Good morning. Welcome to CPKC's 2023 and inaugural Investor Day. Thank you for those joining us here today in historic, beautiful Union Station in Kansas City, and thank you to those of you who are joining us online. My name is Chris de Bruyn. I'm the Assistant Vice President of Investor Relations at CPKC. Before we get started, I'm gonna run us through a safety briefing as well as some regulatory disclosures. We are located in the Grand Plaza of Union Station at 30 West Pershing Road in Kansas City, Missouri. Restrooms are located on the east wall to my left. In the event of an emergency, should we need first responders, my colleague, Ashley Thorne, will be your designated person to call 911 and will direct first responders as required. Should anyone require CPR, Mr. Chad Becker will administer CPR.
In the event we need first aid equipment or AED, Kyle Mulligan will coordinate with Titan Security and CPKC Police, located at the south entrance to the plaza. In the event of a fire, there are fire extinguishers located at each of the exits along the east and west walls. Should we need to evacuate for any reason, we will exit through the south entrance to the Grand Plaza and into the south parking lot of Union Station at the muster point there. In addition, I would ask if you need to get up at any point through the day, please ensure you're pushing your chairs in and keep the floor clear of any tripping hazards. Going through a few regulatory disclosures. This presentation is going to contain forward-looking statements. Actual results may differ.
Please refer to the disclosures filed with Canadian and U.S. regulators and in the press release. Additionally, this presentation contains non-GAAP measures. Please refer to the disclosures filed as well as the press release. We have an exciting day planned for you today, full of great content and speakers. I'd ask that you now direct your attention to the screen.
As one railroad connecting a continent, CPKC goes places no one else can go. With over 270 years of combined success behind us, we're forging a new path, built on a foundation of providing safe, reliable service. Our journey is just beginning. As the first single line rail network connecting Canada, the U.S., and Mexico, we've redrawn the map and are delivering more value with every move we make. Our network gives unprecedented reach, increased optionality, and access to strategic port facilities. Our advantage is revolutionizing the industry. We're creating new service solutions for customers, raising the bar for others, and enabling economic growth between three great nations. We're delivering for the future, making the impossible, possible. Innovating to make a greener tomorrow a reality. Led by our relentless pursuit of safety and operational excellence, we're making bold new moves on a larger field.
Fueled by strong momentum, we invite you to join us on this thrilling journey of limitless rewards. Welcome to CPKC. Welcome to the CPKC Advantage.
All right. It's now my pleasure to welcome to the stage CPKC's President and Chief Executive Officer, Mr. Keith Creel.
I'm going to Kansas City. Kansas City, here I come. I'm going to Kansas City. Kansas City, here I come.
All right. I'm here. We're in Kansas City. Good morning. Gosh, we got to loosen up a little bit. Everybody's so tight in the room. A much-anticipated day. Listen, let me start with thanking each of you. You know, I was thinking about it this morning, reflecting after last night, for those. I share this for those that are joining us virtually. For those of you that are here, the conversations that I had, to think that we have literally brought much of the world together to Kansas City. I talked to a gentleman, an investor from Sweden. We've got London, we've got Paris, we've got Europe covered, we, of course, got the U.S. covered, as well as Mexico and Canada. Again, thank you for taking your time. Thank you for your trust.
I want to say this now, you know, this has been a journey to get us to this point today, and I'll say this many times, this is day 75 of our journey forever. I'll tell you, this is not when we started. This has been a battle. It's been one worth fighting for, and the ultimate outcome of bringing these two amazing companies together to create what is not just our advantage, but as I've shared with some of my colleagues in the industry, I think this industry's advantage. To be able to connect markets, new markets, competition, growth for our three nations, especially in light of where we are in the world's history, has never been needed more. For us to have a seat at the table, for us to have gotten here, many people in this room, you had a role in that.
We went to the KCS investors and made our case that we were the right partner. We went to the CP shareholders and made our case that we were the right partner. You gave us the confidence, you gave us the trust, and you gave us the support. You voted with your shares for this opportunity. So it's gonna be our honor today, you're gonna hear in detail what we're building. What I would suggest, this is a five-year view, yes, but this is a foundation forever creating a network that, quite frankly, has never existed before and will never exist again. Forever is a long time, and never is a big word I rarely use, but you will not see in this nation's history, our three nations' history, a network that will connect Canada, U.S., and Mexico again. It's a one and only.
When I say unique, and I say CPKC advantage, you'll leave today clearly understanding why I'm saying that. Let me say this: anybody that's here, and I said this last night, the building we're in, this has a purpose, this has significance. This building, this city, has historic significance. The magnitude of this building, the cliché that said they don't build them like that anymore, they don't build them like this anymore. This building's over 100 years old, and this building existed and exists today because it connected and grew a nation. It grew the West for the United States as we know the United States today. It's only befitting that we come back today, 75 days after we pounded that spike at our joint facility just miles away from here in Knoche Yard, when we created this network.
That's exactly what we've done in our history and what we're gonna be doing in our future, is building three nations with this network. Being the backbone, being the spine that connects all rail networks to Mexico and Mexico to the Midwest, left of the Mississippi River, up to and then across Canada. We'll get into those details today, but that significance and relevance is important then as well as now, and I think it's a very important point to make. With that said, throughout the day, again, you're gonna be hearing from, and I said this last night, an industry-best team of railroaders. That, quite frankly, I'll put against any in the industry. I've worked with some amazing people.
I've learned and served with some amazing teams, but the talent set that we have, the skill set we have, that we brought together to be able to convert this journey that we're on, is second to none in this industry. I'm a man of faith. I've said that before, and I'm not gonna apologize for that. I tell you, I've lived my life never knowing that I would stand on this stage. This is my 31st, almost my 32nd year of railroading, I never knew the steps, pursuing my passion, that I would take to get here. Those steps and all those different moves and all those different people, interactions, and learnings, they form my knowledge base, my skill sets, my capacities.
Every individual you're gonna hear from today that I'm honored to serve with, they have that same journey. We've crisscrossed, and I'll get into some of that, and it'll kind of bring all the dots together to let you know how we got to where we're at and why it truly matters. With that said, let's talk about the journey so far. I wanna kind of set the stage for the team. To understand where we're going, I think it's important we reflect on what got us here. You know, it seems like yesterday, I think about my 10-year anniversary, I just celebrated with Canadian Pacific back in February.
Before that, I spent 17 years with our competitor, I played and served with many people, some of which are on this team, that drove significant change at that other railroad. I never would've imagined then, competing against CP, I'd have an opportunity and my steps would lead me to this company, but they did. The same thing that motivated me at that other railroad motivated me here. It was the case for change. This company is a proud company that is. It's above any of us. I stand on the shoulders of giants that created the CP network in Canada. They built a nation. It's a proud company. I always knew that. I just didn't understand the power of the people or the power of the network.
What I did know, and what other investors recognized, it was a company that was in trouble. Regardless of the history, financially, the company was not performing well. The company truly, if you really get into the detail, and there's a few people in this room that know the bad details, I don't know if they would've had any investors, because they were in trouble. Sustainability is a key word. It was at risk, and an investor recognized that, and there was a case for change, and we came, and we went to work. We went to work creating the right culture. Went to work creating and using the right operating philosophies and plan.
We went to work developing the team so that we could actually recognize the value of the network, recognize the strengths of the network, deal with the challenges, but create opportunities, because that's what leaders do. That's what driving results is all about. Then we invested, and that's something that's a key ingredient if you're gonna run a precision-scheduled railroad. You've got to have the infrastructure to match your business ambitions. There's a balance to this thing. You can't have big train aspirations if you don't have a network built to handle big trains. There's a formula for this PSR that, when applied right, creates success. In the beginning, you fix the engine. You fix the financial problem we were in. You eliminate costs, you rightsize your assets. You invest in the infrastructure because you've created cash by controlling costs to allow you to invest.
This company was not in a position. They were robbing Peter to pay Paul when we came in 2012. Some of the mistakes that I made and some of the lessons I learned. When I started thinking about a PSR, run it the shortest route, run it the fastest way, turn the asset. Well, at CP, the infrastructure was in such bad shape, and I'll use the potash example. The first train I ran west out of Saskatoon to go the shortest route to Vancouver, we derailed. We derailed it two times within two subdivisions. I'll never forget that, and as a railroad or as an operating guy, I'm like, I could not comprehend how you have a piece of track and you can't take a train over it safely. That's, to me, that's unconscionable.
I remember it like it was yesterday. I said I don't know if it was Justin that went or Brent Lang, that was our chief engineer back then. I said, "Send me the pictures of the track," 'cause I was somewhere doing something else, and I said, "I wanna see pictures of the infrastructure." The pictures that I saw scared me. I felt embarrassed because I directed a train to run that way. I didn't know, but I learned quickly that there was a cycle. Again, if you don't. This is a capital-intensive business. If you don't create cash flow to invest in your infrastructure so you can run a railway safely and efficiently, you do those kind of things, robbing Peter to pay Paul, that don't lead to best outcomes. By doing what we did, we've invested more than we've ever invested.
You know, people that are critical of the PSR operating model, it's because they don't understand it. To suggest that it's cutting your way to success, no, it's eliminating unnecessary costs. It's creating asset turns. It's doing it safely. That allows you to invest, when you invest and you match those all together in a balanced way, that's the key to growth. That's what the first four, five years of this journey were all about, and that's what we were focused on, myself, and then another very legendary leader that I had an honor to serve with, a Mr. Hunter Harrison, and the team that's in this room. What does that do for us? That takes us to a place of great success.
That takes us to, again, what we enabled through creating the success financially, to reinvest in the infrastructure, to create the network, to build out our operating model, has allowed us, again, to invest. If you think about it, and I've done this, if you go back to pre-PSR at this railroad, at CP, before CPKC, and if you look at since, the last decade since, we've invested 50% more capital than the decade before. We've never invested more money in this infrastructure. Again, when you invest in technology, when you invest in people, when you invest in process, you can have a safer, and you will have a safer outcome, and that's part of the formula. You've got to keep your trains on the rail to keep them fluid. A train derailed is not moving. That supply chain is broken.
It's like an airplane that breaks down on the runway at O'Hare or at JFK. Nothing else is landing. It's not in your best interest to let it stop. You've got to make sure you apply that virtuous cycle to realize the success that we've had in the discipline of operating this model to create the kind of success and the platform for growth. Now let's skip to 2017. We made a transition at our company, and I went from being in the right-hand seat to being in the CEO seat. My board, at that point, we had a mandate to fix the engine. We had done that. We'd created this capacity. We'd created this efficient running machine. Our safety performance had continued to improve.
We had spare locomotives, we had land assets, but we had a big challenge. We had an origin-rich network, we didn't have a lot of destinations, and we had a very capable competitor. What does that happen? What does that drive? That drives entrepreneurial thinking. That got us to a point, and I learned, and I seized this, and John Brooks and I, we talked about this: we gotta have the right team to market this product, we gotta know what we do well, and we gotta play those markets that we can win in. We create value for our customer, we create stickiness for our network that's unique to our network. That's the key to success. That's when we started the strategy of our self-help initiatives.
That's when we took our lands that are contiguous to our property, we started creating these supply chain solutions. We can apply it to the transload facility we built in Vancouver. We can talk about the one we built in Montreal. We can talk about the 8,500-ft grain foot plan. There's been so many pieces to this that we've crafted as a result of necessity, entrepreneurial thinking, being hungry. How do we grow this network? That's exactly what we did, and we've created a tremendous amount of value. We told you in 2018 what we would do. For those of you that were here that remember the same, our last Investor Day. Did I know that we would be here today? No.
I knew that if we didn't grow a railroad, we'd never have the opportunity to grow the network. We knew in the back of our heads, and I've known this for quite some time, because of that path I went through, what network made the most sense. With the success we created, financial success, the growth, we led the industry, our network and KCS, financially, we're in a good position. We get to a place after three years, I guess it was 2018, 2019, the beginning of 2020. In my own mind, it's time. We need a bigger network. We had our customers coming to us, "You have a phenomenal service. It's reliable. We're able to win in our marketplace. We're able to grow with you." We've created this stickiness.
