Okay, I think we're going to go ahead and get started. We're kicking off this morning. We're really excited to kick off the 2025 Wells Industrials and Basics Conference here in Chicago. Thanks to everybody for joining. I'm Chris Weatherbee, the Senior Transportation Analyst here at Wells. I have my team here as well. I'm very pleased to be joined by Canadian Pacific to kick off the conference. I think it's going to be a great way to start and start talking about what's going on in the rail space. We'll have transport companies pretty much throughout the day as well as into tomorrow. It's going to be a great lineup. From Canadian Pacific , we have Nadeem Velani, who's EVP and CFO, as well as Mark Redd, EVP and COO, Chris de Bruyn, VP Capital Markets and Treasurer is in the audience.
Gentlemen, thanks so much for joining us and kicking off the conference for us. Really appreciate it.
Thanks for having us, Chris.
Yeah, thank you for being here.
I think we're going to kick it over to you for a couple of intro remarks, then we'll just sort of dive right into Q&A. We want it to be interactive. If you guys have questions, we can get you a mic. We'll definitely get you the questions in there. We want to kind of have a good dialogue this morning. Again, thanks so much, and I'll kick it over to you guys to get started.
Thanks, Chris. So honored to be here. It's great to have you covering us again with Wells now. Certainly when we look at where we are, it's two years since we became officially Canadian Pacific Kansas City, two years since we laid out our investor day targets, our five-year plan. I'd say despite a very uncertain environment, probably the most overused word in the last three months or so, but it's really proud of what we've been able to deliver. If you look at what we laid out two years ago, our five-year plan, we talked about kind of mid-teens level of EPS growth over time as we ramp up our synergies and ramp up even the benefits of capital allocation and shareholder returns and so forth.
Pleased with, despite a freight recession that seems to be unending, that we were able to deliver in 2024, 11% EPS growth. We had talked about this combination being a growth story, and we delivered industry-leading RTM growth in 2024. If we look at where things have started in 2025, again, very pleased. We have guided to 10-14% EPS growth for the year. Very confident that we will be able to achieve that. Again, we are leading the industry in RTM growth. If you look at what we have been able to do so far this year, we are up 5% RTM basis for the year. For the quarter, we are up around 7%. I think the momentum that we built in 2024 is carrying through in 2025.
If we can get some supportive level of macro, I think we will really see how this combination can really kickstart growth. I am very pleased with how things are started out. Maybe I'll just pass it over to Mark to speak to operations a bit.
Yeah, so Nadeem covered kind of where we are, where we're headed for the year. A couple of things I would say is we really hit a milestone beginning of the last month, May, with our day in cutover. That's really putting our operating team systems together, running under one umbrella at this point. Some things went well. Some things we are still working through. I would say that from the standpoint of coming through Memorial Day, we're probably about 5,000 cars under cars online. So that's a measure we've been looking at for the last couple of weeks just to make sure we can push volume through the system. The good news is we've cut over.
The areas where we've been able to just kind of focus on some of the opportunities we've had with the cutover is Louisiana, South Louisiana, eastern part of Texas, and some parts in Mississippi where we've struggled just a bit with some of the operating features that we're working into. Certainly, the rest of the railroads are doing quite well. Canadian operations is probably some of the best I've seen since being on this job. Mexico, for the past two years, has really done a very good job working in that space as well. What I would leave you is kind of where we headed with day in, starting to push cars offline, doing well in that space. I know some of the customer aspects have felt some of the brunt of some first-mile, last-mile customer service. Certainly, I've been boots on the ground.
I've been down in Shreveport for the better part of two to three weeks, and I do have some senior VPs on hand as well in operations that's helping through this nuance of just learning the systems, pushing through the systems, making sure we do all the tight work order type stuff that we need to complete. The only other thing I would probably touch on this point is really just labor stability. As you see it read on the news that we finally got our arbitration back for the Canadian Operations, 3% for the next four years. It creates some stability in that market of Canadian Operations. It is good news for us. We look forward to that. We will continue to work with the other unions and TCRC and RTC as well as we look forward for the next four years with those fellows.
Let's start on the volume side. Nadeem, you talked about RTMs up just under 7%. I was looking this morning. Year to date, right around 5%. Some pretty strong performance there. Can you maybe walk through a little bit of what's standing out on the positive side, maybe what's been a little bit on the softer side?
