CPKC announces new intermodal deals with Knight-Swift and Schneider

Class I railroad carrier Canadian Pacific Kansas City (CPKC) is making significant intermodal inroads, since formally becoming a collective entity on April 14, following the official of the company’s merger by the Surface Transportation Board in mid-March, with recent announcements heralding new respective intermodal agreements with Knight-Swift Transportation and Schneider National.

CPKC’s multi-year agreement with Knight-Swift will provide truckload intermodal service on CPKC’s new single-line north-south corridor, which connects Mexico, the United States and Canada, which was widely viewed as a cornerstone of the merger prior to it being made official. Following the STB decision last month, CP said that CP and KCS (CPKC) will jointly connect shipper customers through single-network transportation offerings between points on CP’s system throughout Canada, the U.S. Midwest, and the U.S. Northeast and points on KCS’ system throughout Mexico and the South-Central U.S. 

CPKC and Knight-Swift said that Knight-Swift’s established Mexico customer base will be able to leverage CPKC’s network of rail lines, terminals, and cross-border efficiency and expertise, with a focus on improving service reliability and competitiveness.

“Our agreement with the CPKC will provide another differentiated solution for our customers and their over-arching supply chains,” said Adam Miller, Knight-Swift Transportation CFO and Swift President, in a statement. “The Knight-Swift team is looking forward to engaging with the CPKC railroad on service offerings, customer solution design and demand planning to help facilitate growth on the first single-line railroad connecting Mexico, the United States, and Canada. Our Transmex team and growing LTL offering will also benefit from the newly created railroad and will allow us to continue supporting our customers in new and different ways by providing thoughtful solutions with a solid underlying service product.”

And CPKC Executive Vice President and Chief Marketing Officer John Brooks explained that this agreement creates compelling new transportation solutions for Knight-Swift’s current and future customers looking for optionality and increase capacity in their supply chains. Brooks also noted that as Knight-Swift transitions its Mexico-U.S. traffic to CPKC next month, in mid-May, it will be centered around growth between the Chicago, Texas, and Mexico markets.

From a network perspective, CPKC said its International Railroad Bridge over the Rio Grande River at the U.S.-Mexico border at Laredo, Texas, provides shippers with a reliable alternative to congested highway ports of entry, adding that a second span to expand the bridge's capacity and further increase the efficiency of cross-border train movements is currently under construction and expected to be completed by the end of 2024.

And, in terms of sustainability, CPKC said that it is comprised of the avoidance of more than 1.6 million tons of greenhouse gas (GHG) emissions due to the expected improved operational efficiency of CPKC versus 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. Diverting 64,000 long-haul truck shipments to rail annually with new CPKC intermodal services will reduce total truck vehicle miles travelled by almost 2 billion miles over the next two decades, saving US$750 million in highway maintenance costs.

Schneider deal: CPKC’s multiyear deal with Schneider National focused on providing new single-line intermodal transportation service on CPKC’s north-south corridor connecting the U.S. and Mexico.

Starting in mid-May, Schneider will transition its Mexico-U.S. traffic to CPKC, serving as an “anchor” domestic intermodal customer on CPKC’s north-south flagship intermodal service between Chicago and all major destinations in Mexico. The companies said that Schneider’s growing customer base will be able to leverage CPKC’s broad network of rail lanes and terminals, with these services supported by Schneider’s drayage capabilities and expertise in the U.S. creating service reliability in lanes, which previously did not have single-line, truck-competitive intermodal options.

“It is a natural fit to pair CPKC's rail operating excellence and Schneider's superior dray execution to provide unparalleled service,” said Schneider President and CEO Mark Rourke. “Our 30-plus years operating in Mexico and broad portfolio of services will bring an intermodal service offering into and out of Mexico that is comparable to the speed and efficiency of shipping over the road, but with the added benefit of sustainability.” 

CPKC President and CEO Keith Creel said on the company’s first quarter earnings call on April 26 that these deals with Knight-Swift and Schneider are only the beginning, with more to come in June.

And CPKC’s Brooks said on the call that CPKC is very excited about having Knight-Swift and Schneider as part of the CPKC team.

“We worked hard…really for two years, really finding the right partners that can best utilize our capacity and service in this marketplace,” he said. “We're excited, Schneider has over 30 years of experience of operations in Mexico. The Knight-Swift team, very excited about the [compelling] value proposition that a single-line haul will bring from Canada, U.S., and into Mexico. I'll tell you both of those shippers are going to be on the door step of our terminals day one, May 11. They will be on that train and bringing volume and synergies to the new CPKC.”