We've created a reputation of being a safe railway as well as a reliable service provider in a world where those around us were not creating that same experience. Our Achilles heel is we only went so far. We saw the opportunity with the CMQ to get back to the East Coast, to not be disadvantaged east of Montreal. We made that quick move. We integrated that network, and it's exceeded all of our expectations. You'll hear more about that and about the future of that and how this thing is accelerating from Jonathan. That really was, to me, like a dress rehearsal. It reminded me that, you know what? We have a responsibility to each of you to take this ability that we've created on this network and to create a legacy and to create a network that will drive forever value.
That's exactly the vision that Pat and I got aligned on when we agreed to try to put these two companies together. It got complicated. It did. In the end, where we started is where we ended, and we brought these two proud, historic companies together, the two smallest, the two hungriest, the two most entrepreneurial, like cultures. We've been the guy that's been kicked around. We've been six, seven and 7. We're still gonna be last in size, but I don't care about size. I care about impact, and I care about value creation, not just for you as a shareholder, but for all stakeholders. To me, the key to success in any business, it's, you call it precision schedule railroad, it's called precision schedule business. You can apply it to any manufacturing business. You can apply it to any business, in my mind.
If you can provide value to your customer, value to your employee, value to your nations, value to your environment, in a very unique world where our environment needs help every day when it comes to our carbon footprint and our impact to our ever-changing environment, and you can do it safely, value to the communities you operate in and through with the investment this unlocks and with the infrastructure you can harden. When you can do all those things, that's unique. That is absolutely unique, and that's what this network represents. Now let's talk about what we've been doing. As we get ready for this, connecting a continent, we've got the track record on safety. This last year, we celebrated our best ever year at CP, and KCS wasn't very far behind when it comes to safety.
Did I know five years ago when we started this historic journey, given the environment that we're in, given the pressure and perhaps some perceptions that some people have about the rail network, I think are very unfair, but still it's the reality of what we're dealing with? Had no idea. Do you think for a moment that we would have had a regulator that would have trusted their mandate to provide a stronger U.S. rail network in their decision had we not had the track record we had? No way. No way in the world that would have occurred, and that comes with responsibility. Through this network that we've created, and you're gonna hear about it, the strengths, the advantage it gives those that choose to partner with us to create value across the entire stakeholder chain.
There's not another opportunity set like this, period, in this industry, because there's not another network that connects all these lanes the way this does. Industry leader in safety, we've got the right culture. I can tell you there's a lot of work, and you're gonna hear about that from Mark, about making sure that we bring these two cultures together. I'm telling you, much like my journey, when I went to CP, I underestimated the pride that was in the company, the motivation to change, the motivation to succeed. I've learned over my life, and I know this is true in each of yours, the way we're wired as human beings, we all wanna serve. We wanna serve something bigger than us, than ourselves, because serving yourself is not just selfish. That's not, that's not a path to achievement.
That's not a path to true joy and satisfaction in life. It's not just about money. It's about leaving it better. It's about legacy. That's what true value is, at least in my version, in the way I'm wired and what motivates me. If you surround yourself with people that are wired the same way, that have like values, like motivations, that's when you create something special. The reality of this network, you can have the best strategy in the world, you can have the best network in the world, and we do, but if you don't have the right culture and the people to convert it's useless. It's absolutely useless. That is the secret sauce. That is the secret sauce to create the success that we've created. You're gonna see the advantages are not just this network.
You're gonna hear, if you think about this, 2018, I think you've heard from six of our leaders in this company. Today, it's a double-digit number. I don't know if it's 14, 15, 16. You're gonna see that this company is much more than just Keith Creel, because Keith Creel does not do this alone. We do this as a team. When you create and bring the right team of railroaders, that it's not just these people in this room, they're reflective of and represent 20,000 of us, that are like-minded railroads focused on creating this value with the right culture and the right operating philosophy, implementing and executing what PSR truly is. In all honesty, I thought about this this morning, where did that R come from? What I learned was precision execution.
That's what we called it at IC, if I go back to my IC days. I think the term maybe was coined, perhaps in CSX's history when Hunter went there. I'm not sure. Some of you probably know, but all of a sudden, that became the acronym, and now some people are apologizing for it. I'm not apologizing for it. That's a gift that keeps on giving. I've said that my entire career because it's the right operating model matched with the right network and the right people, and it creates sustainable success for all stakeholders. Again, that's part of this recipe. That's part of the success. That's part of this advantage that you're gonna get. That's part of the legacy, and again, legacy is about leaving it better, that we're creating with this network....
I can tell you, as a leader, if this thing doesn't run better when I'm not a part of it, I haven't done my job. I challenge each one of my leaders the same way. In this culture, everyone that we've picked to be on this team, it's their skill sets, it's their competence, it's their expertise. You put those things together, it's part of the recipe. They all understand one thing: we have a culture of accountability in this company. We have a culture of safety in this company. I've never apologized for it, I never will. I love every one of them, but if there's not one of them, if they don't do their job, they don't have a seat at the table, and that applies to me, too. There's no free rides in this company. It's the way we work. It's what's required.
I call it throttle eight railroading, I call it constructive tension, I call it foot on the gas. We've got several acronyms that we've integrated into our leadership training and our culture training. These thoughts, these concepts, again, when I'm gone, they become ingrained into the culture of this company. That this isn't a one-hit wonder. This comes with huge responsibility. This is about legacy. This is about sustainability. This is about a forever story. It's not a five-year story. We're just building the foundation, the forever, over the next five years. That leads me to this, Mexico. Key partner in the story. If you get into the investment thesis, and I know you did, if you looked at the success that KCS has created, a lot of growth, that's what excited me.
You know, some of the people I worked with, they were a bit apprehensive about it, but I saw opportunity, I saw the world changing, and the world has continued to change. I never knew, though, how much it would change and how critical it could become in this whole thesis when we started. I didn't know COVID would be what COVID was. I didn't know Russia would invade Ukraine. I didn't know any of that. Somebody did, but I didn't. Nevertheless, it did, and then it leads us to Mexico. When you think about all the theses of when we started, nearshoring, was it happening? Sure, it was happening some.
Was labor cost and supply chain challenges, you know, not as attractive as they used to be in China, with the changes that were occurring in China, and they were shifting to Vietnam and the needles were moving around? Yes, we knew that. What we didn't know, though, was the acceleration that would occur because of these crises that we never could have predicted, and how important the very reliable, talented labor force is in Mexico, and abilities for companies to make decisions to not only nearshore, to ally shore, to de-risk supply chains. Is that gonna move everything? No. Does it move the needle for these three countries to create trilateral trade, to take risk out of supply chains for companies, to create infrastructure that allows companies to create their business model? That's what this network is.
We're the physical bridge that will forever connect these three nations to enable that to be built upon. Two weeks after this... I'll go back to January. From my Canadian participation in the BCC, I was invited to go to the leadership summit that was held down in Mexico, where our presidents all came together. Pat and I went down, we participated in the business forum. I started to learn more and more about the culture in Mexico and about the business opportunities. I knew, stepping into this, once we got this deal approved, it was important to me, understanding the president of Mexico, President Obrador's vision, his political party's vision for growth in that country and connecting the dots with this opportunity, I knew in my head that we were aligned.
He wants job growth, he wants a middle class that gets developed, he wants to bring economic prosperity to the population of Mexico. We're a success enabler. Our interests are aligned. It's important that he understands that because he is definitely, if I've learned anything about him, and I think if the world will show, I don't think anybody would doubt, he's a man of action. He's not a man that's gonna sit complacent. We went to Mexico. I can tell you, Oscar's in here, you'll meet him. Oscar is a key member of this team. Oscar was KCS's president of the KCS de México. We said, "We need to get in to see the president." Pat and I, and Oscar, and John Orr, two weeks after we consummated our deal, we were in Mexico City, and we had an amazing interaction with President AMLO.
We got to hear his vision, he sit and listened to ours. I can tell you, they're gonna do what's best for Mexico, no doubt about it. I can't control that. If our rail network, if it's best for Mexico, you align those interests, it's a success enabler. I feel confident that as long as we represent what's good for Mexico is gonna be good for CPKC, and we can coexist and uniquely complement each other. I'm sure from those discussions, and as we grow together and learn more together through the relationships we've developed in Mexico, that administration, President AMLO's administration, as well as any subsequent, when they have a leadership change next year, the formula is gonna work the same. To me, what makes good sense, makes good sense, and this makes too much of it.
It's clearly part of our success story. The other thing I'm gonna applaud, and I've got to give credit where credit's due, you know, we were in trust. KCS was in trust. We had no control. It was a long process, but we had our teams working hard. I can tell you, as a trustee and as running and being stewards of this asset while we were in trust, Pat and the KCS team, they never stopped railroading. You think about the things they got accomplished. Oscar was a part of that. Warren Urban's in here, he was a key part of that. Ashley's in here, she was a key part of that. John Orr's in here, he was a key part of that.
The work that got done when they were in trust to get this exclusivity extended to 2037, to get that agreement done, to break ground and start the second bridge, that gives us, again, unique competitive advantage and capacity to get over that river into Mexico. That bridge will be done sometime next year. The infrastructure, the hard work, it's been laid. Now it's up to this team to continue to build upon it and to mine that opportunity. The next chapter. You heard this morning, you saw, I think, the very unique value creation numbers that we share publicly. You know, at the end of the day, you'll have to digest them. You're gonna need the benefit of what we're gonna go through today, but I can tell you, the guidance itself, it's a compelling value creation story.
Again, not just for you, that's the beauty of it, for all stakeholders in our supply chain. It's unique. For those of you that choose to trust us, for those of you that choose to join along the journey, there's no doubt in my mind that this team and this network will exceed your expectations. That's our mandate. That's my commitment. I've never been more engaged. I've never been more honored. I've never been more humbled. This is a unique point, an inflection in time in history, my history, my team's history, this network's history, the rail industry's history. I said this on April the 14th, this network, this industry, needs a success story. This is the foundation to create it, and this team is the one that's gonna make that true. Again, you have a lot of choices where you put your capital.
I can tell you this: if you decide to give it to us, we're gonna be stewards of your capital. We're gonna maintain that balance, we're gonna maintain that tension, and we're gonna work our tails off to optimize this network, not just for today, but forever. That's what you're gonna get from this team. That's what you're investing in. I'm certain when you leave today, when you see the depth of these discussions, when you think about the thoughts that have gone into this, when you think about the dots that we're gonna connect, you'll be equally convinced. I thought I had a slide. Where's Chris? This is, this was a late edition add-on, because, quite frankly, although we've been planning this and thinking about this and trying to get to this very unique niche edition, it's been...
When you've got three parties involved, you all understand. When you've got three railroads trying to create great service, that's a challenge. Now, when you've got three railroads trying to come to an agreement, it brings its own unique set of challenges. I'm talking about the announcement we made this morning. They'll. Hopefully, they'll get a map up in a minute. It's, you know, some of you are asking why. What I'm talking about is that bridge between Meridian, Mississippi, and Atlanta, Georgia. I think we all understand that the population shift, the manufacturing shift, the economic value creation, supply chain growth is occurring in the Southeast. Growth is occurring in Mexico.
I don't care if it's your politics or if it's your quality of life, if you like the weather, but I'm telling you, the South is what's growing, the southern part of the U.S. It is the future. What we missed on this network, and what KCS has missed on this network in the past, is a bridge to connect to the CSX. Did it exist? Has the railroad always been there? Yes. Why not before? The why not before kind of gets into the details. If you don't own the asset or you could invest the money into the asset to create the infrastructure, to optimize the capacity so that you can create a superhighway to bridge west of the Mississippi with the CSX.
Too many hands in the cookie jar, I guess, for the lack of a better term. If you can create two like-minded companies that are willing to invest, match investments on their own network to create another alternative, to create a second alternative to an already best-in-class service east of Meridian, which exists today with CPKC and with NS. Listen, we're not doing this because we're not interested in growing with NS. We're interested in helping everyone succeed. We want to be the bridge to prosperity again, in a lane that's an add-on to this whole vision. We've successfully concluded, and we've announced today, an agreement where we will acquire 50 mi east of Meridian to a place called, is it Myrtlewood, Alabama? I'm from Alabama, and I've never been there. Nevertheless, it's 50 mii east.