Yeah, sure. First off, we're still very much a bulk railroad, and we're seeing the benefits of a strong Canadian grain crop and even U.S. crop. Typically, the crop will start seeing some slowdown as far as seeding for the next crop year, and we start running out of basically inventory to move. It stayed pretty strong through the end of Q2. Grain has been a real driver of volumes, certainly on the Canadian side and to an extent on the U.S. side. If you look at our coal franchise, formerly Teck, now Elk Valley Resources, they've been, with a new ownership, really pushing through to their export markets and really delivering a lot of product that we're seeing the benefit of to a lesser extent as well.
We have a small U.S. coal franchise now with Kansas City Southern and even seeing benefits of volume growth on the U.S. coal side. The overall bulk is doing well. Potash has been a bit softer to start the year, but we expect that to really start ramping. Canpotex was a big part of the export franchise with our Canpotex as our key customer. We'll see some strength in the second half of the year there. Overall bulk, I feel really good about. Intermodal, I think that the benefits of our Gemini Alliance, we've seen some market share gains there with Hapag-Lloyd and Maersk. That's driving a significant amount of growth. I think our international volumes are up 28% as we stand.
Even domestically, we're tied to a lot of the key Canadian retailers, and we have a really good growth we've seen with Loblaw and Home Depot, Canadian Tire in Canada. Despite a pretty weak kind of backdrop on the macro side, Intermodal's hanging in for us very well. We've got some new products coming on in terms of our new facility coming online with Americold in the second half of the year. I think it sets up well for that. If we look at merchandise, aluminum and steel, I've seen some softness because of the tariffs and recent increase in tariffs. We're not as optimistic on that part. We've also seen crude be negative. I think it's down about 30% plus right now. We have that.
That is an actual facility that's down right now that's going to kick up in the second half of the month here. We'll start seeing that ramp up positively. We've talked about our, on the ECP side, the opportunities to build that land bridge, if you will, from Canada to Mexico. We're seeing real strength on the refined fuel side, on the plastic side, and the LPG side. Strength on merchandise there is offsetting some of the negative volumes on crude. Overall, we feel good with the start that we've had. In the second half, we've got some very easy comps. Talked about the labor outages that we had last year, the port strike. Volumes, I think, are going to continue to see some strength for CPKC.
Mark, how's the network handling the volume growth we're seeing? Maybe specifically kind of curious about Mexico. When the merger occurred and you guys ultimately took operational control of the business, I think there's been some progress moving forward in terms of what you guys inherited at the time. Maybe talk a little bit about where the network is and how it's handling this volume growth that we're seeing.
Yeah, so I touched a little bit about the network earlier, but as far as capacity and capacity projects, things that we're doing to right-size and get ready for future growth, good news is we continue to build capacity in Mexico to separate the locals from the mainline trains where we can do both. I talk a lot about that. It's very important to an operating person. It's creating value to where we can do both and serve the customer last mile, first mile. The other piece is during the past two weeks, we've been able to onboard about 10 locomotives so far, 10 of the Tier 4 locomotives through Dallas, Wiley, and already have them headed up toward Canada, put them on the 100 series.
That will free up locomotives to bring back down southbound fuel efficiency benefits, all of that type of stuff that we will see. Certainly, things that we are doing in Kansas City with some of the double track build that we are doing to create more and more capacity through Kansas City, because it can be a bottleneck if you are not careful with the amount of business we are bringing through. Certainly spending money before we get to that point to where we can run trains fluid through there. Crew base is good. I mean, we continue to work with the unions on hourly agreements. I think that would be a big plus once we get to that point. We are not quite there yet, but we are working hard to get there. Yeah, that is what I would tell you.
I guess maybe, Nadeem, in terms of some of the Mexico to U.S.-bound business, we usually think auto is kind of one of the things that we're focused on, particularly given the noise around tariffs. What's the state of that business? How's that trending these days?
Yeah, so from an auto perspective, we saw early on when post-liberation days, some of the auto OEMs had slowed down some of their production. But as we sit here today, everyone's back up and running. We've seen that production kind of come back quite strong. You've seen our auto volumes are up pretty significantly. We're seeing some auto parts business come down south. That's been growing and starting to build upon our Intermodal product, which with our 180/181 Service Chicago to Mexico, the southern part of that. Our auto sector, our auto volumes have seen record volume over the past year, and we still see that picking up. Our Closed-Loop Product has really fit well with the key markets and with our key customers. We continue to see strength there. We're optimistic.
