A Canadian Pacific train heads to its next stop. Jerry Huddleston / Flickr

CAN - Railways See Untapped Potential in Atlantic Canada Ports

Coordinated efforts among the railways, the ports and port operators to expand capacity could benefit all stakeholders along the supply chain.

Canadian Pacific (NYSE: CP) and CN (NYSE: CNI) are vying to be the top freight railroad in Eastern Canada, with both companies seeing the Atlantic Canada ports as having untapped potential.

The ports at Saint John and Halifax have access not only to Eastern and Central Canada, but also to the coveted U.S. Midwestern market and the Eastern U.S. CN has access to both ports, while CP — with its recent acquisition of the Central Maine and Quebec Railway — has direct access to Port Saint John.

Expanding the rail network capacity in eastern Canada complements the strategy of importers or beneficial cargo owners (BCOs) that have adopted a “four corners” approach to access the North American markets, Jonathan Wahba, CP’s executive vice president of sales and marketing for intermodal and automotive, told FreightWaves in an interview.

The four corners are ports on the northern and southern ends of the North American West Coast and the northern and southern ends of the North American East Coast.

“Whether there are changes in the supply chain or nearshoring, the large global shippers are going to want flexibility in their supply chains,” Wahba said. “They’re going to want to be nimble. The COVID experience has taught them that people procure goods wherever they can get it.”

Both the Canadian East and West Coast ports see a sizable portion of their traffic as having a final destination in the U.S. About 40% of CP’s containers in Vancouver are bound for the U.S., while nearly 50% of CP’s containers that are handled in Montreal have U.S. destinations, Wahba said.

Meanwhile, CN in recent earnings calls has expressed interest in expanding its network capacity, citing its exclusive access to the Port of Halifax. CN’s executives have painted the port’s potential as being the “Prince Rupert of the East,” in part because of PSA’s ownership of the Halterm intermodal terminal at the port.

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