Canadian Pacific Railway Stock

Canadian Pacific Railway Limited (CPRL), together with its subsidiaries (CP), owns and operates a transcontinental freight railway in Canada and the United States (U.S.). The company is in the ground transportation and logistics business.

CP provides rail and intermodal transportation services over a network of approximately 13,000 miles, directly serving the principal business centres of Canada from Montréal, Québec, to Vancouver, British Columbia (‘B.C.’), and the U.S. Northeast and Midwest regions. CP’s railway network feeds directly into the U.S. Midwest from the East and West coasts. Agreements with other carriers extend CP's market reach in Canada, through the U.S. and into Mexico. CP transports bulk commodities, merchandise freight, and intermodal traffic.

Strategy

The company’s strategy remains focused on precision scheduled railroading as embedded within the company’s five foundations:

Provide Service: Providing efficient and consistent transportation solutions for the company’s customers. Centralized planning aligned with local execution is bringing the company closer to the customer and accelerating decision-making.

Control Costs: Controlling and removing unnecessary costs from the organization, eliminating bureaucracy, and continuing to identify productivity enhancements are the keys to success.

Optimize Assets: Through longer and heavier trains, and improved asset utilization, the company is moving increased volumes with fewer locomotives and cars while unlocking capacity for future growth potential.

Operate Safely: Each year, the company safely moves millions of carloads of freight across North America while ensuring the safety of the company’s people and the communities through which the company operate. Safety is never to be compromised. The company strives for continuous implementation of state-of-the-art safety technology, safety management systems, and safety culture with the company’s employees to ensure safe, efficient operations across the company’s network.

Develop People: The company recognizes that none of the other foundations can be achieved without its people. Every employee is a railroader and the company has established a culture focused on the company’s values of accountability, diversity and pride, in everything the company do. Coaching and mentoring all employees into becoming leaders will continue to drive the company forward.

The company continues to apply its long-term strategy: leveraging the company’s lower cost base, network strengths, and improve service to drive sustainable, profitable growth.

The company focuses on key strategies, identifying tactics and actions to support and operationalize the company’s environmental commitments. The company’s strategies include:

Implementing measures to minimize or prevent environmental impacts from the company’s operations and facilities, and to ensure compliance with applicable environmental laws and regulations;

Maintaining an Environmental Management System to provide consistent, effective guidance and resources to the company's employees in regard to the management of air emissions, dangerous goods and waste materials, emergency preparedness and response, petroleum products management, and water and wastewater systems;

Reducing environmental and safety risk through business processes to identify and mitigate potential environmental impacts related to all the company's operations and activities;

Ensuring that new or altered operations and other business activities are evaluated, planned, permitted in accordance with applicable regulations, and executed to mitigate environmental risk;

Engaging with relevant stakeholders to consider and discuss the company’s environmental management practices and environmental issues and concerns associated with the company’s operations;

Employing best practices, proven technologies, and safe operating standards for activities involving elevated environmental risk; and

Planning and preparing for emergency responses to ensure all appropriate steps are taken in the event of a derailment, spill, or other incident involving a release to the environment.

Lines of Business

The company transports freight, consisting of bulk commodities, merchandise, and intermodal traffic. Bulk commodities, which typically move in large volumes across long distances, include Grain, Coal, Potash, and Fertilizers and sulphur. Merchandise freight consists of industrial and consumer products, such as Forest products, Energy, chemicals and plastics, Metals, minerals and consumer products, and Automotive. Intermodal traffic consists largely of retail goods in overseas containers that can be transported by train, ship and truck, and in domestic containers that can be moved by train and truck.

Bulk

Bulk includes the Grain, Coal, Potash, and Fertilizer and sulphur lines of business. Bulk traffic predominantly moves in unit train service moving from one origin to one destination on a single train without reclassification.

Grain

The company’s Grain network is unique among railways in North America as it is strategically positioned in the heart of grain-producing regions of western Canada and the Northern Plains of the U.S. The company provides a service advantage to its customers through grain transportation in 8,500-foot High Efficiency Product (‘HEP’) trains, including high-capacity hopper cars which enables the company to efficiently serve farmers, shippers, and the entire grain supply chain. The 8,500-foot HEP train can move approximately 40 percent more grain than the prior generation of grain train.

Canadian grain transported by the company consists of both whole grains, such as wheat, durum, canola, pulses, and soybeans, and processed products, such as meals, oils, and malt. This business is centred in the Canadian Prairies (Saskatchewan, Manitoba, and Alberta), with grain shipped primarily west to the Port of Vancouver and east to the Port of Thunder Bay for export. Grain is also shipped to the U.S., eastern Canada, and Mexico for domestic consumption.