Two things I would just add to that is really Chicago. We have been able to put more parking in Chicago just due to the fact of the volume that we have coming to Chicago. Wiley continues to do extremely well inbounds. Offloading, taking those empties back down to Mexico to reload, as he talked about, the cycle of the cars. From an operating person, from day one, when we started 180/181 with a couple of different cars running on that train with Manifest, it is super exciting to see how much volume is on that train today. I mean, we are running, soon we will be running Americold on the train out of Kansas City. We will have deploying these thousand reefers that we have across this network in that space.
Super excited to see that train grow to what it is today and be able to serve Snyder and others in that franchise.
Lastly, Chris, I'd just add the key part of the combination was to also extend the length of haul, single line service, which effectively turns your assets, have a better product in the marketplace, and a lot of efficiency tied to that. Previously, the old KCS network, you'd see about 90% of traffic on the auto side kind of at the border be given up to other carriers for final destination. That 90% has gone down to 70% today and going to get lower. We can have a product that can get single line service, which ultimately is going to be beneficial across the board.
Where do you think you are in that process?
I think if I go back to the investor day, you guys talked about maybe two to three percentage points of sort of outgrowth coming from revenue synergies, the opportunity 180, 181, which is probably part of that sort of process. Where do you feel like you are in capturing those synergies on the revenue side?
Yeah, if you go back to when we announced the combination, we had said our plan was kind of a three-year plan as far as our synergy target. It was not a case where we felt, "Okay, after three years, it just ends." That is kind of line of sight. We had talked about being able to handle the capacity, the capital requirements that you have. You could not do everything all at once. That sets you up for failure from a service point of view. We wanted to kind of stair-step into it to be able to invest in the sidings, invest in the infrastructure across the network to be able to support that growth responsibly. We are two years and a little bit into the transaction. I would say I think we are going to finish this year about $1 billion of synergy.
We're probably going to be at that level of that three-year target a little early. It doesn't end. We see this having a longer runway. Last investor day, we had talked about it being potentially instead of a $1 billion kind of revenue synergy, closer to $1.5 billion. I'm not backing off of that. If you look at this environment, when you have some of these hurdles surrounding tariffs, etc., it forced us to look at the opportunity. An example is this land bridge. We've talked about some opportunities for Canadian traffic into Mexico, which hasn't been a big amount of volumes traditionally.
This has challenged Canada as a whole, but also challenged ourselves internally to say, "What can we do more?" On the ECP side, when we looked at LPGs, we looked at refined fuels and so forth, I think that could be a huge opportunity, a $100 million type of revenue opportunity near-term that I think could be three-four X times over time. That alone could be another, if you want to call it a synergy over time, is going to be an area that can take that billion up to $1.5 billion almost on its own. I feel like we have got many years ahead of us for that synergy opportunity.
When you think about the price piece of it, I think there's been performance at CPKC has been good on the yield side. I think selling a different product into the market, I think you've been successful doing that. Can you talk a little bit about sort of the pricing dynamics for 2025 specifically? Are you seeing any acceleration? Where are the opportunities?
Yeah, so pricing, you think about the last few years, we've had a significant amount of inflation coming out of COVID, etc., that we still needed to overcome. When you look at pricing, it's kind of net of inflation. Inflation has come down significantly. Mark talked about the recent labor contracts that have been closer to 3% as opposed to 4% or 5%. Pricing has held in steady. Again, you got to have the service. You got to have that ability to drive value to the customer. We've been able to see pricing still in that 4% plus range. If you factor in kind of the lower inflation, the net benefit is pretty significant in this environment. Again, you're driving value for the customer by having the single line service, etc.
You have got to maintain that in order to make it sustainable for the future.
Let's talk a little bit about some of the near-term stuff that you guys have given out. I think last time on the conference call, you noted OR guidance for the second quarter, kind of 200-250 basis points better. Obviously, looking at where RTMs are, feels like that's probably pretty decent, but kind of want to get your take on how you think 2Q is shaping up from an OR standpoint.
Yeah, no, when we looked at the first few months of the quarter, things are on track. There's always going to be some variability. Stock-based comp is one of those that you got to mark to market each month. Outside of that, though, I think we're on track for that guidance for the quarter. We talked about sub-60 for the year, which I feel very comfortable with as well.
