CP sold off its routes east of Montreal, including what became the CM&Q and J.D. Irving short lines Eastern Maine Railway and New Brunswick Southern, as part of a retrenchment in the mid-1990s.
“The world’s changed in 25 years,” Creel said Wednesday on CP’s quarterly earnings call. “The railroad’s changed, it’s evolved.”
Creel spent time on the CM&Q recently and came away impressed with CP’s shortcut across Maine linking Montreal with Saint John, New Brunswick, via connections with the Irving short lines.
“Commercially, the customers are extremely excited to have service alternatives which they simply have not been afforded in over two decades,” Creel says. “We’ll be able to offer the shortest routes from the Maritimes to Montreal, Toronto, Chicago, and Western Canada that will be trucklike reliable and trucklike competitive on a service standpoint and obviously much more compelling on a cost standpoint.”
CP aims to provide one-day service between Saint John and Montreal and three-day service between Saint John and Chicago.
“We’re having some very encouraging discussions with customers about existing moves as well as new moves to the rail industry,” Creel says.
Even though the geographic advantage was there with CM&Q, and predecessors Montreal Maine & Atlantic and Iron Roads Railways, service was not an advantage because moves to and from Saint John involved three railroads.
CP will move traffic between the end of CM&Q rails at Brownville Junction, Maine, and Saint John via a haulage agreement with New Brunswick Southern and its sister line, the Eastern Maine Railway.
To CP’s customers, the experience will look and feel like a single-line move, Creel says.
CM&Q currently handles around 24,000 carloads per year. In a regulatory filing, CP says acquiring the railroad will help traffic on the line grow 2% to 3% annually, or 4,000 or so carloads over the next three years, with potential growth of and additional 7,000 cars.
Creel says he sees growth opportunities in domestic and international intermodal, automotive, fuels, and lumber. The paper industry has declined over the years and the number of available loads in Eastern Canada is not what it once was, he noted.
“But at the same time the strategic value of that port in Saint John has not been unlocked,” Creel says.
Creel compared Saint John to Vancouver, British Columbia, which is Canada’s busiest port and is critical to CP’s success. CP has the shortest and fastest routes from Vancouver to major cities in Canada as well as to Chicago and other points in the U.S. Midwest.
CP would have the same advantages at Saint John, he says.
“Saint John could be the Vancouver in the East,” Creel says.
But there are significant differences.
The Port of Vancouver has been growing steadily as trade with Asia rises, and last year it handled nearly 3.4 million twenty-foot equivalents, or TEUs, the common measure of international containers.
The Port of Saint John handles primarily north-south trade with South America and the Caribbean, with connecting service to other ports around the globe. Saint John’s container terminal handled just 59,102 TEUs in 2018, down from 97,465 TEUs in 2015, according to the latest data available on the port’s website. A port spokeswoman did not respond to a request for more current data.
The Port of Saint John is currently undergoing a $205-million modernization and expansion that will nearly triple its container handling capacity to 320,000 TEUs by 2023. The project is funded by the port, the Canadian federal government, and the province.
The Port of Halifax, the busiest in Atlantic Canada, last year handled nearly 550,000 TEUs. Canadian National, the only railroad to serve Halifax, also serves Saint John.
CP plans track upgrades that will permit faster and more reliable service.
“The most important thing we’re working on … is investing in the physical plant to get it up to a CP standard,” Creel says.
CP will spend $75 million over the next three years to upgrade the CM&Q to FRA Class 3 track, which is good for 40 mph, up from 25 mph today. The 262.7 miles from St. Jean, Quebec, on the outskirts of Montreal, to Brownville Junction should be a 40-mph railroad by the end of 2021.
Track speed on Eastern Maine Railway and New Brunswick Southern on the 189.5 miles from Brownville Junction to Saint John is 25 mph. A CP spokesman declined to comment on whether CP would invest in track improvements that would enable higher speeds on the connecting short lines.
CP is awaiting U.S. Surface Transportation Board approval of its purchase of the Maine trackage owned by CM&Q.