It's a crow fly, straight across Mississippi, east of Meridian, into Myrtlewood, where ownership belongs to the Genesee & Wyoming, to the Meridian & Bigbee Railroad. Beyond that, for the next 117 mi to Montgomery, Alabama, which as a crow flies, is we're heading to Atlanta, has always been owned by the CSX, but for years, and I don't know how many years, the MNBR has operated the railroad. They've had it on a lease arrangement. In short terms, what this says is, we take possession of that 50 mi. We did a light kind of exchange, and we'll get into the details later, with Genesee & Wyoming on an asset that we couldn't really ever optimize, so that we could optimize an asset they could never optimize. With our investment, we'll make it Class Three track.
Today, it's, you're talking about a 10-mi-an-hour, 25-mi-an-hour railroad. They're doing it safely, I would suggest that's not as efficiently as investment will allow you to generate out of that piece of track. CSX is gonna do the same. They take back their 117 mi to Montgomery. They invest like investments. We have Class Three track. Today's volume, potentially 49 mi an hour. 10 years from now, maybe it's CTC, maybe it's Class Four track. We'll see. We can grow into that. We've created another lane to inject more capacity into this nation, to inject more competition and more optionality. We're opening the door through this bridge to the CSX customers that haven't been able to have equal access to compete for traffic going into the Dallas markets or the Mexican markets.
That's the customers that are there today. The beauty of this is you get into the details, if you think about this, if you start connecting the middle dots. CSX, over the last year and a half, on their network, they've announced four new auto plants. Well, with automobiles, if you understand these supply chains that are being established now because they've come online in 2024-2026 at different time frames, those decisions are being made today to establish the supply chains to run those manufacturing facilities. You've got parts coming out of Mexico that are going over the highway, that are going into the southeast. You've got parts made in the southeast that are going over the highway. They go to the manufacturing in Mexico.
Think about this opportunity to connect, again, with two committed partners in this marketing alliance to go out and sell this service with some of our other unique partners that can do some of that last mile, first mile. It's a beautiful thing that we have a strong strategic partnership with Schneider. The framework's there. Guess who Schneider's aligned with extremely well east of the Mississippi, in the southeast markets? I'm sure they do business with both railroads, but they have a very strong commercial existing relationship with CSX. At the end of the day, I told Alan this morning, I called Alan, out of respect for our partnership, we're gonna honor it. We literally, that railroad from Meridian to Shreveport, Louisiana, we co-own it. There's an LLC. NS is invested in it.
We have responsibilities to give them phenomenal service, best-in-class service, because it is the shortest route to Dallas, to the west, and we're gonna honor every bit of that, and we're gonna grow with them. We're gonna do the same thing with CSX. They both have unique networks. They both have unique origin points. Their customers that choose to participate in this, we believe, as long as we do our job providing reliable service, which we will, we have the capacity to handle it, which we will, we create success for their customers, which become our customers. Again, a very strategic niche value add that three years ago, I would've said, "I'm not thinking about that yet.
I'm thinking about the big deal." As soon as we started to understand the big deal, that's when that little piece of railroad became very strategic in my mind, and I said, "If we can do it, figure this out, that's the next deal." For us to get that done, and it took a lot of hard work, and I've got to commend James and his team. I'm gonna commend Jack Hellmann, the CEO and leader of Genesee & Wyoming, and Mike Miller, that works with him. For them to trust us, to partner with us, for Joe and his team and Kevin to see the same thing we see, the same opportunity for their customers, again, it's something we're extremely proud of, and I'm proud to be able to work with them.
I said this, I think I shared this with Scott and a few other people, and I've said this back during our testimony, you know, this railroad, we went through a firestorm to get this merger approved. History will show there's never been a more exhaustive effort, I don't think. There's never been so much drama about it before it even got started, and even after. Every railroad, they make their own decisions, but at the end of the day, again, there's not one network except this one, that this is true about. They can say they can partner with and compete against any other Class I in this company, in this country, in these three countries, and that's true about our business mix, and it will always be true. We're gonna be partners, and we're gonna be competitors.
It just depends on the lane, and it depends on the customer. It depends on the options, and at the end of the day, the customer is the one that gets to decide. That's the truth that led us to getting this deal approved. This is pro-growth. This is pro-competition. This is pro-stakeholder. It's pro-investor. It's pro-employee. It's pro-community, and it's pro-environment. This last thing we talked about, this really grew in my mind, the importance of this, when I took an inspection trip two years ago across that MLCC with Pat and with Alan. As I'm riding down that railroad, when I got to Shreveport and growing up in the South, and I'm literally watching I-20. I'm watching those hunt trucks. I'm watching Schneider trucks. I'm watching Swift trucks.
I'm watching those trucks that I used to have to drive between that bothered me when I was on I-20 growing up and living there, run down that highway, and I'm thinking, "Wait a minute, there's the highway, and there's the railway." We got a field of dreams here. We just got to connect the markets. If we can create this bridge, that's truly who is at most threat of competition. It's that highway. If we win in that battle, and we will with reliable service and capacity, the public wins. That's what public interest is. The environment wins. Those 64,000 trucks we talked about taking off the highway with this network, that opportunity that we just unlocked with this announcement, not even in the math.
I don't care if it's value in revenue, I don't care if it's value in job growth, I don't care if it's value in sustainability and ESG and our carbon footprint, it's a powerful success enabler and multiplier for what we've already created. That's what the future holds, this network in totality. Somebody asked me last night: "Well, okay, what are you gonna do next? What's your vision?" My vision and my legacy will be marked by two things: developing the leaders in this company so they can sustain the success that we owe to each of you, that we owe to our employees and our families, and to optimize this network, not for the next five years. This is the seventy-fifth day of forever, and forever is a long time. With that said, I'm gonna stop talking.
I'm gonna take the mic off, and I'm gonna hand it to the real talent. I'm gonna turn it over to Maeghan, and I look forward to once we go through today, till we get to that Q&A and addressing your questions. Again, thank you for joining us today. It's our honor to present our story, your story, to each of you.
Good morning. It's great to see so many familiar faces. I haven't seen many of you since I switched roles from Investor Relations to head of Human Resources. For those who aren't familiar with my background, I started with the legacy Canadian Pacific back in 2005. I moved into Investor Relations on November 18th, 2011. It might seem strange to you that I remember the exact date. It was one of those days that gets forever etched in your mind because, you see, it was only a few weeks earlier that a hedge fund had announced an activist stake in our company and was seeking change.
It was on that day, I was working in financial planning and analysis, and my manager at the time came and quite literally tapped me on the shoulder and said, "Do you remember when you said you'd like to work in investor relations one day?" I said, "Yes." He said, "Well, you report there in 10 minutes." That began quite the journey for me. I'll tell you that I became a quick believer in the power of PSR, and I had a front-row seat to a tremendous turnaround, significant culture change, and then a pivot to growth as Keith took the helm as CEO. I had the privilege of articulating that story to many of you over the years. What you might not appreciate is during that same time, I also had the opportunity to share that story, the vision, the strategy with many employees.
Fast-forward to April 26, 2023. This time, rather than a tap on the shoulder, it was a knock on the door, and it was Keith. He told me I looked alarmed. I was. We were only a couple of hours away from an earnings call, and I was fearing the worst. He quickly alleviated my fears and said that he wanted to ask me to take on the challenge of leading the HR function and communicating and guiding our most important asset, our people, through a time of tremendous change. I clearly didn't hesitate. The change happened very fast because it could. You see, the expectation of a leader at CPKC is, first and foremost, that you leave it better than you found it. Second, that you develop a strong and capable bench.
I had that in Chris de Bruyn, with his deep knowledge and respect at the legacy CP organization, and with Ashley Thorne, given her strong knowledge and deep experience at KCS. They make a dynamic duo, and I'm certain they haven't skipped a beat. Just as I've hit the ground running in my new role, so too, has CPKC in these first 75 days. It's fitting that we're here in Kansas City, home to CPKC's U.S. headquarters. We are a boots-on-the-ground railroad, that meant day one, a number of our key executives actually moved their offices here. Keith moved his U.S. office from Chicago to Kansas City, likewise, Mark Redd, John Brooks, Justin Meyer, as well as key players from our labor relations and our investor relations departments, all moved their offices here to Kansas City, that was intentional.
Because KCS or Kansas City, I should say, is not just the center of this new, much larger network, but it's also the heart of where the culture change is gonna take place over the next number of years. It's not just about being in a head office location, it's also about being out on the network. Last night and throughout the course of today, you're gonna hear from a number of my colleagues and where they've been out on the network. For myself, even just last week, I was joined by a number of other members from the executive team, and we were down in Mexico. We were hosted by Oscar Del Cueto, our President and Executive Representative at CPKC de Mexico, and we hosted an employee town hall.
We joined employees in some local events, and we had a chance to engage with our teams face-to-face, both in Monterrey and Mexico City. For me, I was able to meet with my HR team and to hear about their policies, their processes, and how they currently operate, the opportunities, the challenges. It wasn't just meeting with my team, it was also taking the chance to meet with key leaders and high-potential talent down in our Mexico operations. We've taken a lot of other intentional steps in these first 75 days. Mark Redd is gonna tell you shortly about post day one, bringing up a number of key operating leaders from the KCS organization, both in the U.S. and Mexico, and bringing them to Calgary.
A number of us have actually brought key players from our team to Calgary, not just once, but in some cases several times, because we want them to be able to see our world-class campus, our training facilities. We want them to stay in the employee lodge and to interact face-to-face with their new colleagues. We want them to see how we work and why. It's also important during times of significant change to take feedback, so we've implemented some employee pulse surveys. We just closed our first of what will be many. We had over 23 responses across Canada, the U.S., and Mexico. I've personally read through every single response myself, and I've shared it with the rest of the executive team.
We know that we aren't gonna get everything right, but being open to feedback on the opportunities that exist and what's working well, is gonna be key to getting everyone aligned and pulling in the same direction. Speaking of getting aligned and pulling in the same direction, another key item we focused on is creating the right incentives. Day one, we opened up our employee share purchase plan to all KCS employees. We want them to share in the value creation opportunity that CPKC presents, and I was thrilled to see that in the first week alone, we had 30% uptake. We created a CPKC budget so that there was a common set of financial metrics, operating and safety metrics for everyone to rally behind. We established long-term incentives as well.
Historically, at the legacy KCS, there were fewer than 100 employees who were part of a long-term incentive program. We believe in a performance-based approach at CPKC, there are now over 1,000 CPKC employees who have long-term targets tied to free cash flow and total shareholder return. As many of you in this room also know, shareholder feedback plays an important role in shaping our views. Over the last number of years, CP has had an active shareholder engagement program with our board, engaging directly with you, our shareholders. Isabelle Courville, our Board Chair, and myself, have participated in every single meeting over the last eight years. I can tell you firsthand that our compensation structure and targets, they reflect your direct feedback, and they've evolved with our strategy over time. In 2023, safety will make up 30% of our annual targets.
That's the highest of any railroad by a wide margin. That doesn't just apply to executives, that applies to all 5,000 of our non-unionized employees. Similarly, on the long-term incentive side, as we entered into this merger, we recognized that our favorite metric, your favorite metric, ROIC, wasn't gonna fit in the near term, given some of the noise created by merger accounting. We sought your feedback, and on an interim basis, we moved to free cash flow, something observable, measurable, well understood by employees, but also takes into consideration key elements like synergy realization. We like ROIC. We will return to it, but it just shows that evolution over time. We have a culture of accountability.
This morning, we put out a press release, and throughout the day, a number of my colleagues are gonna talk to you about various targets and figures. We're gonna be held accountable. Those will serve as the basis for our annual and our long-term incentives as well. We're expected to do what we say we're gonna do. Finally, in a world where demand for railroad talent is high, we've implemented critical retention tools and developed succession plans within our organization to ensure that the momentum and success we have today are sustained well into the future. It is the expectation of every person who comes up on this stage today, that they have a detailed plan, and they do regular talent reviews with their team, even in the midst of all of this change.
Another positive outcome of our shareholder engagement work has been a heightened focus on sustainability and ESG. Throughout the day, you're going to hear how sustainability is woven into the core of our business. Many of you would have seen the announcement a few weeks ago, where CPKC, as one of its early acts, announced its ambition to set one and a half degree aligned targets that'll put us on a pathway to net zero by 2050. I'll tell you that from a human resources perspective, being a leader in sustainability gives us the upper hand when it comes to attracting and retaining top talent. From the ability to work on innovative projects like the hydrogen locomotive, which you had the chance to see yesterday evening, to simply coming to work each day at our solar-powered head office in Calgary, there's a sense of purpose for employees.