Okay. I guess maybe zooming out a little bit as you think bigger picture and the opportunities you had, Mark on the operation side, you on the finance side, you still feel, I guess, how do you think about the longer run opportunity from an OR perspective? I know you do not solve for OR. We have heard that a lot over the years from you guys, and it is an output, not an input. Does the KCS opportunity and what you see ahead of you in terms of growth still support decent improvement from where we are right now?
Yeah. If we were going to do mid-single digit type of volume growth, we're investing in additional assets. Mark talked about some of the tier four locomotives that are going to drive benefits from operating leverage, from fuel efficiency. If we're operating and running the way we should, we should see 100-150 basis point type of OR improvement year over year just with the benefits of operating leverage, pricing above inflation, etc. I think long term, we should start seeing, first of all, we got to get sub 60, and then beyond that, I think we'll continue to see improvement if we're delivering what we say we're going to do as far as volume growth and running it efficiently.
Mark, maybe from your perspective, I know there have been some changes at the FRA side and some potential opportunities on the regulatory side to do things differently. Maybe if you want to talk a bit about that, because I do think that this sort of at least is partially the underpinning for sort of a longer term sub-60, sustainable sub-60 OR.
Yeah. So I mean, you can speak a day on that alone. I would say that feedback has been good. I mean, they want technology. They want kind of some of the things that we're doing in Canada and some of the other class ones in the U.S. with Coldwell technology, how we can cycle trains, have a safer, better effective brake system. We're working through that. We've got broken rail protection that's homegrown. It's fairly cheap for the outcome that you get. We want to put it on all of our subdivisions. There's conversations with FRA about how we deploy that in the U.S. We've talked a lot about just changing wheels within train. We've got waivers to be able to do that at Laredo, Kansas City. That's something that we've struggled with in the past. I would say KCS has struggled with.
Today, we have the ability to do that. Really, the last piece and what I'm looking for is cross-border, how we bring the cross-border inspections through Laredo and not have to stop again. Once I do the brake test in Sanchez, I can move across border, not have to stop. You just gain hour upon hour doing that. It helps with cycles. It helps with just trains across the railroad, makes them safer, certainly utilize the assets that we have in place. There is a lot of good traction in that space, and they are keeping an open mind, and we are showing data. We are keeping them apprised of things that we can do, much like some of the other railroads are doing as well.
We spent some time recently kind of digging into AI and technology opportunities. I think sort of the changes at the FRA were part of what spurred us to take a little bit of a deeper look at that. I know you guys have spent some time thinking about that. Obviously, you've had your hands full with the integration of the merger over the last couple of years. I guess as you think about the landscape for technology on the network, what can this be? I don't think we're heading towards one-man or unmanned crews anytime in the very near term. I mean, it seems like there's many opportunities around the edges. Is this something that starts to kind of get on your radar, Nadeem, from a cost perspective? Is there capital you want to put into it, maybe OR opportunity coming out of it?
Yeah. Let Mark touch on some of this a little bit more in terms of the specific initiatives that we have at CPKC, and then yeah, maybe I'll.
Yeah. A couple of things. I mean, one is if we think about spotting trains and how work in the back office to spot cold trains, different things like that, we can do that through some of the AI technology that we have. We're actually working through that today, even with some of our DN initiatives to get some of that work completed and finished. It's really just mining the data and understanding where we can use it just from an operating standpoint. I think everybody's probably most likely met Kyle Mulligan, Dr. Mulligan, just a brilliant person in that space and how we can work with Pam's group, our CIO in that space, and just develop more and more type of examples of how we can produce that.
A lot of it from an operating side is going to be within the space of what Kyle does. Then how do we spot customers, give more history, more data back to customers as they need to understand what their cars or what their cycles are doing and how we can produce a better result with spot times as well.
Yeah. First of all, I thought you did a perfect job of doing a report about what the future of the state of the industry could be as far as benefits from technology. I'll give you a plug there. I think you hit the nail on the head in terms of your report, which talked about what can we do as far as turning assets more as far as from a safety point of view. We spend a lot of money on casualty, the direct costs associated with derailments or incidents, etc., but even the indirect costs that that has as far as taking your network down and affecting your reliability, affecting your network speed, and the implications of that can be pretty material as far as what that means as far as your asset base, right?
