CPKC chief exec says CN deal with Union Pacific fails to ease competition concerns

The head of the Canadian Pacific Kansas City Ltd. says a deal its northern rival struck with one of the two biggest railways on the continent does little to assuage concerns around competition in the industry.

CEO Keith Creel told analysts Wednesday the agreement Canadian National Railway Co. inked last week with Union Pacific ahead of UP’s proposed merger with Norfolk Southern offers “a few steps” toward allaying worries around consolidation — but not enough.

“It at least signals a bit of a realization that their railroad-empire building plans are going to have to bring more to the table to even be considered,” Creel said on a conference call.

“It still creates significant monopolistic-like — those are my words — market concentration,” he said. “There’s still significant concerns about anticompetitive behaviour, past and present.”

Last week, CN struck a deal with Union Pacific that would end the Montreal-based company’s opposition to UP’s proposal for a massive merger south of the border.

The agreement would hand CN more network access in the U.S. Midwest in exchange for its tacit support of Union Pacific’s proposed US$85-billion acquisition of Norfolk Southern. The settlement is contingent on the merger’s approval by American regulators.

“We’ve been talking a lot about the need for more competition,” CN chief executive Tracy Robinson said last Friday. “So as we’ve come to this agreement, we are satisfied that we’ve mitigated much of that concern.”

Creel disagreed, saying the deal could trigger a wave of mergers across an already concentrated sector — six companies dominate the North American rail industry.

“It’s all about eventual consolidation. If this merger gets approved, that boulder is rolling. It’s undeniable,” he said.

Competitors and customers worry the merger would cost shippers — and ultimately consumers — as well as placing unprecedented market power in the hands of a single railway, which would handle some 40 per cent of American freight traffic.

Union Pacific and Norfolk Southern argue that getting hitched would slash costs and prompt rivals to lower their rates to compete.

The two fleshed out their merger submission to the U.S. Surface Transportation Board with additional filings earlier this week after the regulator rejected an amended application in May, saying it left out key information and calling for more details.

A second Canadian National deal with Union Pacific would give CN a quicker route between Mexico and Canada, as CN locomotives rev up to roll on UP tracks between Memphis, Tenn., and the Rio Grande.

Creel waved off any suggestion the deal would pose a serious competitive threat to its shipments to and from Mexico, as did analysts.

CN’s service will still require rail cars to be switched at the U.S.-Mexico border, unlike at CPKC’s more efficient single-line service on the only railway to span all three countries in North America, noted National Bank analyst Cameron Doerksen.

“The CN-UP deal will likely be primarily competitive relative to CPKC for Mexico-Canada traffic to Eastern Canada. CPKC will still have the more competitive length of haul serving Western Canada-Mexico,” Doerksen said.

Roughly two-thirds of Canadian Pacific’s Canada-Mexico shipments are hauled to and from Western Canada. CPKC projected its shipments between the two countries would amount to $600 million in revenue this year.

CPKC sees its Canada-Mexico revenue reaching ~$600 million in 2026 with visibility on growing it to ~$1.0 billion and management does not appear to have serious concerns about CN’s new competitive service.

On Wednesday, CPKC reported that profits fell in its latest quarter even as revenues shot up on the back of a bumper grain crop and the company beat earnings expectations.

The Calgary-based railway said net income decreased 17 per cent to $1.02 billion in the three months ended June 30 compared with the same period a year earlier.

Second-quarter revenues rose 13 per cent year-over-year to $4.16 billion.

Core adjusted diluted earnings rose to $1.27 per share from $1.12 per share a year earlier, beating analysts’ expectations of $1.24 per share, according to financial markets firm Refinitiv.

Revenues from grain — the railway’s largest segment — rose by nearly a quarter from the year before while container revenues jumped 11 per cent.

Chief executive Keith Creel said that leveraging the company’s status as the only freight railway to span all three countries in North America is paying off.

In a separate release, CPKC announced the retirement of board chair Isabelle Courville, who took the helm in May 2019 to become the first woman to chair a major North American freight railway, effective Wednesday.

Longtime board member Gordon Trafton has stepped into the top spot to replace her.

This report by The Canadian Press was first published July 29, 2026.         

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