Washington District of Columbia USA - Canadian Pacific (CP) still expects federal approval of its planned acquisition of Kansas City Southern to occur sometime within the next 12 months, despite a recent pause in the proceeding.
 
CP anticipates that a ruling from the Surface Transportation Board (STB) will come by early 2023 at the latest, President and CEO Keith Creel told investors during CP's first-quarter 2022 earnings call.
 
"We're certainly optimistic things will be restarted soon," Creel told investors Wednesday afternoon.
 
STB had asked CP to clarify some of the data it provided during the merger proceeding, and the board issued a decision on which data to use on Wednesday.
 
"There's room in the overall schedule for the board to take the time it needs to consider all the facts and the data."
 
Creel said CP is still willing to work with other Class I railroads regarding their concerns over the merger, provided that the other railroads' arguments are "reasonable."
 
CP still opposes CN's offer to acquire a Kansas City Southern line between Kansas City, Missouri, and Springfield and East St. Louis, Illinois: "We intend to grow that railroad, but we're certainly not going to divest that railroad," Creel said.
 
He also said CP would honour a 2006 joint venture between Norfolk Southern (NS) and KCS over the Meridian Speedway, but CP's merger application isn't the venue for NS to gain something that wasn't in the initial contract.
 
Infrastructure in the Houston area can support the traffic of CPKC, Union Pacific (UP) and BNSF, but there is room for potential investments.
 
"We believe that the infrastructure, if used properly, in the Houston area specifically is more than adequate for the level of business that we believe our synergies will bring," Creel said.
 
"That said, should we exceed our synergies, should investment need to be made in cooperation and in partnership with BNSF and UP, there are mechanisms within those agreements now, those trackage rights agreements that allow for those investments."
 
Despite lower revenue in the first quarter, CP is maintaining its sales outlook for the year, saying it expects to deliver double-digit revenue ton miles growth in the back half of 2022.
 
Creel defended Precision Scheduled Railroading (PSR), an approach the Class I railroads have adopted to streamline operations, although he noted that companies must regularly reassess their plans to ensure they have the infrastructure to handle the plans.
 
PSR is "a formula that has to be managed. It's not going to manage itself. It has to be done in a disciplined fashion, and you have to ensure that you've got your assets in lockstep with what your demand is," Creel said.
 
"You've got to understand what you're putting on your railroad. You can't oversubscribe your railroad. The physical assets can only do so much. You've got to plan and build the service design around what your physical plant is capable of handling, and it requires investment, and it requires measuring, and it requires the discipline to execute that."
 
Joanna Marsh.