CN, which operates across Canada and the U.S., kept its 2025 guidance of 10-percent to 15-percent earnings per share (EPS) growth intact even as it identified a “heightened recessionary risk” related to tariffs.
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“We’ve not seen a significant impact to our volumes thus far, but there’s no question that uncertainty has increased over the last few months,” said CEO Tracy Robinson in a Thursday earnings call.
CPKC cut its outlook to match the uncertainty, lowering its EPS growth expectations to between 10 percent and 14 percent from a prior adjusted target of 12 percent and 18 percent.
According to CPKC chief financial officer Nadeem Velani, the railroad is still tracking for mid-single-digit volume growth for the year.
For CN, chief commercial officer Remi Lalonde kept referring to the expected international intermodal volume declines as an “air pocket,” which he anticipates the railroad endure for “maybe a month or two, max.” If the “air pocket” lasts longer than expected, CN’s chief field operating officer Derek Taylor said employees could be furloughed to adjust cost structures.
“The recovery of U.S. volume has been a little bit slower than we expected,” said Lalonde during the call, who said the volumes “picked up nicely” in April. Lalonde indicated overall that U.S.-bound containers entering through West Coast ports in Vancouver and Prince Rupert were down 30 percent in the first quarter. At least half of that traffic comes from China, he said.
However, the 16 percent growth in Canadian intermodal volumes, which represents two thirds of the intermodal business, has kept traffic through those ports “much stronger than we expected.”
“We think the impact on a place like Rupert and Vancouver is not as significant as what we’ve heard from other of the Western terminals,” Lalonde said.
Echoing Lalonde, CPKC’s chief marketing officer John Brooks said volumes at both Vancouver’s Centerm terminal as well as those at New Brunswick’s Port of St. John were stronger than expected.
According to Brooks, less than 1 percent of international freight that CPKC handles is China-originated and U.S.-bound.
CPKC, which operates trains across Canada, the U.S. and Mexico, believes there is opportunity for the railroad as the tariffs play out, particularly among the three countries as they navigate duties the U.S. placed on steel, aluminum and automotive.
CEO Keith Creel said his company serves as a “land bridge” between Canada and Mexico, in which both countries can trade with each other while bypassing the U.S. According to Creel, the cross-border business “largely has not been impacted by any tariffs.”
“Our teams are working closely with the government in Canada at the federal provincial level as well as the government of Mexico regarding policies that could further incentivize growing Canada-to-Mexico trade volumes,” Creel said. “We’re hearing from both governments and genuine desire to see the Canada-Mexico trade relationship maturing deepen, and we’re playing a major role in supporting that agenda.”
In recent months, the Alberta-to-Mexico trade lane has added CPKC roughly $100 million in new business, Creel says.
CN, CPKC bullish on Gemini alliance
Both Class I railroads highlighted their work with the Gemini Cooperation, the vessel-sharing alliance between Maersk and Hapag-Lloyd that went into effect in February, as a beneficiary to their businesses going forward.
The Gemini alliance has pulled in more volume into Prince Rupert, Canada’s second largest West Coast port, according to CN.
“Gemini is kind of bringing a different approach with a service promise that is above what the industry has typically seen, and we think it plays very well into our hand,” said Lalonde. “The way that we sell Rupert is exactly on that basis, because there isn’t a city surrounding the port. We can service it very, very well, and so we sell that service reliability, that service consistency, to build it out.”
As the Gemini vessels began to ramp up in March, CPKC saw higher volumes in the Port of St. John and Mexico’s Port of Lázaro Cárdenas, primarily via Hapag-Lloyd vessels. At Vancouver’s Centerm terminal, CPKC is now adding a second train per day as Gemini phases in.
“We have a lot of opportunity between Maersk and Hapag focused on cross border into the U.S.,” said Brooks, with regards to the additional cargo flowing into Lázaro. “I would say the momentum hasn’t slowed on that. Certainly, a portion of that was tied to imports through Mexico from China.”
When asked on the call if there was increased dialogue among shippers looking to sail to Canada to avoid U.S.-levied port docking fees on Chinese ships, Brooks said the chatter was “pretty minimal at this point.”
In the first quarter, revenue for CN increased 3.6 percent to $3.2 billion on $840.4 million in net income. Revenue ton miles, the preferred volume metric for the company, increased 0.5 percent, while carloads decreased 2.2 percent.
At CPKC, revenue jumped 7.8 percent to $3.2 billion on net income of $909 million. Revenue ton miles increased 3.6 percent, while carloads increased 3 percent.
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