It's not just lip service, it's real action. It's a unique employee proposition. You can work for a top-performing railroad. There's the opportunity to be a part of a transformative North American growth story. Growth at CPKC is good for the environment. It takes trucks off the road, it lowers emissions, and there aren't a lot of other companies or industries that can make that claim. To wrap up, I'd say we're 75 days in, we've hit the ground running, and it's not lost on me or any one of my colleagues today that culture change is hard.
While things like systems integration are critically important, what we know to be true is that the success of this merger is ultimately going to come down to harnessing the collective efforts of our 20,000 employees across three nations and getting them pulling in a common direction. I've never been more excited about the opportunities for CPKC. I've never been more proud to be a railroader, and I can't wait for the rest of my colleagues today to share in that journey. Without much further ado, I'm going to hand things over to John Brooks, our Executive Vice President and Chief Marketing Officer.
All right. Well, look, thank you, Megan. That was tremendous. Look, it's my honor to be up here this morning. I certainly know and have met many of you over this journey, the last five, six, seven years in this role. For those that are new, of course, I'm John Brooks. I'm the Executive Vice President and Chief Marketing Officer. I've had the pleasure of being in this role since Keith appointed me back in 2017, and I'm entering my 29th year of railroading. I can tell you, it has been a wild ride. I'm super excited to be up here to take you through what we call the transformational growth journey as part of CPKC. To say that it's been a wild ride is an understatement.
I can tell you the energy, the excitement, the unique advantage that this network brings to North America is unlike anything that we've experienced. You know, Keith described it so well in terms of just the way this network will begin to unlock the connectivity between three countries: across Canada, our network through the United States, and ultimately down into Mexico. We use the word transformational for a very intentional way. As you think about the solutions that I'm going to talk about, Jonathan Wahba is going to talk about, Coby Bullard's going to talk about, David Eaton's going to talk about, they're transformational because they're unique. They're unique solutions in the supply chain that have never existed before across North America.
That's what makes CPKC unique, and it gets me excited because when you begin to think about the competitive options out there in the marketplace, many of those folks, many of our competitors out there, just completely cannot replicate what we're going to talk to you about today. I'll tell you all pumped me last night. I think I got two bites of dinner in. I got one bite of my eggs in this morning. A lot of this is, you've already leaked some of this out of me at night over the last 24 hours. We're gonna dig into why CPKC has this complete, unique advantage in the marketplace. Let me tell you what the next couple hours are gonna look like.
First of all, much like Keith did, I think it's important from a pure marketing and sales perspective that I reflect a little bit on the journey that we've gone through as a team. I'm gonna take you through that. I'm then gonna fast-forward to this unique network advantage, and we'll dig into the map a little bit. I'll tell you what excites me, where I think those advantages are, and then ultimately, we'll get into how we're gonna leverage them in the marketplace. Number three, I know you all came here for one reason, 'cause that's what you've been pumping me for the last 24 hours. You wanna know the details, you wanna know the numbers, you wanna know how big the opportunity was. You know, it took Fatty two seconds at dinner to say, "Well, really, how big is it?
How big is the opportunity?" I'm gonna bring you through the pipeline as we see it today, and ultimately, then how we stack on a lot of announcements that Jonathan, Coby, and David are gonna talk about to build up this multi-year plan. That's what they're gonna do. I'm telling you, I've never seen so many drone videos and schematics and different details. They're gonna take you although I'll be at kind of the 50,000-ft level when I take you through the opportunity pipeline, they're gonna take you straight down to the ground level and talk about the details of why CPKC has this advantage in the marketplace. Then I'll come back, and I'll get the honor to close things at the end.
We have Joan Hardy, not with us today, is actually retiring in a couple days from now. I'm gonna get the pleasure to talk to you all about our grain and fertilizer franchise, and then I'll wrap it all up and bring it together and give you really the numbers at the end, that sort of build up to our high single digits growth over our multi-year plan. Let's get started. All right. Reflecting back, I'll rewind you, much like Keith did, to 2018. You know, I started my journey in about 2010 at CP, and it was a marketing, commercial-driven company. They competed on price, there was no service, and there frankly wasn't a whole lot of strategy.
As Keith described, the mandate of change came, and it was really then flipped on its head, I would say, and became an overweight, operationally-driven company. It had to, by design. It had to, so we could fix the engine to create a product that we could also then put into the marketplace and pivot to growth. Honestly, back in 2017, when I took this role, and then we spoke to you at that Investor Day in early 2018, it was really about that journey of making that pivot to the next level of growth. You know what? We delivered. We did everything we told you, we said we were gonna do. We led the industry from that time till we sit here today in terms of that growth profile.
The exciting thing about that is, we did it as the smallest railroad. We did it with unique solutions. We knew in a lot of places, and frankly, in my career, it's been tough to go head-to-head against some of these networks that are out there that are, frankly, just more sizable, more scalable. We did it with unique solutions, and that's gonna be the common playbook as we get into the details of how we're gonna grow, and actually are already well on our way to growing CPKC. I'll tell you, the combination of our leading growth, I'll remind you that KCS wasn't far behind, and that's kind of the unique piece of, very interesting piece of the story. You're bringing together the two fastest-growing railroads in the industry.
I talked to you at that time about four critical elements that I thought from a sales and marketing perspective, that would be very key to our success back in 2018 as we thought about growth. I've raised them, and I'm gonna just run through them quickly today, because as you think about how we grow CPKC into the future, those elements all remain paramount to how this story and journey plays out the next five, 10, 1five years. Started with sales and marketing culture. We had to realize we are an operating company. We sell service and capacity, and that's what we do. That's a mindset you got to get set in place with your sales and marketing team because frankly, it guides how you approach the marketplace and how you sell. We needed a high-performance culture of salespeople.
Keith said it, Throttle Eight, they got to run hard. We also, and I talked about it at dinner last night, at the table, we had to set up a compensation incentive plan that helped motivate the sales team to get out there and ultimately, outhustle our competitors in the marketplace. We talked about constructive tension, a key part of it, and as I think about constructive tension, you're gonna hear Iain Gray and Mike Foran talk about it a little later today. As I think about it from a commercial standpoint, it's the key element that helps guide us in growing responsibly, not growth for growth's sake. Making sure that we're growing the network in lockstep with Mark and team, and the operations team, the assets team, so we don't oversell the network. That's growing responsibly.
Number three, I talked to you extensively in 2018 about what we call playbooks. Back then, I kind of referenced it in the context of, if you think about an offensive coordinator on the football field, and he's got his set of script and plays that he's gonna use to march that team down the field, that's what our playbooks are. We make every line of business go out every year and reestablish what those priorities are in terms of how we're gonna grow. I'm gonna talk about those more in a little bit here. Finally, last, and Keith spoke to it earlier, we had a very unique, well, we were blessed with a very unique situation at CP. We had a lot of land, and it wasn't something that we were able to develop.
The forefathers of CP were smart. They bought up a lot of land. We had land around terminals. The trick became how we create those unique solutions to monetize that land with our customers, to create that stickiness and those solutions, again, that much of our competition cannot replicate. I'll tell you, that is gonna be as you listen to Jonathan and Coby and David Eaton today, that is gonna be a paramount part of how you think about the growth strategy as we look to the future as CPKC. I said in 2018, it was like CP was a 137-year startup company, and honestly, it felt like that at that time. I'll tell you, CPKC is different. This company is starting from a position of strength, and as Keith said, relevance in the marketplace.
It's just a bigger playing field, but we got a heck of a lot more tools out there now to play with. All right, let's talk about some of those tools and look at this network. Fast forward, this network is unmatched, it's unique. It ultimately touches 500 million consumers across Canada, the U.S., and down into Mexico. I'll tell you, with my background coming from the short-line railroad industry, and then during CP, during its weaker years, and honestly, much like the KCS folks that are in the room, I've spent my whole career looking up, just battling against networks that were just stronger, that had more reach, that could combine origins and destinations, where I was dependent on connecting carriers. I don't have that anymore.
I have a network that can go toe-to-toe against any of our competitors in this north-south corridor, and frankly, linking to the east. I have confidence day in, day out, that my operating team, my service, my capacity, can win in this marketplace, hands down. I'm at a point where I feel good when I look at this map and what we can bring together in terms of, in driving business as I look to the 20,000 mi of unmatched, three countries, starting in Vancouver, all the way over to Atlantic Canada with our acquisition of the CMQ, and Jonathan's gonna talk about some of the exciting things we still have going on out in Saint John. Down to the Chicago market, the Twin Cities, and Kansas City, what I call sort of a unique triangle of opportunity.
Southbound out of Kansas City, down into the Gulf of Texas, rich with opportunity. Rich with opportunity that KCS, frankly, has become, in the past, so dependent on handing off traffic to reach marketplaces, to now where this network can connect it with direct moves. Down into Mexico, the industrial corridor, from Monterrey to San Luis Potosí, down to Mexico City, ultimately, kind of what Jonathan calls his field of dreams, down in Lázaro Cárdenas, and we're gonna talk about some exciting things going on down there as an alternative in the marketplace. In Mexico, a couple comments on Mexico, David Eaton has joined us here today, and he's gonna talk quite a bit about the opportunities down there and build upon what Keith talked about in terms of nearshoring.
Certainly, the buzz is nearshoring as more and more companies, you know, look to de-risk their globalized supply chains and bring it closer to those 500 million consumers in North America, and Mexico being so poised to accept that growth and make those supply chain links up into the U.S. and into Canada. I'll tell you, I am shocked in my first 75 days around the domestic opportunity. There's 130 million people in Mexico, a very young workforce, eager for wealth, eager for education, eager to make a difference in that country. The amount of industrial development that in itself is spurring to the existing industry down in Mexico, is a compelling growth story just in itself. Finally, let's talk about Room to Grow 2.0.
You know, the KCS, much like the CP network, has a tremendous amount of land assets across our network. Over 6,000 acres at ports, at industrial development locations, at our terminals that are ripe for growth. Actually, I told them to edit this slide. It should say 5,800, because we just sold about 200 acres in three exciting projects that we're gonna talk to you about. You know, Jonathan's gonna talk about a really exciting announcement that pairs really well with the CSX opportunity that Keith introduced earlier. We've got an exciting project down in Port Arthur that I'm gonna talk to you about. Fatty and the team at the table were pumping me for information on last night.
Of course, you saw our press release on the Kansas City and Americold announcement, which again, is the development of taking trucks off the road and creating a cold storage ecosystem that, again, in our view, just cannot be replicated across this network. Don't get me wrong, it's not that KCS didn't recognize the power of their land and the capabilities, but they just standalone didn't have the reach. It's the power of bringing these networks together that ultimately creates the ability to now drive unique solutions at these underutilized assets. In total, we're gonna utilize about 200 acres as part of this. This is gonna generate about a $250 million ongoing revenue stream at these three opportunities. All right, let's dig into the opportunity pipeline.
I know the first thing that's gonna jump out on the page is that $5 billion that's on there. The pipeline is big. Honestly, we took the time, as Keith said, as painful was the process we went through to get to April 14th, the blessing was it gave us a lot of time to sit down with customers. It gave us a lot of time to talk to the KCS folks about the business. It gave us a lot of time to get in the marketplace and understand what the unique advantages of this marketplace could drive in terms of a pipeline. We've been at it, building this for, I would say, two plus years.
Frankly, I've had my eye on this ball, as many of us has, for probably half my career in terms of what this combination could look like. It also allowed us to begin working on our playbooks that I spoke to you earlier about. It began to let the CP team build out what could be the art of the possible with these two networks together. I'll tell you, over the first 60 days of CPKC, I spent about 75 hours in multiple meetings, every commodity, over 100 of our sales and marketing team, going hour by hour, working on what the defined strategies are for every commodity we're gonna haul. I can tell you, the themes of those meetings were about how we make our own luck, how we take the chains off that KCS network.
I'll remind you guys that 80% of the KCS business in the past was all interchanged, and I'm telling you, a lot of those movements were a 100-mi less or less hauls, basically big switch charges. How do we change that mentality? How do we look for opportunities to use the power of this network, create value for our customers, and ultimately back to you as our shareholders? I'll give you an example. And this is maybe sort of weird that I'm going to be talking about this up here, but one of the very first playbook I got into was with our energy chemical plastics team, with Coby and his team, and they were telling me about lube oil. I know it's weird I'm talking about lube oil up on stage at a railroad.
