CP Rail Chief Executive Officer Keith Creel thinks consolidation will inevitably come to the rail industry in the coming years, as organic growth opportunities grind to a standstill.
In an exclusive broadcast interview on BNN, Creel echoed the sentiments of his mentor, veteran railroader Hunter Harrison, predicting that increasing demand for rail shipments will force firms to band together.
“Inevitably, the thesis is not going to change from a capacity standpoint. The demand for railways, the demand for transportation is going to increase in North America,” he said Wednesday. “You’re not going to build new railroads -- you’re not going to have the ability to do that, so you have to do more with what you have.”
Creel said barring consolidation in the space, gridlock would ensue and ensnare the North American economy.
“The way to do [more with existing infrastructure is] through consolidation to create capacity by eliminating unnecessary handoffs, and through that process you’ll be able to handle the growth in the future,” he said. “If not for that, some type of consolidation, we’re going to have gridlock in both [the Canadian and American] economies, which is going to adversely affect the North American economy.”
Creel said as a result of the interconnected nature of his industry, he’s keeping a close eye on the heated NAFTA talks, and while surprised by their intensity, he believes cooler heads will prevail.
“It’s negotiations, it’s discussions -- there’s probably not a perfect agreement. At the end of the day, NAFTA, to me, has created an ability to have fluid trade between Canada, the U.S. and Mexico,” he said. “I think that’s in all three economies, collectively, best interests. So, at the end of the day, I think the facts are going to prevail once they get through the rhetoric.”
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