When you can have a greater reliability of the network, reduce the number of incidents, reduce the downtime on the network, it can be hundreds of million dollars worth of capital implications directly from that. When we look at the opportunities from what you can do from a technology point of view, I certainly think the safety aspect of it, what you can do as far as taking away a lot of these jobs that are menial tasks that people do not want in this day and age, but also not as effective, right? When you can look at utilize technology to look under a rail car, to find flat spots, to find potential incidents that can impact the network.
I think that 5, 10 years from now, we're going to look back and say, "Why didn't we have a lot of this technology sooner that can make the network that much more improve velocity, but also take away a lot of the incidents that are the cause of reduced velocity across the rail space?
Yeah. Seems like an interesting point.
We will not even talk about the back office stuff, but that is going to be a big area. AI that you utilize into even just the sales process, right? Salesforces of the world, etc., that can help you generate leads for our account managers or think about how we can sell across the lines of business differently or so forth.
I'm going to pause for a second. If anybody wants to ask a question, certainly raise your hand. We'll get you a mic. We'll get you on here. While they think about that, I did want to ask about the second half. You noted the second half and how the comps are a little bit easier, certainly on the RTM side. So you're kind of running in roughly in line with your full year target now through the second quarter. Obviously, there's some puts and takes, and we'll see sort of where grain goes as the year goes on. Any thoughts on kind of maybe how we should be thinking about that?
Is there the potential where we're running a little bit above mid-singles for at least a period of time in the third quarter? Or is there, I guess, maybe if we could break down what the second half might look like from a volume standpoint?
Yeah. We are going to see, as I mentioned, the tail end of this grain crop. Things will start slowing down a little bit here. I do feel good about where things stand as a whole. It was not too long ago here, a couple of months ago, where there was much greater fear of a potential recession in the second half of the year. I do feel a lot better about the macro aspect and how that might not be as big of a downturn. I feel better about, even from a Canadian perspective, where things are as far as trade, etc., how we have been able to overcome kind of some of the near-term challenges we had in the April timeframe. I feel good broadly about that.
The grain crop so far looks to be decent levels of moisture that we still have good line of sight that we'll have an average type of crop, which I think is a good thing given wildfires have been burning for a couple of months here now across the northern part of Canada. Optimistic about that grain will be solid. The comps are very easy. We had a very challenging, I'd say, August with stop starts on the labor side with some of the port disruptions. If you think about on the intermodal front, which I think is going to be a big driver of overall volumes, I do feel good about what we've been able to deliver both on the international and domestic side. Overall, I do think that there could be I feel good about the mid-single digits for the year.
Could there be a little bit of upside? Yes.
In terms of intermodal, you mentioned intermodal. When you think about Vancouver in the context of Canada, it certainly feels like Canada lost some share to the U.S. over the course of the last year, given some of the disruptions that we've seen from a labor standpoint. How do you feel like that share kind of is? Is that coming back up to Vancouver? Are you seeing that happen?
Yeah. Yeah. I think we see that through just the Gemini experience. I mean, with those two companies coming together and what we're bringing through Centerm, I mean, Gemini is probably 90% of what comes out of Centerm today, meaning that what we can do is build a train straight out of Centerm that goes out to the destinations either across Canada, across into St. Paul or Chicago, however we split that business up coming out. Certainly done well. I mean, I think it's, I'm going to say it again, it was 28% up. I forget now, but it was a large volume that's coming off the coast and certainly doing well. We're 100% handling that business. They're quite satisfied with where we are. For us, it's A plus today, B minus tomorrow.
We want to continue to improve in that space, but certainly doing well coming in and out of Vancouver.
Is there anything that you guys are hearing or seeing about China coming back online after the drop of the tariffs from 145% to 30%? Is there anything that we should be thinking about? There was a period of time where we thought we'd have a lull, then potentially a surge followed by maybe a hangover later in the year. Seems like things are maybe a little less volatile, meaning kind of just a bit steadier. I don't know if that's your experience. What are you guys seeing?
Yeah. We did not have necessarily on our network the expectation of seeing some blank sailings. Our customers were being pretty solid through that kind of air pocket potential. We never felt that that was going to occur, and we have not seen it. A big part of our network also as far as import traffic is not coming to the U.S. as well, to be fair. We were never going to have that exposure relative to some of our peers.