Maybe it's not. Anyways, there was 5,500 cars of lube oil that KCS originates on its network to a whole variety of destinations, all of which is handed off to connecting carriers. Most of the hauls the KCS team had with this lube oil were honestly, 100 mi, a lot of 20 mi. Basically, a big switch charge. We began to sort of dig into, well, why, and are these the only markets, and who else uses lube oil, and what is it used for, and where could the destination consumption markets be? Lo and behold, we started to dig into one particular move that was a 20-mi haul in KCS. We handed it off to a western carrier, and it went to Arizona.
I'm like: "Well, those are private assets team, right?" "Yeah, all private assets." We got an interchange. We got to go all the way out west, get the car back. I said, "Have we talked to this customer about markets that could be in North America or Canada, la ted on our railroad?" Set the team to work. They came back a few days later and said, "Look, lo and behold, we found a user of the same product in North Dakota." Okay, that's interesting. "On CPKC, up in the Minot area." All right, have we played matchmaker yet? Have we got those two talking?
Right now, in my mind, I'm seeing dollar signs saying, "I'd much rather haul that 1,500 mi up to North Dakota than I 20 mi, handing it off, going to the west." Lo and behold, we're runnin g test cars now of lube oil out of this location, up to North Dakota. We keep those assets on our railroad. They're private assets. We spin them faster, creates value for the customer, value for us. We can utilize the power of the franchise. It's not that we cut off the other market opportunity. It's an opportunity for our customer now to grow in their thinking of the markets they can reach with the power of this franchise.
The other point I want to make, and I'm going to take you through it, each one of these, is we got $5 billion in opportunities identified here. I don't want to win it all, right? Playbooks are designed to strategically go through and cull out the best opportunities to create value for this network, value for us, value for our customer. Let's take a look at each one of these, and I'll give you a little description on how I'm thinking about them. Rail-to-rail opportunities, this is probably the simplest area to think about. I think about it in two ways: share shift and direct route conversion. Share shift, think about it this way: back in 2018, when we fixed the engine, I told you in that Investor Day that we saw a lot of traffic that just had gone heavyweight, our competitor.
Because we didn't have a product, a lot of customers were 100% of their business on our competitor, and that we saw an opportunity to maybe peel off 10%, 20%, have the customer experience our product, and then we'll see how that journey goes in terms of growth with those customers. That's how you should think about share shift. There's a lot of opportunity in that North-South corridor, which customers have just sort of been locked into one or two modes of transportation or other rail providers that, frankly, over the last couple of years, haven't really given them a good ride, but there hasn't been another option. There's a unique opportunity now for these customers to diversify their transportation portfolio and put some of that business on CPKC.
The second area you should think about is route conversion, here's how I want you to think about that area. How many people in this room had to make a connection flying here today? I know you all didn't fly private. Yeah. Well, that's exactly how you should think about this area. This is the opportunity to take an interchange, to take a connection out of the mix and go direct. There's a lot of existing opportunities that are CP only or KCS only, where we're handing off traffic, that now we can work together and make that direct connection. We can do a CPKC single line haul. Honestly, I kind of view this area as low-hanging fruit. This is stuff we just got to grind and mine.
We got to educate our customers on the power of what this conversion can look like and what it can do for their businesses. Let's talk about truck to rail. First of all, right out of the chute, I'll tell you, much bigger opportunity than we understood two years ago or even six months ago. Tony Hatch, I think, called it out right in his memo the other day, said 64,000 trucks seems conservative. Well, you're right, Tony. The opportunity for truck conversion is almost limitless as long as we establish the products and routes that can compete in the marketplace. I think that's where the industry, particularly in the U.S., has fallen short.
I think we've had a lot of success in Canada when you think about our 100 series trains from Calgary to Toronto, that once you put the discipline in place, you can convert truck to rail. We've done it, and I'm confident in that North-South corridor, and Jonathan's going to talk about it extensively, that we'll continue to do it in that lane with our partners. We see at about a $1.8 million addressable truck market that's out there. I say addressable because it's been an effort to mine the data to say, "All right, what are those lanes that we can best service, that make the most sense, that are in that length of haul, that make them conducive to conversion.
What are the products in those trucks that make sense to put in a 53-ft box or a reefer box that we can haul from origin to destination?" I'm super pleased that a big part of the early wins we've now announced with Knight-Swift and Schneider, and of course, 100% of the Americold opportunity and reefer opportunity is all truck-to-rail conversion. I also want you to think about this area in terms of greenhouse gas emissions. Early returns, 60%-75% reduction in greenhouse gas emissions for those opportunities that we've converted and put on our 180, 181 train pair. I've been in endless meetings since I've been in my role, where many of you ask me, "Well, but is that really a buying decision? Do your customers really...
Yeah, it's just this nice-to-know piece. Frankly, the truth is, in the past it was, now it's a buying decision. These transportation managers and directors are getting more and more pressure to make greenhouse gas emissions part of their equation on how they select to move their goods from A to B. That's part of the reason why we dove into, and Keith drove hard, a carbon calculator, and the best in the industry carbon calculator in terms of ease of use and accessibility to our customers. The ability to put in that I want to move your product from Mexico City up to Toronto, and quickly spit back, well, what's the benefit of doing that? What if I do put it on CPKC? What does that benefit to me in terms of my Tier 3 scope emissions?
It's also, I'll tell you, just another tool in the toolbox for my sales team, much like the hydrogen locomotive that we talked about yesterday. How do we use that as part of our discussions with our customers, again, that differentiate CPKC? The third area of the pie I want to touch on is industrial development and nearshoring. David and Coby are going to get into this in far more detail. I'll tell you, again, I think this is an area of our pipeline that's unique to CPKC. It's larger than I ever anticipated. This area really supports, as you think about it, the long game of this investment. You know, a lot of these projects will require infrastructure and capital to develop. They're gonna take time to build, as you think about it.
Frankly, some of the opportunities in here are self-help, where we are pursuing this industrial development or this nearshoring activity to our network. I'll also be honest with you, a lot of it's just power of the franchise. Franchise is attracting that opportunity. It's the electric vehicles, it's the steel business, it's the grain announcements that, you know, it's no longer just 8,500 ft across Canada, it's 8,500 ft moving down through the U.S. and ultimately down into Mexico. Finally, the last piece of the pie, and honestly, I didn't know what to call it. I called it other self-help.
Not real exciting or descriptive, but I did it because I know we talk to you a lot, that we believe we're different in terms of how we market and sell because we make our own luck. We're willing to out-hustle in some areas. We're willing to be a little more creative, and that's what I think about in terms of this category. Think about this in these terms. This is about taking ports and outlets and creating new markets for our customers, much like I described in those movements to North Dakota, or much like I'm going to describe in terms of our fertilizer opportunity out through Port Arthur. It's also about hustling with our transloads to extend our reach and our shortline partners. I mean, our shortline partners have like it's Christmas morning for our shortline partners.
They just gained completely new access to three countries that they never had before. They were always potentially, you know, locked into a route with maybe the UP or the BN or whatever the carrier might be, but now they have the opportunity to unlock our route to compete into those marketplaces. The last area that I lumped into this, and again, I talked about it last night quite a bit with the group, is just improved business discipline.
I'll tell you from day one, we implemented with the KCS team, and frankly, a good reminder to the CP team, some very strict disciplines in terms of expectations around what we expect on renewals of contracts, what we expect on all of our pricing, what we expect on our investment returns, what we expect on what incremental opportunities really make the best sense for this railroad. All those things create unique, additional value to this franchise. Look, it's a big pipeline. I'm not gonna even begin to suggest that we want it all or we're gonna win it all, but I'm super pleased in terms of the quantum of opportunity that exists out there today. It's constantly being recharged, and the team here now is gonna really take you into the details of what it looks like.
The next hour or so, get ready. This is gonna be quite exciting. We're gonna kick it off with David Eaton, who's gonna join me on stage. Let me introduce David. David is our Director of Business Development. He is based down in Mexico, and he's gonna come up and dive into specifically the nearshoring and industrial development opportunities. David?
1994. Think about where you were in 1994. 1994 was a year of transition and, to a certain extent, turmoil in Mexico. The year started off January 1, 1994, with the implementation of NAFTA. That's when our nearshoring journey begins. In 1994, there was a significant amount of turmoil in Mexico, and the year ended with the Mexican economy in free fall. You know, NAFTA saved Mexico from a prolonged crisis. NAFTA created the incentives and the institutions for a rapid return to stability in Mexico, and that's when our nearshoring journey begins. We see that Mexico is poised for aggressive growth. John talks often about the field of dreams. NAFTA is laying the groundwork for our today USMCA, for North American integration. Since the implementation of NAFTA, bilateral trade between the United States and Mexico has grown 700%.
Over 700% growth since the USMCA went into effect in 2020. We've had about 25% growth between the United States, Mexico, and Canada. I moved to Mexico in 1994. As a young law student, I had the opportunity to work with Dr. Boris Kozolchyk at the University of Arizona College of Law, and he was an advisor to the U.S. NAFTA negotiating team. This opportunity opened my eyes to Mexico's potential. It led me to move to Mexico in 1994, and with a bunch of buddies from Toronto, Texas, Arizona, and Mexico, started a small little law firm and consulting firm, Monterrey Business Consultants.
In 2000, had the opportunity to meet Warren Erdman and a couple of folks from the KCS team and started helping as that journey to obtain 100% ownership of the Mexican franchise took place. When we secured the 100% ownership, I had the opportunity to come on board as an employee. Since joining the Mexican franchise, I've had different roles. I started off in corporate affairs, industrial development, sales and marketing, chief transportation officer, customer service, and now a very exciting new role in business development for CPKC. I also have the opportunity to serve as president of the American Chamber of Commerce in Monterrey. Monterrey is the epicenter of nearshoring.
Monterrey right now is at 98% absorption rate on their industrial parks, and there's just a lot of folks coming down, looking for space in Monterrey, and it's pretty exciting. The Council on Foreign Relations recently said that globalization is now regionalization. The world has been divided up economically into Asia, Europe, and North America. North America, with 27% of global GDP, is positioned to be the advanced manufacturing platform for the world. Now, we're not nearly as politically integrated, for example, as Europe, and Asia is certainly much larger. The level of supply chain integration in North America is truly part of the synergies that we'll be talking about here. CPKC is the logistics backbone of this nearshoring opportunity, the logistics backbone of North America. We are witnessing a pivot in global supply chains from Asia to Mexico.
Mr. Creel mentioned this morning that, of course, this has been going on, manufacturing in Mexico, for quite a few years, but the COVID reality has supercharged the movement of companies to Mexico and the development of supply chain integration in North America. The pandemic forced us to de-risk supply chains, to plan for contingencies, to build redundancies into our systems. The drivers of nearshoring are many, but a couple that we should keep in mind: global tensions. Of course, we have war in Europe, we have tensions with China, geopolitics is certainly one of the main drivers. You see a lot of other factors, such as emissions reductions targets. You know, you transport your product, shorter distance, of course, your emissions are less. We see that there are issues such as changes in U.S. industrial policy.
The U.S. has realized that they can't go it alone. This is a big change in U.S. industrial policy. The Inflation Reduction Act, the CHIPS Act, there really is a recognition that North America needs to work together, and there are policies out there that are driving that. The USMCA creates incentives, institutions for further North American integration. Think about the value added or regional content rules of the USMCA. There are incentives out there to source your products in North America. Would like to use a couple of examples, and probably one of the funnest is Barbie, right? 1998, Mattel, to a certain extent, spurred on by NAFTA that went into effect in 1994, they created a Barbie manufacturing plant in Monterrey. Subsequently, offshoring to China became very common practice, right?
Mattel, like many others, begins making plans to reduce operations in Mexico and start increasing manufacturing in China. The world begins to change, as we all know, in 2020. The USMCA goes into effect in 2020, creating renewed certainty for investment in Mexico. We also see that 2020, as a result of the COVID-19 pandemic, forced us to work through congestion, work through changing consumer demand. Those five or six weeks that you can get when you're sourcing out of North America are critical for companies like Mattel. Mattel makes a big pivot. They decide that they're going to not only are they not going to close down the Monterrey plant, they announce that it's gonna be the largest plant in the world. Keep in mind, please, that Mattel moves significant inbound bulk resin and outbound finished product via rail.
