VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Wednesday, December 31, 2025
Canadian Pacific Kansas City Limited
CP · New York Stock Exchange
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
Canadian Pacific Kansas City Limited (CP) operates a trinational Class I rail network across Canada, the U.S., and Mexico, with revenues primarily from freight transportation. In 2024, freight made up the vast majority of total revenue, split across Bulk, Merchandise, and Intermodal lines of business. The core moat is structural: hard-to-replicate rights-of-way and network density, reinforced by capital intensity and operating leverage; in Mexico, concession rights include an exclusive freight period through 2037 (subject to certain rights). Key counter-pressures are competition from other modes (especially trucking), regulatory constraints (rates/service/safety), labor disruption risk, and execution risk in maintaining reliable service across the network.
Primary segment
Merchandise Freight
Market structure
Oligopoly
Market share
—
HHI: —
Coverage
4 segments · 7 tags
Updated 2025-12-30
Segments
Bulk Freight
North American bulk rail freight (grain, coal, potash, fertilizers)
Revenue
34.2%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Merchandise Freight
North American carload rail freight (industrial and consumer commodities)
Revenue
46%
Structure
Oligopoly
Pricing
moderate
Share
—
Peers
Intermodal Freight
Intermodal container transportation (rail intermodal competing with long-haul trucking)
Revenue
17.6%
Structure
Competitive
Pricing
weak
Share
—
Peers
Non-freight and Other
Railroad ancillary revenues (asset leasing, switching, subsurface/mineral/fibre rights, and logistics services)
Revenue
2.2%
Structure
Competitive
Pricing
weak
Share
—
Peers
—
Moat Claims
Bulk Freight
North American bulk rail freight (grain, coal, potash, fertilizers)
Revenue share estimate derived from 2024 total revenues ($14,546m) and freight revenues ($14,223m), with Bulk at ~35% of freight revenues in 2024.
Permits Rights Of Way
Legal
Permits Rights Of Way
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Rail rights-of-way are difficult to replicate; in Mexico, concession-based operating rights include an exclusivity period for freight service (subject to specific haulage/trackage rights).
Erosion risks
- Regulatory intervention (rate regulation, trackage rights)
- Concession / license policy changes in Mexico
- Political and security disruptions affecting rights-of-way
Leading indicators
- Regulatory filings/actions (U.S. STB, Canada, Mexico ARTF/COFECE)
- Any expansion of mandated trackage/haulage rights
- Service interruptions or disputes impacting corridor access
Counterarguments
- Exclusivity can be limited by trackage/haulage rights and regulation
- Some bulk lanes can shift to barge or other export corridors depending on price/service
Physical Network Density
Supply
Physical Network Density
Strength: 5/5 · Durability: durable · Confidence: 4/5 · 2 evidence
A capital-heavy rail network and corridor access create high barriers to duplicating long-haul bulk transportation capacity, especially for export-oriented unit-train flows.
Erosion risks
- Sustained service deterioration (drives mode-switching)
- Extreme weather and climate-related disruptions
- Port congestion or labor disruptions at key gateways
Leading indicators
- On-time performance / service metrics
- Network velocity and dwell
- Capital spending vs plan and maintenance backlog
Counterarguments
- For some commodities, alternative modes (barge, ship-to-rail routing, trucking) can constrain pricing
- Bulk volumes can be cyclical and sensitive to export demand and policy
Operational Excellence
Supply
Operational Excellence
Strength: 4/5 · Durability: medium · Confidence: 3/5 · 2 evidence
Operational leverage from disciplined network operations can create cost advantages, particularly in unit-train bulk flows where efficiency is critical.
Erosion risks
- Labor availability/cost inflation
- Safety incidents and tighter operating constraints
- Integration complexity across a trinational network
Leading indicators
- Operating ratio trend
- Fuel efficiency trend
- Crew starts and labor agreement outcomes
Counterarguments
- Operational best practices diffuse across Class I peers over time
- Efficiency gains can be offset by higher input costs or stricter regulation
Merchandise Freight
North American carload rail freight (industrial and consumer commodities)
Revenue share estimate derived from 2024 total revenues ($14,546m) and freight revenues ($14,223m), with Merchandise at ~47% of freight revenues in 2024.
Physical Network Density
Supply
Physical Network Density
Strength: 5/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Dense rail corridors, yards, and cross-border connectivity support service coverage that is difficult to replicate and supports carload networks.
Erosion risks
- Service issues driving modal shift to trucking
- Regulatory constraints on service or pricing
- Loss of volume density on key lanes
Leading indicators
- Carload volume trend in key groups (chemicals, auto, forest products)
- Customer service metrics (velocity/dwell)
- Shipper complaints / regulatory scrutiny
Counterarguments
- Trucking offers superior flexibility for many merchandise lanes
- Competing Class I carriers can match access in many markets via interchanges
Distribution Control
Supply
Distribution Control
Strength: 3/5 · Durability: medium · Confidence: 4/5 · 1 evidence
Transload and logistics nodes extend the rail network's effective reach into non-rail-served locations, increasing addressable demand for merchandise freight.