Canadian grain includes a division of business that is regulated by the Canadian government through the Canada Transportation Act (the ‘CTA’). This regulated business is subject to a maximum revenue entitlement (‘MRE’). Under the CTA, railways can set their own rates for individual movements.

The U.S. grain transported by the company consists of both whole grains, such as corn, wheat, soybeans, and durum, and processed products such as feed, meals, oils, and flour. This business is centred in the states of Minnesota, North Dakota, and Iowa. Grain destined for domestic consumption is interchanged with other carriers to the U.S. Midwest, the U.S. Northeast via Chicago, Illinois, and the U.S. Pacific Northwest. The company also delivers direct shipments of U.S. grain to western Canada primarily for animal feed. In partnership with other railways, the company moves the U.S. grain to export terminals in the U.S. Pacific Northwest and the Gulf of Mexico. Export U.S. grain traffic is also shipped to the Port of Vancouver and the ports at Superior, Wisconsin and Duluth, Minnesota.

Coal

In Canada, the company handles mostly metallurgical coal destined for export for use in the steelmaking process. The company’s Canadian coal traffic originates mainly from Teck Resources Limited’s mines in southeastern B.C. The company moves coal west from the mines to port terminals for export to world markets (Pacific Rim, Europe, and South America), and east for the U.S. Midwest markets.

In the U.S., the company moves primarily thermal coal from connecting railways, serving the thermal coal fields in the Powder River Basin in Montana and Wyoming, which is delivered to power-generating facilities in the U.S. Midwest.

Potash

The company’s Potash traffic moves mainly from Saskatchewan to offshore markets through the ports of Vancouver, Portland, and Thunder Bay, and to markets in the U.S. All potash shipments for export beyond Canada and the U.S. are marketed by Canpotex Limited or K+S Potash Canada. Canpotex is an export company owned in equal shares by Nutrien Ltd. and The Mosaic Company. Independently, The Mosaic Company, Nutrien Ltd., and K+S Potash Canada move domestic potash with the company primarily to the U.S. Midwest for local application.

Fertilizers and Sulphur

The company’s fertilizer traffic includes dry fertilizers, which are phosphate, urea, nitrate, and ammonium sulphate, and wet fertilizers, which are primarily anhydrous ammonia. Approximately half of the company's fertilizer shipments originate from production facilities in Alberta, where abundant sources of natural gas and other chemicals provide feedstock for fertilizer production.

Most sulphur is produced in Alberta as a byproduct of oil and gas activity. Sulphur is a raw material used primarily in the manufacturing of sulphuric acid, which is used most extensively in the production of phosphate fertilizers.

Merchandise

Merchandise products move in both mixed freight and unit trains in a variety of car types. Service involves delivering products to many different customers and destinations. In addition to traditional rail service, the company moves merchandise traffic through a network of truck-rail transload facilities, expanding the reach of the company's network to non-rail served facilities.

Forest Products

Forest products traffic primarily includes pulp and paper, and lumber and panel products shipped from key producing areas in B.C., Ontario, Alberta, Quebec, the U.S. Southeast, New Brunswick, and the U.S. Northeast, to destinations throughout North America, including the U.S. Midwest, the U.S. Northeast, the U.S. Southeast, and to export markets via Vancouver.

Energy, Chemicals and Plastics

The company moves energy products consisting of commodities, such as liquefied petroleum gas (‘LPG’), fuel oil, asphalt, gasoline, and other energy products. The majority of the company’s western Canadian energy traffic originates in the Alberta Industrial Heartland, Canada's largest hydrocarbon processing region, and Saskatchewan. The company accesses key destinations and export markets in the U.S. West Coast, the U.S. Gulf Coast, the U.S. Northeast, the U.S. Midwest, and Mexico.

The company’s biofuels traffic originates mainly from facilities in the U.S. Midwest, shipping primarily to destinations in the U.S. Northeast, the U.S. Gulf Coast, and Alberta.

The company moves crude primarily from production facilities throughout Alberta to refining markets primarily in the Gulf Coast. The majority of the company’s crude is now moving as DRUbit, a sustainable heavy crude oil specifically designed for rail transportation and produced using an innovative facility known as a Diluent Recovery Unit (‘DRU’), which enables the removal of diluent at origin. This technology enables the safe and economical transportation of crude oil and is cost competitive with pipeline transportation. The company transports DRUbit from the Hardisty Rail Terminal in Alberta to Port Neches, Texas, via interchange in Kansas City.