Electric mobility is coming to Mexico. Jonathan will establish that Mexico has one of the world's most important automotive hubs. The automotive industry in Mexico is truly the best example of North American integration. Supply chain integration is exemplified by the auto industry in Mexico, and this industry in Mexico is making an aggressive transition to electric mobility. Tesla's gonna supercharge an already energized EV environment in Mexico. Certainly, Tesla's sucking up all the air in places like Monterrey. Let me tell you first about BMW in San Luis Potosí, right across the street, right across the track from a wonderful Aluminum Dynamics opportunity that Koby's gonna talk about.
BMW in March 2023, announces it's gonna invest $866 million in an electric mobility manufacturing facility in San Luis Potosí, served by CPKC, and a lithium high battery manufacturing plant will also be in play. Think about those raw materials in Canada, the incentives under the Inflation Reduction Act, the opportunities to hopefully down the road, move some of these rare earth elements and materials for battery manufacturing in Mexico. BMW is an example of the transition of Mexico's very, very robust automotive industry to electric mobility. Tesla. Tesla, $10 billion is what they've announced that they will invest in their plant in Monterrey, the Gigafactory. Now, this Gigafactory underscores the nearshoring thesis.
It's widely reported that Tesla has announced that they're going to invest in this Gigafactory $10 billion due to many nearshoring drivers. You know, they're looking for quality workforce. They're looking for close proximity to suppliers and to end consumers. They're looking for quality labor, good universities, quality local government, logistics connectivity. Tesla could result in $15 billion in additional Mexican exports to the United States. Tesla is a testament to the exciting things happening with respect to nearshoring in Mexico. Geography, demographics, incentives. Think about geography, think about demographics, think about the incentives under the USMCA, incentives under the Inflation Reduction Act. Demographics are driving business decisions. Companies are making decisions based on the availability and the quality of their workforce. Companies seek low-cost production and quick access to markets.
Mexico indeed has low-cost production and quick access to markets, but Mexico also has one of the world's most talented labor forces. Every year, 2.2 million eager young Mexicans come into the workforce. The median age in Mexico is 29, compared to 40 in Canada and the U.S. Customers are seeking the opportunity to work with Mexican labor. Many surveys of C-suites have determined that there are lots of incentives for large manufacturers to onshore back to the U.S., and that is certainly happening, and CPKC will benefit from that. What they're finding is that they just can't find enough people for the available manufacturing jobs in the U.S., and working with Mexico offers a solution. The demographic story is compelling, John Deere is a pointed example of the advantages or the combination of geographic proximity and favorable demographics.
John Deere recently announced that it's going to close its cab and welding operation in Waterloo, Iowa, and move it to Ramos Arizpe, Mexico. Great city for us, Ramos Arizpe, Mexico, outside of Saltillo. John Deere announces that this opportunity is going to free up floor space in Waterloo for new product lines, for more value-added product lines, for less labor-intensive, and they're moving that labor-intensive welding operation down to Mexico. Truly an example of how demographics and geographic proximity are combining for companies to make decisions as far as where they're gonna manufacture. Think about a virtuous cycle, if you would, please. North America is going to benefit from this virtuous cycle of nearshoring. As nearshoring grows, North America grows. We have a virtuous cycle of CapEx.
Don't remember who it was, but one of you guys talked about the mother of all CapExes, that there was gonna be this investment. Morgan Stanley talked about a potential of $155 billion of additional Mexican exports to the U.S. over a five-year period. What that does is it draws in a bunch of CapEx to increase manufacturing capacity in Mexico, and that's the virtuous cycle. One of the most cited reasons for nearshoring is the location or the proximity to suppliers. As Mexican exports increase, CapEx flows in to build that manufacturing capacity, and that, in turn, strengthens the local supplier base, which encourages others to pivot to Mexico. That's the enduring pivoting cycle of the virtuous nearshoring opportunity in Mexico. China and Europe are also moving aggressively to Mexico. North of Monterrey, there's a industrial park called Hofusan.
Hofusan is a industrial park for 100% Chinese companies, located just around the corner from our CPKC Salinas Victoria Intermodal Terminal. This industrial park for Chinese companies houses many companies from China, from sectors like auto parts, electronics, IT hardware, furniture. As China moves in aggressively, they are also feeding on the opportunity for flexibility in the supply chains, allowing companies to use our Lázaro Cárdenas route if they want to continue feeding off of some of their suppliers in Asia, but also taking advantage of those North American suppliers and a lot that we're finding in Monterrey. We see that the Europeans are also moving aggressively into Mexico. Couple of examples would be LEGO and Bosch.
The Danish powerhouse, LEGO, has a plant north of Monterrey, which is their largest in the world, and LEGO consumes a significant amount of bulk resin via rail. The German manufacturer, Bosch, is transferring refrigerator production for the U.S. market from China to Monterrey. Yet another example of these exciting opportunities that are presenting themselves. Customers, companies seek cost-effective production and access to quick markets. Truly, CPKC is the backbone of North American integration. CPKC will benefit from and contribute to nearshoring in Mexico. The opportunity that presents itself as a single-line North American railroad is unique. CPKC will contribute to growth and prosperity in Mexico and in all of North America for many years to come. Thank you very much.
Okay, thank you very much, David. Certainly, some exciting things going on in Mexico and terrific opportunities for CPKC. We're now gonna take about a 15-minute break, so we'll see everyone back at 9:45 AM Central Time. Thank you.
Okay, good morning. Welcome back. It is now my pleasure to introduce our next guest to the stage, Mr. Jonathan Wahba, CPKC Senior Vice President, Sales and Marketing, Intermodal, Automotive, and Bulk.
In 2021, I was riding in the engine of this train that you see behind us. This is train 421. It's a mixed manifest train that runs every day between Toronto and Vancouver. Our assignment that day was to take this train from Kamloops, in the interior of British Columbia, to Boston Bar, which is the last crew change location before Vancouver. About two hours into our ride, we passed through a small community that I hadn't thought about in years. What jogged my memory about this community was a meeting and conversation I had with Mike Foran and Mark Redd years earlier. I remember that meeting and conversation well because Mike and Mark were quite upset with me coming out of that meeting.
In that meeting, we had met with a customer who wanted to bring on new business in this small community in rural British Columbia. I thought this was a good thing for CP. It was net new business, it was trucks off the highway. It was priced well. As we rode through the small community in the engine of that locomotive in 2021, a light bulb went off up here for me. I realized why Mike and Mark were concerned. You see, this train behind us was 10,000 ft long, and the customer's siding was only 4,000 ft long. That meant we would have had to stop our train, cut it into pieces, shove the cars into the customer, pull them out, and off we go.
This is the work the men and women of CPKC do every single day, thousands of times. There's nothing unique about it. What was unique about it was the location. This is the Ashcroft Subdivision between Calgary and Vancouver, and it is the busiest section of mainline we have at CPKC, running up to 40 trains a day over it. To put it in layman's terms, it would have made more sense for American Airlines to land a 777 on the busiest runway at O'Hare to pick up 1 passenger with all their planes circling overhead, than it would have for us to stop to serve this customer.
You might be thinking, "Jonathan, what the heck does this story have to do with Investor Day or with CPKC?" The reason I'm starting with this story today is 'cause I think it's very important for all of you in this room to understand the profound impact Keith's investment in people is having on how we run this company. Keith took me out of my job for seven months in 2021 and put me in a training program, where I became qualified as a locomotive conductor and a railcar mechanic, a railcar inspector. That training positioned me incredibly well for my next job that I came back to in the company later in 2021, which was to help author the commercial strategy for what our new company would be. In short, what business could we attract or unlock with the merger of CPKC?
What I'm going to do over the next 30 minutes is take you through four areas of the business that I worked on over that two-year period: in domestic intermodal, our reefer business, our automotive business, and our international intermodal business, and give you an update in terms of what we've been up to, what we've discovered, but most importantly, provide that ground-level coverage that John talked about relative to guidance for what we expect to deliver in the years ahead. With that, let's get into our domestic intermodal business. Early on in the merger application process, as we were learning about CPKC or what would become CPKC, we learned about this place behind me. What you see here is a drone shot flying south over Texas towards the border with Mexico.
This is the World Trade Bridge at Laredo, Texas, Nuevo Laredo, Mexico, as you can see, it is one of the busiest and most congested border crossings on the continent. In addition, there's other problems with this place. Every night at midnight, the border closes until 8:00 A.M., on the weekends, it closes at 4:00 P.M. until the following morning. The question that came to us at CP was: Could we take our decades of experience running an express transcontinental network in Canada and apply it to this problem? Obviously, our belief is that we could, just two short weeks into this new company, we did this. What you see behind me was the very first Mexico Midwest Express train connecting San Luis Potosí and Chicago, arriving in Chicago 12 hours early. We are ushering in a new era of truck-to-rail conversion opportunities.
Why do I say that? Let's take a direct comparison look at our service versus moving over the road. As I mentioned earlier, this train is a new era for intermodal conversion, and I really don't see the competition with this service being other railroads, I see it being with over the highway. Recall the opening drone shot of the Laredo bridge that is closed eight or 16 hours a day, and contrast that with our rail bridge that's open 24 hours a day. When you layer on the information that Keith shared in his opening slides about us building a twin bridge over the Laredo, at the Laredo Gateway, our ability to cross the border will be seamless with the and almost unlimited, giving us the capability to run almost 80 trains a day later next year when that second bridge is built.
Next, think about the driver shortage that affects the North American trucking industry and how frustrated those drivers would have been sitting in that line every single day waiting to cross the border. We don't have that on the intermodal side of our business. Finally, I would highlight the fact that Mexican citizens are not permitted to work in the United States, which means every time a Mexican truck driver crosses that bridge, he or she has to get out of his tractor and swap that tractor with an American driver to continue onwards. This adds complexity, it adds cost, and most importantly, it adds time.
Last night at dinner, Keith Creel said to everybody, "You know, words are important, but actions speak louder than words, and actions are what are important." Why don't we take a look at what we've been up to from a results perspective, just two months into this new company? For those of you in the back of the room who can't read the chart, let me explain what you see behind me. This is a bar chart that compares transit times between San Luis Potosí and Chicago. On the right-hand side, you see the next closest rail option. To the left, in the yellow, you see what we told the STB we would do. This is all measured in days. To the left of that, the gray box, you see what a single driver truck is capable of.
Finally, to the left of that, you see how we have performed in our first two months. What this slide shows is that our domestic intermodal service is competing on par or even slightly faster than a single driver truck. When you add the economics of rail and the environmental benefits of our service versus over the road, we believe we have a true winner in this product. Lastly, before I move off this slide, just a quick comment on flattery. If you, like I, believe that imitation is indeed the highest form of flattery, it is clear that our competitors to the north and our competitors to the west are very impressed with what we've been up to.
As you can see from the slide, while it's clear they will never compete with our single line service, it is nice to see that the competition that they said would never amount from our merger is indeed alive and well. Some of you may be thinking to yourselves, "This sounds familiar from our last presentation in 2018," if you're thinking that, you're indeed correct. If you think back to Investor Day of 2018, I stood up on this stage, I said we were gonna use our express transcontinental intermodal service to revolutionize east to west growth in Canada. I shared with you that we were gonna add a demand management system, a dynamic pricing model, unlike anybody else in the industry. The CAGR chart on the right-hand side shows that.
We've grown at 7% CAGR since 2018, since I last met with you in our domestic intermodal business. I share this with you as I hope our track record of growth helps underpin your confidence in this team's ability to do this again. While my words and numbers on the screen hopefully are convincing, I think the most convincing thing that I can share with all of you is the words of our customers. I'm sure all of you would have seen just a few short weeks into our merger, the twin announcements or the back-to-back announcements of securing Schneider and Swift as anchor customers.
Early in 2021, or in the middle of 2021, one of the first customer meetings that Keith and I took was to Green Bay, Wisconsin, where we went to see Schneider National, and then after that on to Phoenix to meet with Swift. Many of you in this room cover Schneider, and it's a company that needs no introduction. For those of you who don't, it's important to recognize Schneider is one of the oldest, largest, and most well-respected service transportation companies in North America. They have a stated goal of doubling their intermodal business by 2030. If you think about their business model and strategy, which is Schneider-owned containers, Schneider-owned chassis, Schneider-owned trucks, and company drivers, they are the perfect arms and legs to complement our north-south MMX Service.
