CPKC receives arbitration decision establishing new TCRC collective agreements

Rhea-AI Summary

Canadian Pacific Kansas City (CPKC) has received an arbitrator's ruling establishing new collective agreements with two Teamsters Canada Rail Conference (TCRC) divisions. The four-year contracts, effective from January 1, 2024, through December 31, 2027, include 3% annual wage increases for approximately 3,200 locomotive engineers, conductors, train and yard workers (T&E division) and 80 rail traffic controllers (RCTC division) across Canada. The arbitration decision follows successful ratification of three other collective agreements with unions representing mechanical, engineering, clerical, and intermodal employees. These agreements collectively ensure labor stability and uninterrupted rail service for CPKC's Canadian operations.

Positive

• New 4-year labor agreements provide long-term operational stability through 2027
• Successful resolution of labor negotiations with multiple union divisions
• Agreements cover essential workforce including engineers, conductors, and rail traffic controllers
• Predictable cost structure with fixed 3% annual wage increases

Negative

• 3% annual wage increases may impact operational costs and margins

Insights

Railway Industry Analyst

CPKC secures labor stability through 2027 with 3% annual wage increases, eliminating operational uncertainty for investors.

The arbitration ruling establishing new four-year collective agreements between CPKC and the Teamsters Canada Rail Conference represents a significant development for the railroad's operational stability. The agreements cover approximately 3,200 locomotive engineers, conductors, and yard workers, plus 80 rail traffic controllers – essential personnel who directly impact the company's ability to maintain fluid operations.

The 3% annual wage increases through December 2027 provide CPKC with predictable labor costs for financial planning. This is particularly valuable as the company can now accurately forecast one of its largest expense categories. Labor disputes in the rail sector can cause severe disruptions, with strikes potentially costing millions in lost revenue per day and damaging customer relationships.

This arbitration outcome, combined with the three other collective agreements ratified earlier this year, means CPKC has now secured labor peace with all its major unions in Canada. This comprehensive labor stability enables the company to focus on operational integration following the CP-KCS merger without the distraction of potential work stoppages.

For investors, this removes a significant uncertainty from CPKC's risk profile. Rail networks operate as integrated systems where labor disruptions can quickly cascade into widespread service failures. The four-year timeframe provides an extended runway for uninterrupted operations, supporting the company's ability to deliver consistent service to customers and stable financial results for shareholders.

CALGARY, AB , May 30, 2025 /PRNewswire/ - Canadian Pacific Kansas City (TSX: CP) (NYSE: CP) (CPKC) today said it has received an arbitrator's ruling establishing new collective bargaining agreements with the Teamsters Canada Rail Conference (TCRC) – Train and Engine (T&E) division and the TCRC - Rail Canada Traffic Controllers (RCTC) division.

Arbitrator William Kaplan issued his ruling after the completion of multiple rounds of mediation and ultimately the conclusion of the interest arbitration process. The arbitrator's ruling establishes terms of new four-year contracts with both TCRC bargaining units.    

TCRC – T&E represents approximately 3,200 locomotive engineers, conductors, train and yard workers across Canada.

TCRC – RCTC represents approximately 80 rail traffic controllers in Canada.

The new collective agreements with the TCRC divisions, effective from January 1, 2024, through December 31, 2027, include annual wage increases of 3%. The provisions outlined in the arbitrator's award do not require ratification.

The establishment of these multi-year collective agreements involving train crews and rail traffic controllers come after the ratification earlier this year of three new collective agreements reached at the bargaining table between CPKC and unions representing thousands of mechanical, engineering, clerical and intermodal employees in Canada.

Together, these agreements bring labour stability to CPKC operations in Canada, allowing efficient and dependable rail service to continue uninterrupted for years to come.

Forward looking information

This news release contains certain forward-looking information and forward-looking statements (collectively, "forward-looking information") within the meaning of applicable securities laws in both the U.S. and Canada. Any statements about CPKC's expectations, beliefs, plans, goals, targets, predictions, forecasts, objectives, assumptions, information and statements about possible future events, conditions and results of operations or performance are not historical facts and may be forward-looking. Forward-looking information in this news release includes, but is not limited to, statements in respect of the collective bargaining agreements entered into between CPKC TCRC divisions, and the effects and results stemming therefrom.  Forward-looking information is often, but not always, made through the use of words or phrases such as "anticipates", "aims", "strives", "seeks", "believes", "can", "could", "may", "predicts", "potential", "should", "will", "estimates", "plans", "mileposts", "projects", "continuing", "ongoing", "expects", "intends" and similar words or phrases suggesting future outcomes.   

The forward-looking information that may be in this news release is based on current expectations, estimates, projections and assumptions, having regard to CPKC's experience and its perception of historical trends, and includes, but is not limited to, expectations, estimates, projections and assumptions relating to: applicable laws, regulations and government policies; and CPKC's relationship with TCRC going-forward. 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, CPKC'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:  general North American and global economic and business conditions; changes in laws and regulations; and labour disputes.

The foregoing list of factors is not exhaustive.  These and other factors are detailed from time to time in reports filed by CPKC with the securities regulators in Canada and with the Securities and Exchange Commission (SEC) in the United States. Readers should refer to "Item 1A - Risk Factors" and "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Information" in CPKC's annual reports on Form 10-K and to our risk factor and forward-looking information disclosure in our Form 10-Q filed on SEDAR+ (www.sedarplus.ca) and EDGAR (www.sec.gov). 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 CPKC. Except as required by law, CPKC undertakes no obligation to update publicly or otherwise revise any forward-looking information, or the foregoing assumptions and risks affecting such forward-looking information, whether as a result of new information, future events or otherwise.

About CPKC

With its global headquarters in Calgary, Alta., Canada, CPKC is the first and only single-line transnational railway linking Canada, the United States and México, with unrivaled access to major ports from Vancouver to Atlantic Canada to the Gulf Coast to Lázaro Cárdenas, México. Stretching approximately 20,000 route miles and employing 20,000 railroaders, CPKC provides North American customers unparalleled rail service and network reach to key markets across the continent. CPKC is growing with its customers, offering a suite of freight transportation services, logistics solutions and supply chain expertise. Visit cpkcr.com to learn more about the rail advantages of CPKC. CP-IR

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SOURCE CPKC

FAQ

What are the key terms of CPKC's new labor agreement with TCRC?

The new four-year agreement runs from January 1, 2024, through December 31, 2027, and includes 3% annual wage increases for TCRC members.

How many employees are covered under CPKC's new TCRC agreements?

The agreements cover approximately 3,200 locomotive engineers, conductors, train and yard workers in the T&E division and 80 rail traffic controllers in the RCTC division.

Does CPKC's new TCRC agreement require union ratification?

No, the provisions outlined in the arbitrator's award do not require ratification.

What impact will the new labor agreements have on CPKC's operations?

The agreements bring labor stability to CPKC operations in Canada, ensuring efficient and uninterrupted rail service for years to come.

When do CPKC's new TCRC collective agreements take effect?

The new collective agreements are effective from January 1, 2024, through December 31, 2027.