CALGARY, Alberta — Knight-Swift will shift its U.S.-Mexico intermodal traffic from Union Pacific to CPKC’s new single-line route beginning in May.
CPKC and Knight-Swift announced their multi-year agreement today, just four days after Schneider said it would move its U.S.-Mexico intermodal business from UP to CPKC in May under a similar agreement.
“This agreement creates compelling new transportation solutions for Knight-Swift’s current and future customers looking for optionality and increased capacity in their supply chains,” CPKC Chief Marketing Officer John Brooks said in a statement. “As Knight-Swift transitions their Mexico-U.S. traffic to CPKC starting in mid-May, we will focus on growth between Chicago, Texas, and Mexico markets.”
Adam Miller, who serves as chief financial officer for Knight-Swift Transportation and is Swift’s president, said, “Our agreement with the CPKC will provide another differentiated solution for our customers and their over-arching supply chains.”
“The Knight-Swift team is looking forward to engaging with the CPKC railroad on service offerings, customer solution design and demand planning to help facilitate growth on the first single-line railroad connecting Mexico, the United States, and Canada,” Miller added. “Our Transmex team and growing LTL offering will also benefit from the newly created railroad and will allow us to continue supporting our customers in new and different ways by providing thoughtful solutions with a solid underlying service product.”
CPKC’s International Railroad Bridge over the Rio Grande at Laredo offers an alternative to congested highway ports of entry. A second span to expand CPKC’s cross-border capacity is under construction and expected to be completed by the end of 2024.
About 16,000 trucks cross the border at Laredo every day compared to just a few hundred intermodal containers, which CPKC executives have said represents a major growth opportunity.
Despite its longer route, CPKC has said its transit times will be truck-competitive and that it expects to gain nearly 138,000 containers annually that currently move on other railroads in the north-south corridor.
UP, the dominant carrier for traffic moving between the Midwest and Mexico, stood the most to lose from the April 14 merger of Canadian Pacific and Kansas City Southern, which are able to offer single-line service between Chicago and major points in Mexico.
In a pre-emptive strike, UP booted Canadian Pacific from the EMP domestic container pool in October. Canadian National simultaneously became a full partner in the EMP program.
While UP has lost Schneider and Knight-Swift’s Mexico business to CPKC, it stands to gain significant volume from new joint cross-border service that will launch next month with Canadian National and Ferromex. That agreement was announced on Monday.
The Falcon Premium service will connect CN terminals in Canada and Detroit with the Ferromex terminals in Monterrey and Silao via the Eagle Pass, Texas, gateway. CN and UP will use steelwheel interchange to exchange the traffic via CN’s former Elgin, Joliet & Eastern Chicago bypass route.
CN believes there are two trains’ worth of volume moving in each direction every day via truck, based on market research conducted as part of its ill-fated attempt to acquire KCS. If each train carried 250 containers, the service would handle 365,000 boxes per year, with UP serving as the bridge carrier between CN and Ferromex. UP has a 26% stake in the Mexican railroad.
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