Erosion risks
- Transload competition from 3PLs and truck-only providers
- Shippers bypassing rail via redesigned supply chains
- Terminal congestion and service variability
Leading indicators
- Transload facility utilization
- Door-to-door service adoption and retention
- Service variability (missed switches, dwell)
Counterarguments
- Transload can be replicated by logistics operators in attractive markets
- If rail service reliability weakens, transload becomes less valuable
Operational Excellence
Supply
Operational Excellence
Strength: 4/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Merchandise networks benefit from better train productivity, asset utilization, and cost control; sustained execution supports returns even under competitive price pressure.
Erosion risks
- Labor disruptions / bargaining outcomes
- Higher maintenance and operating costs
- Safety incidents causing operational constraints
Leading indicators
- Operating ratio and cost per GTM
- Locomotive/crew productivity metrics
- Safety performance metrics
Counterarguments
- Peers also pursue similar operating disciplines; advantage may narrow
- Cost cuts can backfire if they reduce service quality
Intermodal Freight
Intermodal container transportation (rail intermodal competing with long-haul trucking)
Revenue share estimate derived from 2024 total revenues ($14,546m) and freight revenues ($14,223m), with Intermodal at ~18% of freight revenues in 2024.
Physical Network Density
Supply
Physical Network Density
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Intermodal competitiveness depends on terminal footprint, port access, and corridor coverage; single-line cross-border offerings can improve service economics and reliability.
Erosion risks
- Aggressive trucking pricing cycles
- Port disruptions and labor actions
- Terminal congestion and chassis/container availability
Leading indicators
- Intermodal volumes (carloads) and yields (revenue per RTM)
- On-time performance and terminal dwell
- Share of cross-border U.S.-Mexico intermodal in mix
Counterarguments
- Trucking is highly flexible and can win on time/price in many lanes
- Intermodal marketing companies can shift volume among rail providers
Operational Excellence
Supply
Operational Excellence
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Intermodal is sensitive to service reliability; operational execution (velocity/dwell) is critical to sustain share in a truck-competitive market.
Erosion risks
- Service degradation from network congestion
- Rising fuel or labor costs compressing margins
- Technology parity (visibility/ETAs) across providers
Leading indicators
- Service metrics (velocity, dwell, OTIF)
- Intermodal gross margin trend
- Customer win/loss and contract renewals
Counterarguments
- Operational improvements are replicable by peers
- Intermodal demand can be cyclical and price-sensitive
Non-freight and Other
Railroad ancillary revenues (asset leasing, switching, subsurface/mineral/fibre rights, and logistics services)
Non-freight revenues were $323m of $14,546m total revenues in 2024 (FY ended 2024-12-31).
Permits Rights Of Way
Legal
Permits Rights Of Way
Strength: 2/5 · Durability: medium · Confidence: 3/5 · 2 evidence
Some non-freight revenue streams are enabled by ownership/control of rail corridors and associated subsurface/mineral/fibre rights.
Erosion risks
- Contract expirations or renegotiations
- Regulatory or permitting changes affecting corridor monetization
- Lower demand for certain ancillary services
Leading indicators
- Non-freight revenue trend and concentration by source
- Renewal/termination of major ancillary agreements
- New corridor monetization initiatives announced
Counterarguments
- Many ancillary services are commoditized and price-competitive
- Some revenue sources may be one-time or non-recurring
Evidence
"CPKCM has the exclusive right to provide the freight rail service through 2037 ..."
Supports legal/permit exclusivity on part of the trinational network (Mexico).
"Other transportation modes ... use public rights-of-way ... while ... railways must ... build and maintain their rail networks."
Highlights structural advantage/barrier: rail networks are privately built/maintained and hard to replicate.
"The Company incurs expenditures to expand and enhance its rail network ..."
Supports the continuous, large-scale investment required to sustain and expand the network.
"... drive further productivity improvements ... grow its business at low incremental cost."
Management frames performance tracking as a driver of productivity and low incremental cost growth.
"Due to the capital intensive nature of the railway industry, depreciation ... [is] a significant part of operating expenses."
Capital intensity magnifies the importance of operating efficiency to deliver returns.
Showing 5 of 13 sources.
Risks & Indicators
Erosion risks
- Regulatory intervention (rate regulation, trackage rights)
- Concession / license policy changes in Mexico
- Political and security disruptions affecting rights-of-way
- Sustained service deterioration (drives mode-switching)
- Extreme weather and climate-related disruptions
- Port congestion or labor disruptions at key gateways
Leading indicators
- Regulatory filings/actions (U.S. STB, Canada, Mexico ARTF/COFECE)
- Any expansion of mandated trackage/haulage rights
- Service interruptions or disputes impacting corridor access
- On-time performance / service metrics
- Network velocity and dwell
- Capital spending vs plan and maintenance backlog
Curation & Accuracy
This directory blends AI‑assisted discovery with human curation. Entries are reviewed, edited, and organized with the goal of expanding coverage and sharpening quality over time. Your feedback helps steer improvements (because no single human can capture everything all at once).
Details change. Pricing, features, and availability may be incomplete or out of date. Treat listings as a starting point and verify on the provider’s site before making decisions. If you spot an error or a gap, send a quick note and I’ll adjust.