(AP) - The Canadian Pacific Kansas City Railroad announced Friday its first major business win -- a week following the completion of its long planned merger -- by signing a multiyear contract to handle Schneider National's rail shipments from and to Mexico beginning in mid-May.
Schneider will now have CPKC as its preferred partner for cross-border rail. It will transport shipping containers that the trucking firm picks up from manufacturers and ports in Mexico, to Chicago's key rail hub where all major railroads trade traffic. This will take traffic away for Union Pacific and BNSF.
Companies did not specify how many intermodal shipments were involved in this deal. However, Schneider reported $458 million profits on all deliveries handled by the company across North America last year.
Schneider stated in his previous investor presentations that $800 million of goods of all types cross the U.S. - Mexico border at Laredo every day. American farmers ship large quantities of corn, pork and avocados south. Mexican car parts and avocados made in factories in Mexico are sent north. More companies are moving their manufacturing operations to Mexico in order to be closer to their clients.
CPKC trains cross the border in Laredo, and the railroad plans to add a span to the bridge to increase its track capacity. The new bridge is expected to be completed by the end next year.
Jeff Windau, an analyst at Edward Jones, said that'management is off to a flying start' since this deal was announced just a few months after the completion of the $31 billion merger between Canadian Pacific and Kansas City Southern.
Keith Creel, CEO of CPKC, said that he believes the new single-network offered by his railroad across the continent offers a compelling value. Other railroads require shippers to transfer their cargo at the border from the Mexican rail to another U.S. railroad.
Creel stated that the CPKC-Sherman combination would create compelling new solutions for Schneider customers who are looking for increased reliability and capacity in their supply chain.
Union Pacific spokeswoman Kristen South claimed that her railroad provides 'the best connection of any North American railway' to Mexico, because it is connected to Mexican railroads on all six major crossings along border.
South stated that "Our services, especially for intermodal and auto freight, provide customers with an unparalleled reach and service to critical markets throughout the U.S.A., Canada and Mexico."
Schneider has an agreement with Union Pacific to have that railroad handle its shipments throughout the Western United States. This contract was signed in January.