CP, CN land long-term potash transportation pacts from Canpotex

Today, Canadian Pacific announced it reached a 10-year agreement with Canpotex Ltd. under which the Class I will be Canpotex's principal Canadian railway for transporting potash to a main terminal in Vancouver, British Columbia. In conjunction with Union Pacific Railroad, CP also will transport all Canpotex potash traffic to Portland, Ore.

The agreement, which takes effect July 1, boosts unit revenue for the railroad, including a “fuel mechanism,” CP officials said in a prepared statement, adding that the additional revenue will support investments for service improvements and capacity expansion. The pact also “reflects increased efficiencies and cycle-time benefits realized from the fewer miles to port and a new ‘hook and haul’ arrangement,” they said.

To move Canpotex’s potash more efficiently and reliably, CP has improved infrastructure along its north mainline and western corridor, which handle potash originating from 10 Saskatchewan mines. The work is part of a four-year capital investment program approved by CP’s board in fall 2010. The Class I recently announced a $1.1 billion to $1.2 billion capital program for 2012 that includes the second phase of a $250 million north mainline project.  

"By upgrading our network, and through the ongoing implementation of our long train strategy, CP is continuing to strengthen our world-class potash supply chain," said CP President and Chief Executive Officer Fred Green. “We are now running potash trains up to 170 rail cars in length, further improving service, capacity and efficiency."

Later in the day, CN also announced that it had signed a 10-year agreement with Canpotex, effective July 1, regarding the transportation of potash volumes to export markets.

Under the pact, CN will haul a portion of Canpotex’s export potash via its southern British Columbia line to the CN-served Neptune Terminals in North Vancouver, B.C. The Class I and Canpotex also will continue work on the feasibility of a potential new potash export gateway terminal in Prince Rupert, B.C. Train design would call for distributed power locomotives pulling 170-car trains, CN officials said in a prepared statement.