I think just Hapag and Maersk themselves, how we're bringing more and more business through St. John's and also Lázaro is continuing to grow. If I don't say that, John, he'll get onto me, but certainly growth in that space from those two customers.
Certainly, one to hit on the topic of the day in rail space, which is M&A. You guys are the last ones to go through that process very successfully. I think the blueprint of CPKC is something that we've heard sort of echoed out there as, well, if they did it well and it has worked out from a service perspective, operations perspective, customer perspective, why cannot it be done again? I guess I am curious if you have an opinion or some thoughts on what a potential for a transcontinental U.S. merger or some further M&A activity in the industry?
It's not time yet, Chris.
Yeah. I saved five minutes for this, so you can speak as long as you want.
It was kind of ironic. I was looking out the window today, and I saw the former Illinois Central headquarter building at NBC Tower, and that was a former lifetime ago, but that was one of our offices at the old CNIC, which was the previous class one merger that took place. Of course, CPKC, two years now. Listen, there's always going to be chatter around M&A. This is something that's always been forefront. We had made some attempts historically at CP as far as some of the Eastern rails and so forth. To me, it always needs to come out of some level of there's got to be some sort of catalyst, whether that's the growth aspect of it.
When we talked about CPKC and why we were so thought that it was such a great initiative, it was to support growth and bring a better product to the marketplace. Now, when you look at kind of the current environment, what's the catalyst? What is it going to do for customers eventually? It remains to be seen. We're post kind of PSR in the industry. Are you going to look for M&A to reduce costs? I'm not sure if I see that. There's going to be a lot of give and take with customers, a lot of give and take within the industry to be able to offset some of the negatives associated with M&A. I think there's always going to be chatter.
If you look at the challenges that we faced in terms of getting approval for the smallest Class One railroad that had a different regulatory perspective in terms of our agreements and the KCS deal, it's going to be a pretty significant hurdle to overcome. Is it worth the benefits or are the benefits going to be able to satisfy some of those hurdles that you have to overcome? It remains to be seen. We'll see. I'm not sure this is going to go anywhere. I think that the railroads, the industry is running well. If you look at the Class Ones across from an operating performance, I think the industry is running well. I think that there's plenty of growth to be had. I think this freight recession will one day end, and I think there'll be an opportunity to grow individually as Class Ones.
I think the alliances and partnerships that have taken place are very positive. We're working with each of the Class Ones in different respects that I think partnerships and alliances can help grow without the need for Class One consolidation. So that'd be my perspective.
Yeah. I would just add to it as far as just operational side. If you think about how well we've done for these past two years and then have the cutover of our mainframe over to where we are today and some of the struggles we've had in that area with our customers, imagine that on a larger scale. I mean, this is two of the smaller railroads, and we took two years to prep for some of the things that we've done in this space. Certainly, we deeply regret some of the issues that we've had with customers and certainly working close with those customers at maybe a smaller scale, but at a magnitude of a bigger railroad end to end that's trying to do that east and west. It would be quite difficult, I guarantee you.
When putting something in trust and having that, there's a lot of waiting to get a return with a lot of risk, and that alone can be a significant kind of deterrent in my view.
There's a question in the back. Fire away. I'll repeat it.
Yeah. Do you want to repeat the question?
Yeah. The question was about incremental margins of putting the two companies together. Can you get upside relative to what each one of them was individually capable of?
Yeah, absolutely. You have seen it. You think about a big part of the CPKC, we talked earlier about that extended length of haul and the ability to run longer trains. We have just been, the last few years, starting to invest in sidings and that opportunity to run longer. We have some unique elements as far as CPKC, Mark talked about, some of that trans-border Mexico into the U.S. When you can run longer, when you can avoid some of the slowdowns associated with whether it is infrastructure related to bridge or FRA regulations that also limit what you can do from a network speed point of view, I think we have a bigger opportunity as far as incremental margins than your typical network or typical vantage point of looking at volumes coming on in a more traditional sense.
I'm not sure about 1 + 1 = 3, but I'd say that can we do the 65-70% type of incremental margins as far as additional volumes that come online? I think that that's a very good way to look at it. That is why I feel very confident and comfortable around our opportunity to improve margins over time. As these volumes come on, they will come on at a high incremental margin. I think we will see we should very much be CPKC leading the industry as far as margins.
Great. We are at time, so thank you very much both for joining us. Really appreciate it.
Thank you.
Thanks everybody.