Canadian Pacific (TSX: CP) (NYSE: CP) continues to review the Transportation Modernization Act, or Bill C49, however the company believes the proposed legislation reduces uncertainty and is cautiously optimistic that it will lead to future development of the Canadian transportation system.
"Like any piece of legislation, there are pieces that resonate with certain groups and other pieces that do not," said CP's President and Chief Executive Officer Keith Creel. "We continue to review the details and will consult with Transport Canada officials and other key stakeholders."
Of note, the Act mandates the installation and proactive usage of Locomotive Voice and Video Recorders, replaces temporary extended interswitching with long-haul interswitching (LHI), clarifies language around "adequate and suitable" service and retains the Maximum Revenue Entitlement (MRE) regime, with minor modifications.
"The proposed changes to the Maximum Revenue Entitlement should promote hopper car investments and that is good for the farmer, good for CP and for all Canadian exporters," Creel said. "The details on LHI need further review, however a move to commercial, market-based fundamentals versus the current regulated approach to extended interswitching is a step in the right direction. However potential access to the Canadian network by U.S. based railroads via LHI without reciprocity is not good public policy as it could create an uneven playing field and disadvantage Canadian railways vis-a-vis those in the U.S., with a negative impact on jobs and investment."
In terms of service, CP believes the proposed legislation to be balanced and focused on what service level is reasonable given the specific facts and circumstances.
"We are committed to providing service that meets the needs of the supply chain, from the farm all the way to the port – that remains unchanged," Creel said.
Canadian railways are already recognized as providing some of the best and lowest-cost railway shipping in the world. The amendments, if they are to be considered successful over the long-term, must be seen as improving the existing regulatory framework and enhancing the supply chain in a way that is sustainable. The supply chain needs to remain responsive to the realities of North American transportation market forces.
"While it is too early to tell if there will be unintended consequences from elements such as long-haul interswitching and service requirements, overall, from a net-net perspective, we believe the proposed legislation to be balanced," Creel said. "We are supportive of anything that facilitates railway investment in the supply chain to enable additional capacity and efficiency."
CP continues to review the full details of the Transportation Modernization Act.
This news release contains certain forward-looking information within the meaning of applicable securities laws relating, but not limited to, proposed future legislative changes, railway and public safety, our operations, priorities and plans, anticipated financial performance, business prospects, planned capital expenditures, programs and strategies. This forward-looking information also includes, but is not limited to, statements concerning expectations, beliefs, plans, goals, objectives, assumptions and statements about possible future events, conditions, and results of operations or performance. Forward-looking information may contain statements with words or headings such as "financial expectations", "key assumptions", "anticipate", "believe", "expect", "plan", "will", "outlook", "should" or similar words suggesting future outcomes.
Undue reliance should not be placed on forward-looking information as actual results may differ materially from the forward-looking information. Forward-looking information is not a guarantee of future performance. By its nature, CP's forward-looking information involves numerous assumptions, inherent risks and uncertainties that could cause actual results to differ materially from the forward looking information, including but not limited to the following factors: changes in business strategies; general North American and global economic, credit and business conditions; risks in agricultural production such as weather conditions and insect populations; the availability and price of energy commodities; the effects of competition and pricing pressures; industry capacity; shifts in market demand; changes in commodity prices; uncertainty surrounding timing and volumes of commodities being shipped via CP; inflation; changes in laws and regulations, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; uncertainties of investigations, proceedings or other types of claims and litigation; labour disputes; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; currency and interest rate fluctuations; effects of changes in market conditions and discount rates on the financial position of pension plans and investments; and various events that could disrupt operations, including severe weather, droughts, floods, avalanches and earthquakes as well as security threats and governmental response to them, and technological changes. The foregoing list of factors is not exhaustive. These and other factors are detailed from time to time in reports filed by CP with securities regulators in Canada and the United States. Reference should be made to "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Information" in CP's annual and interim reports on Form 10-K and 10-Q. Readers are cautioned not to place undue reliance on forward-looking information. Forward looking information is based on current expectations, estimates and projections and it is possible that predictions, forecasts, projections, and other forms of forward-looking information will not be achieved by CP. Except as required by law, CP undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise.
Canadian Pacific is a transcontinental railway in Canada and the United States with direct links to eight major ports, including Vancouver and Montreal, providing North American customers a competitive rail service with access to key markets in every corner of the globe. CP is growing with its customers, offering a suite of freight transportation services, logistics solutions and supply chain expertise. Visit cpr.ca to see the rail advantages of CP.