Likewise, with Swift, a company that needs no introduction in this room, the merger of Swift and Knight created the largest below trucking company in North America. They're one of the oldest and largest participants in the Mexican business, and like Schneider, see our north-south access as an ability for their organization to grow faster than the rest of the market. In closing the slide, I would draw your attention to the quote in the middle of the screen, and I hope all of you can read it. It's from Mark Rourke, who's the President and CEO of Schneider. Seven or 10 days into our new service, I called up Mark, and I wanted to report into him how we were doing.
I said, "Mark, through the first week or a little bit more than a week, every single train that Mark Redd and his team have delivered has either been on time or early." Mark's response to me was, "Jonathan, you shouldn't call this the Mexico Midwest Express. You should call this the CPKC Bullet Train." I don't think it's gonna be possible to have higher praise than that from one of our largest and most important customers. What happens next on this service, and where do we go from here? Both John and Keith have talked so far about our initial commitment to the Surface Transportation Board, and in our application, we told them we would take 64,000 trucks a year off the highway.
I can tell you with certainty that my team has line of sight to deliver 2x or 3x that amount over this multi-year period. As David just so well explained to us, the demand for Mexican manufacturers to move goods to North America is only gonna grow in the years ahead. There is no railroad better suited to deliver that product and those needs than ours. When you consider our industry-leading transit times, our decades of experience doing business in Mexico, the greenhouse gas benefit of using our service, the latent capacity on our railroad, two major anchor customers all secured in the first 75 days of this company, I hope you can share and understand my excitement that we are just getting started in this line of business.
In an effort to help you with your models and your reports that you all some of you will write tonight and tomorrow, Coby and I decided that we would give you a little additional color around how much revenue each of these vignettes will generate now and in the future. For Schneider and Swift, I characterize this as a $100 million of a secured opportunity that is ramping on to our business as we speak. Overall, this domestic intermodal segment on the dry van side, I characterize as a $200 million opportunity. How do we get there? Rough numbers, but a good, safe placeholder. Every transcontinental domestic intermodal train pair that we run is worth $200 million in revenue on our legacy CP network.
If you look at the OD pairs going from the middle of Mexico to Chicago, it's fairly similar, so a good, safe placeholder is $200 million. About half this train is full right now, and I've got line of sight to fill in the rest of it over the course of our multi-year period. While I'm very excited about our very quick start on the dry van side, I'm equally excited about the next segment of our business that will also ride on the MMX service, which is refrigerated. If I look back at our playbooks from 2021 and 2022, as we were analyzing what other businesses could we bring to this network, the refrigerated segment is one that quickly comes to mind.
Recall in Canada, we are the largest refrigerated provider for Loblaws, Canada's largest grocery store, and we have the largest and most modern set of gensets or genpacks, which we use in our international intermodal business. Like with those early meetings with Swift and Schneider, we traveled the continent to meet with a different tranche of shippers to explore whether or not our intermodal service would be applicable to moving refrigerated products. What we found was quite different than what we found with the dry van exercise. 'Cause what we found is that no one, and I mean no one, had ever moved a refrigerated intermodal container via rail across the Mexican-U.S. border. We had, unbeknownst to ourselves, stumbled across the true final frontier of intermodal conversion.
With a proposed network in place, we had to go understand a little bit better what could we move and for whom? This next very sophisticated slide helps illustrate that model. For those of you who live in Chicago or New York or Toronto and have been to the grocery store in the wintertime, undoubtedly, you've picked up a piece of fruit or a vegetable with a little sticker on it that says, " Grown in Mexico." That's because over the past 20 years, Mexico has surpassed California as the fruit and vegetable basket for the upper Midwest and the Northeast North America. California has experienced problems with land, with drought, with labor, and with costs. Mexico has emerged as the low-cost producer of fruits and vegetables.
Again, back to those grocery stores, every single one of those items of fruit or vegetable would have arrived there by truck. That's the only way they can get there. During the winter months, we learned that over 100 full truckloads a day cross the border at Laredo, heading north. It gave us pretty good confidence that there was indeed a market to be made. The question then would become: Well, how would we get those containers back south? Somebody at cocktail hour last night asked me about this, so I'm happy to talk about that. If you draw a circle encompassing Omaha in the north and Kansas City in the south, and go a couple hundred kilometers out from that line, you've just drawn a circle around the largest protein-producing region on the continent.
More beef and pork is produced in that region than in any other part of North America and aligns perfectly with our northern terminal in Kansas City, right here. From an order of magnitude, again, we learned that during peak season, the United States sends over 100 full truckloads a day out of this region, of frozen and fresh beef and pork into Mexico. We've established we've got the MMX service that's fast enough. We've established that we've got an addressable market. There's just one thing missing, and that's containers. That's why two weeks ago, you saw an announcement for our organization, where we announced the single largest purchase of refrigerated containers in railroad history. We purchased 1,000 brand-new, 53-ft containers equipped with state-of-the-art telematics.
I'm happy to tell you that 250 of these units are already in service, with the remaining 750 set to be delivered by the end of the year. With the unmatched velocity of our MMX product, a large addressable market, and the newest and most modern fleet of containers in the world, we are well-positioned to attack this market. I'm happy to tell you that in the past few days, we've begun to move our very first loads north from Laredo of produce and south out of Kansas City of protein. If this is where this story stopped, that we've got 1,000 new boxes, we're gonna make a new market, we're gonna be trailblazers in an industry, I'd be pretty proud of this story and of the team behind me.
The reality is, this is not where the story stops. It gets a whole lot better, and that's because of our announcement last week with our partnership with Americold. Some of you in this room may be familiar with them and some of you not, so I'm gonna tell you a little about who they are and why we're so excited about this partnership. First, a little bit about Americold, for those of you who are not familiar. Americold is the largest publicly traded refrigerated warehousing REIT in the world. They have 245 buildings on four continents, encompassing 1.5 billion cu ft of refrigerated capacity. In our assessment, they are the largest and most sophisticated player in the food refrigeration space, and they're really an integral part of the global food supply chain.
Like with Swift and Schneider, my team and I have been working with the Americold executive team for the better part of the past two years to see, is there a model we could put together that leverages their expertise in warehousing and our expertise in transportation? Let me tell you a little bit about this deal that we've just announced and what we're building. As our announcement would have described last week, we've entered into an arrangement with Americold, where we will contribute land inside our intermodal terminals across our network. Americold is going to contribute state-of-the-art warehouses on that same land and will co-locate with us. The benefit of co-location is something that should be familiar to all of us in this room because it was the main theme of our Investor Day in 2018, Room to Grow.
The benefits of co-location for those protein producers I just talked about in the upper Midwest, is that they can pre-position their fresh or frozen protein to this building we're gonna build right here in Kansas City, so that when it needs to depart, when the order comes in to go to Mexico, it's a matter of minutes or hours to get on our train, not a matter of days. In a temperature-controlled space, with perishable space, every minute matters. Additional benefits of co-location include cost benefits. To get from this facility to the train is a cross-terminal shunt that costs $30 or $40, as opposed to a cross-town dray, which costs $200 or $300. There's environmental benefits of taking trucks off the road as well for these shippers.
Lastly, Americold is gonna be able to load these containers to the maximum weight permitted, not the U.S. highway weight, because once they get loaded and hit the rail, they don't touch U.S. soil again. There's incredible efficiencies that are gonna be derived from this. Keep in mind, a key part of our announcement with Americold is that we said we're gonna announce a series of buildings. It is our intent that in the months and years ahead, we will announce additional locations in addition to Kansas City across our network, thereby creating what we believe to be the most sophisticated and advanced food ecosystem, food transportation ecosystem anywhere in North America. One final comment I'll make before I move off the Americold file, and that's about an announcement they made earlier this year with DP World out of Dubai.
DP World is one of the largest marine terminal operators in the world. They announced a very similar partnership with Americold earlier this year, whereby Americold is gonna build additional warehouses co-located with strategic deepwater port terminals around the world. Keep in mind, in North America, DP World operates marine terminals in Vancouver and in Saint John. I think it is not a stretch to imagine the next time we're up here in two years at Investor Day, I will be able to put a network of dots on the map of Americold buildings connected exclusively by CP's rail network. This is a partnership and an ecosystem that will be unrivaled by anybody in North America.
From a numbers perspective, again, to help you with your models, I would characterize it like this: for every 1,000 refrigerated containers we purchase as a railroad, that's worth about $100 million in revenue as a safe number. I characterize this as a $150+ million opportunity, because by the time the Americold first facility opens here in Kansas City later next year, those 1,000 containers I put on the screen will be fully sub-subscribed, and we're gonna have to go order additional containers. In closing, I'm extremely excited about our opportunity to grow in the refrigerated space. Another market that we'll transition to now that I'm equally excited about is the international intermodal business. The last time I was up on this stage in 2018, our international intermodal map looked a heck of a lot different than it did today.
Recall, at that time, we only serviced the ports of Montreal and Vancouver, and our story at the time was about rebalancing the marketplace with our main Canadian competitor. As you can see again from the CAGR chart, we did exactly what we said we were gonna do, and we led the industry in growth in this line of business with an 11% CAGR, driven by wins from Hapag-Lloyd, from Yang Ming, and from CMA CGM. The challenge, though, as Keith alluded to this morning with our legacy business, is that without any other deepwater access, our ability to grow beyond Montreal and Vancouver was gonna be limited because it was a very mature market.
Of course, all of that changed, and you can see by the map behind me, is dramatically different today, where we now enjoy an unparalleled deepwater reach that is not even close to anything any other Class I can offer. We access the Pacific in Vancouver, the Atlantic in Saint John, the Gulf through a number of ports in Mexico, and the Pacific Mexican coast at Lázaro Cárdenas. I'm gonna talk to you now about two of these new dots on the map at opposite ends of the continent and explain what we've been up to and the growth we've been enjoying there. First, I'm gonna start with Saint John, New Brunswick, and a quick history lesson. Would you pause the video? It's a great video. Okay, a quick history lesson on Saint John.
In the late 1880s, CP first connected to the Port of Saint John. For about 100 years after that, we serviced the deepwater port on the East Coast, and it was the largest port in Canada. In the late 1990s and the early 2000s, as Canadian Pacific was going into severe economic decline, management at the time decided that they would burn the proverbial furniture to heat the house. One of the logs of furniture they chose to throw on the fire was the railroad that connected Saint John to Montreal.
While that might have generated a little cash for the company at the time, what it did was create an Achilles heel for this company that really affected us in a negative way for the next 25 years, as our main Canadian competitor had access to Halifax, and we had no commercial response. With our acquisition of the CMQ in 2019 and our partnership with J.D. Irving, our ability to get back to Tidewater has changed, and a return to Saint John has been simply spectacular. A number of you in this room have been with me out doing investor tours in Saint John, and at the time of those tours, I talked to you about the expansion that was occurring at the port.
The most important piece of that expansion was the commissioning of a second berth and the introduction of 2 new super post-Panamax cranes by DP World, which would allow them to serve 13,000 TEU ships moving forward. The video that we're gonna show you right now is taken in the past two months, and it shows the completion installation of those cranes. I think the visual is very important to give you a sense of what this port is capable of. Let's roll a 45-second video that's gonna show you what we've been up to at the Port of Saint John. If I transition to say, "What have we been up to from a results perspective?" Our early results at the Port of Saint John have been very encouraging. Recall in the summer of 2021, we welcomed our first container ship from Hapag-Lloyd.
In early 2022, we celebrated the win of CMA CGM and their arrival at Saint John. Later in 2022, we celebrated a second weekly call from Hapag-Lloyd. As you can look at the CAGR results, they're very impressive. We've quintupled our business in the past four years, and we are just getting started. If you ask yourself: how is this port able to grow so quickly, and why are we so convicted in it? There's a number of reasons. First, our route. We 200 mi shorter from the Port of Saint John into Montreal and Toronto than our competitors, and our line goes exactly as the crow flies between the East Coast and the hinterland. Our main Canadian competitor has to go north and then west and back down, giving us a significant route mile advantage.