The company’s chemical traffic includes products such as ethylene glycol, caustic soda, sulphuric acid, methanol, and other chemical products. These shipments originate from western Canada, the Gulf Coast, eastern Canada, and the U.S. Midwest, and move to end markets in the U.S., Canada, and overseas.

The most commonly shipped plastics products are polyethylene and polypropylene. Approximately half of the company’s plastics traffic originates in central and northern Alberta and moves to various North American destinations.

Metals, Minerals and Consumer Products

The company’s Metals, minerals and consumer products freight revenues are generated from aggregates (including frac sand), steel, food and consumer products, and non-ferrous metals. Aggregate products include coarse particulate and composite materials, such as frac sand, cement, limestone, gypsum, and other aggregate products.

The majority of frac sand originates at mines located along the company's network in Wisconsin and moves to the Bakken and Marcellus shale formations, Permian shale basin, and other shale formations across North America.

Cement is shipped directly from production facilities in Alberta, the U.S. Midwest, Ontario, and Quebec to energy and construction projects in the U.S. Midwest, western Canada, and the U.S. Pacific Northwest.

The company transports steel in various forms from mills in the U.S. Midwest, the Canadian Prairies, and Ontario to a variety of industrial users. The company carries base metals such as aluminum, zinc, and lead. The company also moves ores from mines to smelters and refineries for processing, and the processed metal to automobile and consumer products manufacturers.

Food, consumer, and other products traffic consists of a diverse mix of goods, including food products, railway equipment, building materials, and waste products.

Automotive

The company’s Automotive portfolio consists of four finished vehicle traffic components: Canadian-produced vehicles that ship to the U.S. from Ontario production facilities; vehicles from overseas that move through the Port of Vancouver primarily to eastern Canadian markets, as well as western Canadian markets; the U.S.-produced vehicles that ship cross-border to Canadian markets, as well as within the U.S.; and Mexican-produced vehicles that ship to Canada and the U.S. In addition to finished vehicles, the company ships pre-owned vehicles, machinery, and automotive parts. A comprehensive network of automotive compounds is utilized to facilitate final delivery of vehicles to dealers throughout Canada and in the U.S.

Intermodal

The company’s Intermodal freight revenues are generated from domestic and international movements. Domestic intermodal freight consists primarily of manufactured consumer products that are predominantly moved in 53-foot containers within North America. International intermodal freight moves in marine containers to and from ports and North American inland markets.

Domestic Intermodal

The company’s domestic intermodal business moves goods from a broad spectrum of industries, including wholesale, retail, food, and various other commodities. Key service factors in domestic intermodal include consistent on-time delivery and the ability to provide door-to-door service. The majority of the company’s domestic intermodal business originates in Canada, where the company markets its services directly to retailers and manufacturers and maintains direct relationships with its customers. In the U.S., the company’s service is delivered mainly through intermodal marketing companies.

International Intermodal

The company’s international intermodal business consists primarily of containerized traffic moving between the ports of Vancouver, Montreal, Saint John, and inland points across Canada and the U.S. Import traffic from the Port of Vancouver is mainly long-haul business destined for eastern Canada and the U.S. Midwest. The company works closely with the Port of Montreal, a major year-round East Coast gateway to Europe, to serve markets primarily in Canada and the U.S. Midwest. The company’s access to the Port of Saint John provides the fastest rail service from the east coast to the Canadian and the U.S. Midwest markets for import and export cargo from Europe, South America, and Asia.

Government Regulation

Canada

The company’s rail operations in Canada are subject to economic regulation by the Canadian Transportation Agency (the ‘Agency’) pursuant to authorities under the CTA.

The company’s rail operations in Canada are subject to safety and security regulatory requirements enforced by Transport Canada (‘TC’) pursuant to the Railway Safety Act (‘RSA’) and the Transportation of Dangerous Goods Act (the ‘TDGA’).

The U.S.

The company’s U.S. rail operations are subject to economic regulation by the STB. The STB provides economic regulatory oversight and administers Title 49 of the United States Code and related Code of Federal Regulations.

The company’s U.S. operations are subject to safety regulations enforced by the Federal Railroad Administration (the ‘FRA’), and the Pipeline and Hazardous Materials Safety Administration (‘PHMSA’). The FRA regulates safety-related aspects of the company’s railway operations in the U.S. under the Federal Railroad Safety Act, as well as rail portions of other safety statutes. The PHMSA regulates the safe transportation of hazardous materials by rail. The company’s U.S. rail operations are also subject to security regulations and directives by the Transportation Security Administration, a component of the U.S. Department of Homeland Security.

History

Canadian Pacific Kansas City Limited was founded in 1881. The company was incorporated in 1881.