environmental, competitive and safety benefits of this historic combination, clearly recognized by the U.S. Surface Transportation Board, are extraordinary for our employees, communities, rail customers and the North American economy. Under the leadership of the exceptional group of railroaders we announce today, CPKC will bring new options to rail customers while increasing safety, improving service and spurring new investment in our railroad network. Together, all these benefits will create jobs and drive economic growth in North America.

“We acknowledge the thorough and thoughtful consideration put into the STB’s final decision, including the conditions it imposes in order to assure that the transaction’s public benefits are realized and any potential harms are avoided. We intend to participate cooperatively and proactively to assist the STB during its oversight process and will honor the conditions the STB has imposed. Our senior leadership team is eager to come together to write the next chapter of railroad history in North America This experienced team will guide our work on a seamless integration for our customers, our employees and the North American supply chain.”

CP completed its US$31 billion acquisition of KCS on Dec. 14, 2021. Immediately upon the closing of that acquisition, shares of KCS were placed into a voting trust that has ensured that KCS operates independently of CP during the regulatory review process. Until CP exercises control pursuant to the STB decision of March 15 and the Voting Trust is dissolved, CP and KCS will continue to operate independently.

Headquartered in Calgary, Alta., Canada, CPKC “will be the first railway connecting North America,” the merger partners noted. “While remaining the smallest of six U.S. Class I railroads by revenue, the combined company will have a much larger and more competitive network, operating approximately 20,000 miles of rail, employing close to 20,000 people. Full integration of CP and KCS is expected to happen over the next three years, unlocking the benefits of the combination. CPKC will bring a new standard of safety to the North American rail landscape. CP has been the safest railroad in North America for 17 straight years as measured by the Federal Railroad Administration train accident frequency ratio. In 2022, CP had an all-time best frequency of 0.93, a rate nearly half what the company produced a decade ago and 69%lower than the Class I average.

“CP’s culture of safety, supported by its history of sustained investments in core infrastructure and technology, aligns with KCS’s likeminded culture, allowing the combined system to operate at the apex of rail safety. CPKC will implement the combination with safety at the forefront of everything it does. In its decision approving the combination, the STB said CPKC ‘should ultimately enhance safety and benefit the environment.’ CPKC plans capital investments in new infrastructure of more than US$275 million over the next three years to improve rail safety and capacity of the core north-south CPKC main line between Louisiana and the Upper Midwest. Anticipated environmental benefits of CPKC include the avoidance of more than 1.6 million tons of greenhouse gas (GHG) emissions due to the anticipated improved operational efficiency of CPKC vs. current operations and another 300,000 tons of GHG emissions with the diversion of 64,000 trucks to rail for a total reduction of 1.9 million tons of GHG emissions over the next five years. By diverting 64,000 long-haul truck shipments to rail annually with new CPKC intermodal services, reducing total truck vehicle miles traveled by almost 2 billion miles over the next two decades, saving US$750 million in highway maintenance costs. CPKC will also support the expansion of Amtrak and other passenger services on the CPKC network.”