Number two, there's no local congestion at the port. As you can see, DP World can load directly to rail, and J.D. Irving can depart trains immediately upon vessel arrival. Three, there's an incredible export market in the Port of Saint John. Seafood, lumber, frozen potatoes, all want to leave Atlantic Canada headed for global markets. We have all the ingredients in place for continued growth. We've got a great partner in DP World and in J.D. Irving. And I'd say I look forward to sharing future wins with you at the Port of Saint John in the years to come. If we switch our focus to the exact opposite end of the continent and talk about Lázaro Cárdenas, we're gonna take a pit stop here first. Where we are here is San Pedro Bay, off the coast of L.A., Long Beach.
What you see behind me was just a small number of the 100 container ships that were queued up last summer for up to a month at a time, waiting to berth at LA Long Beach. While the pandemic-related challenges at LA Long Beach around this photo have certainly subsided, it is worth noting that the challenges at LA Long Beach have become systemic. Whether it's pandemic-related challenges, labor-related issues that we just saw, chassis-related issues, storage-related issues, the modern reality of North America is that LA Long Beach has systemic service issues that are not gonna go away. Don't get me wrong, LA Long Beach will be the largest gateway entry point in North America in our lifetimes, but the lessons of the pandemic have caused shippers to look for alternative gateways.
While the alternative gateway buzz during the pandemic was significant, the reality with many of those gateways is that they're challenged around route availability or transit times. We believe the introduction of a service at Lázaro Cárdenas is the right solution needed right now for the challenges at LA Long Beach. Lastly, I'll highlight an analogy that I'll draw, and Keith has touched on it, that a number of the management team here at CPKC worked at the other Canadian railroad a long time ago, myself included. One of the things that I worked on a long time ago at that other Canadian railroad was the launch of a service at a place called Prince Rupert in northern British Columbia.
I think the analogy of Prince Rupert as a relief valve to Vancouver is very fitting for what we believe Lázaro Cárdenas can become to Los Angeles. Let's talk about Lázaro Cárdenas. For those of you that may not be as familiar with it, let me tell you a little bit about this place. 20 years ago, the government of Mexico had a vision for a new deepwater port on the southwest coast of Mexico. At the time, the one existing port in Manzanillo was filling up, and it was aging, and the government thought, "Time to build a new port that could serve the Mexican population, but that could also act as a gateway to the United States," and that's key. The reality is, over the past 20 years, the vision of the Mexican government to develop this gateway never materialized.
While it's been a great port to get into Mexico, the connection to the United States never happened. You ask yourself, "Well, why is that, and what are we gonna do differently about it?" The reason it didn't happen is because the two western railroads didn't wanna play ball. Put yourselves in their shoes, and I can't blame them for acting how they did. If you could get a container at the Texas border from the legacy KCS to take it into Texas a few hundred miles, or if you could get that container at L.A. Long Beach and move it a few thousand miles, which one would you pick? Well, you would take the few thousand miles. The gateway service envisioned at Lázaro never got off the ground. Our merger or acquisition of the KCS unlocks that potential.
The question becomes: well, what markets could we serve off Lázaro? During the application process, we ran a number of test trains. What we found is that shippers were happy to ship with us to the Upper Midwest, to Chicago, to Kansas City, but most importantly, they wanted to ship to Texas. Let me tell you a little bit about Texas and why customers are so interested in it. In 2022, John Brooks and I were having dinner with Hapag-Lloyd, who's our largest intermodal customer, and we brought out this map, and we put it in front of their executive team of our new railroad, and we said, "What do you think?
What can we do together?" Their senior vice president of global operations looked at us, he pointed at the map, and he said, "We can create a Texas shortcut." We asked him to explain what he meant. Let me use a little illustrative display here to show what we mean. Let's say two vessels leave Shanghai at the exact same time, going to Texas, and the first vessel takes the traditional route, southeast out of Asia, all the way past North America, through the Panama Canal, turns north, back through the Gulf of Mexico, and gets to Houston. Let's say a second container ship leaves Shanghai, follows the exact same route, but it stops at Lázaro Cárdenas, and it uses a land bridge to cut the corner into Texas.
This model, this Texas shortcut, will save shippers 10-14 days as opposed to the traditional all-water route of going through the canal. The canal, as many of you are aware, is having significant low water problems right now, where some vessels are having to discharge 50% of their cargo in order to have the draft necessary to transit through. If you are a time-sensitive importer trying to hit a Christmas holiday or an Easter holiday or Father's Day with time-sensitive cargo that needs to be in stores, 10-14 days matters, and it's a big deal. Now let's think if you're the steamship line. In order to complete this string from Shanghai to Houston via the canal and back, and you want to have a weekly service, you need six ships. If you cut the corner at Lázaro, you can make that four.
A container vessel costs $200 million a piece. If you can take two container vessels out of a six-deployment schedule and deploy them elsewhere in the world, there's hundreds of millions of dollars of savings or capital freed up to do other things with. This went from an idea at that dinner a couple of years ago, to what today has become reality. Today, I'm pleased to announce for the very first time that our long-term partners at Hapag-Lloyd have formally begun marketing the gateway of Lázaro Cárdenas to the United States. That means Hapag is protecting capacity on their ships, and we are protecting capacity on our rail for Hapag.
While Hapag is my first customer who's up and running on this service, I can tell you that you should expect more positive news from us in the months and the quarters ahead about additional deployments to use Lázaro Cárdenas. Back to the models. What's this worth? Lázaro Cárdenas, I characterize as a $200 million a year opportunity. How do I get there? Why do I have confidence in that? Well, the stated goal for our organization, $200 million bucks, that fills a train pair. I would like to have a daily train service running in and out of Lázaro before the end of this multi-year period. From a terminal capacity perspective, which is the other ingredient, we have plenty of it.
The 2 terminals at Lázaro today have a collective capability of 2 million TEUs a year. Last year they put just under 1 million TEUs through their terminals. 1 million TEUs of capacity is 500,000 units, 40-ft units, that's more than enough that would fill up a train pair. That's why I've got pretty big conviction in our ability to hit that number. While I'm excited about Schneider and in Swift and Americold and Hapag, the line of business that I am most excited about in terms of our ability to transform this business, is what I've saved for last, that's the automotive franchise. Let me start with a quick story. Earlier this year, I was at my local car dealership trying to buy a new car. The dealership looked like this sorry Toyota dealership with no cars in the parking lot.
I was talking to the salesperson, asking him, "When can I get a car?" He said, "It's gonna be nine months to one year." Probably a situation many of you have experienced. I asked him, "Why does it take so long?" He said, "The chip shortage and the pandemic," and much to my surprise, and he said, "Logistical challenges in Mexico." I kind of chuckled to myself and thought, That's interesting. What that salesman didn't realize he was hitting on is how vehicles traditionally move from Mexico to North American markets. Take that dealership in Toronto, where I was. How a vehicle would get from the OEM plant in Mexico to me in Toronto is as follows: step one, it's gonna leave the assembly plant on either the FXE or the KCSM, railroad number one.
It's gonna go to Laredo, Texas, or Eagle Pass, and it's gonna get interchanged to a second railroad, the BNSF UP, and they're gonna take it north to Chicago, and there it's gonna get transferred a third time to either the CN or the CP for final delivery into Canada. In even more extreme examples, some OEMs are trucking vehicles from their plants in Mexico to Veracruz or Lázaro. They're short sea shipping them up the coast of the continent and then trucking them to dealerships. These methods of transportation are inefficient. They add the risk of damage, and they take weeks or months on end. If there was ever a line of business that needed the benefits of our new network, it's the automotive franchise. Let me tell you a little bit about how we intend on changing this business.
To understand why I think we're so well positioned, first, you've got to understand our map. If you draw your attention to the right-hand side of the screen, we'll start there. That's the legacy Canadian Pacific's automobile factory origination map. What it shows is we have a very rich origination network in southern Ontario. We serve a lot of plants. The problem with the legacy CP is that we couldn't take this cargo anywhere. We would take 200 mi to Buffalo or Detroit and hand it off to American railroads, who would enjoy a long length of haul across the continent. If you switch your attention to the left side of the map and the oval there, you see the legacy KCS origination map, which is the richest automotive origination franchise anywhere in the world.
The legacy KCS originates freight at 16 automobile facilities, virtually every OEM in the world. The challenge for the legacy KCS is the exact same as legacy CP, just reversed. All those vehicles, a couple hundred miles to the border, where an American railroad would enjoy a long length of haul and a profitable move. How does our new network change all this? For the first time ever, we have the opportunity to offer shippers a closed-loop rail car management system that simply didn't exist before. Let's take the example of an OEM in southern Ontario of your choice. Let's say we go to that OEM and say to them, "Instead of asking us to take traffic to Buffalo or Detroit, let us take this traffic all the way south into Texas.
When that train of automobiles gets to the Texas market, we'll empty the autoracks, we'll collect the empty rail cars, we will shuttle them to the OEM plant of your choice in Mexico, guaranteeing your own rail car supply." When the train gets to the plant in Mexico, they load their rail cars, again, instead of shipping north just to the border, we say to them, "Use our compounds in Minneapolis, in Chicago, in Canada, rail your product all the way north with us. When those rail cars get to those northern destination markets, we'll empty the cars, we will shuttle them back to that same assembly plant in Ontario." We have the ability to create a bespoke, closed-loop network for automotive shippers that has never existed before, in essence, allowing them to guarantee their own capacity. The missing link: auto compounds.
Five years ago at Investor Day, I stood on this stage, and I showed you a video of a dirt field in British Columbia. What you see in the shot behind me was taken last week of that dirt field, and it shows our auto compound full. Recall back to 2018, our strategy of using land and room to grow, to build auto compounds and other lines of business. Our auto van compound in Vancouver was just one of many that we have opened since I last met with you. We opened this compound in Vancouver, we opened a compound in Edmonton, we opened a compound in Chicago, and we opened a compound in Saint John. We've created sticky customer relationships by using our land as leverage.
Today, in keeping with tradition, for the first time, I've got another great announcement, is that we are in the process of opening a brand-new auto compound in Dallas-Fort Worth, Texas. This auto compound will be one of the major collection sites for southbound rail cars from the north to be shuttled for OEMs into Mexico. In traditional CPKC style, we do not build products or facilities with the hope that customers will come. We only build them when we have customer contracts signed that underpin that investment. I cannot share with you today the name of our first customer, as they're busy unwinding themselves from a legacy agreement, but I can tell you that early next year, when this compound opens, you will see it full of vehicles.
I said earlier, I believe this line of business offers the most potential because of how we can transform things. I would characterize this as a $250+ million opportunity for us over the period of this multiyear phase that we're looking at through 2028. Where Swift and Schneider are early movers on the domestic intermodal side, automotive will take a little bit more time to develop. We've got to build compounds, we've got to let customers come out of their current agreements. I have the conviction that five years from now or whenever we meet again, Investor Day, the automotive CAGR that I showed previously will continue to hold true. In closing, when Keith asked me to take this strategy role two years ago, I had no idea about the quality and the quantity of the opportunities that we would uncover.
I have sat through hundreds of meetings in North America and Europe and in Asia, I can tell you, the meetings that we're having, the level of executives that we're meeting with, and the questions we're getting from shippers, is wildly different than anything we've ever experienced. Between Swift, Schneider, Americold, Hapag, and our new Dallas compound, we're off to a tremendous start in the first 75 days of this new company. I hope you could hear the excitement and conviction in my voice that the opportunity set that this company has to work on is dramatically different than anybody else in the industry. That no matter what happens in the macro environment around us, the self-help initiatives that John talks about so often are truly transformative for our business, and we will certainly lead the industry in growth.
It has been a true pleasure of mine to be able to speak with you this morning. I sincerely appreciate your time and your attention. With that, I'll invite my colleague, Coby Bullard, who leads our merchandise, ECP, and transload business, to come to the stage. Thank you very much.
Okay. As Jonathan said, my name is Coby Bullard. I'm Senior Vice President of Marketing and Sales, with responsibility for merchandise, energy, chemicals, and plastics, and transloads. At our last Investor Day in 2018, I'd actually only been with the company for a few months, but I shared a personal story and talked about how railroading and the history of railroading dated back in my family to the 1880s. Actually, 1884, to be exact. That's when the railroad decided to make a stop at our family store in East Texas, and Bullard, Texas, was founded. At that point, our community took off, and the railroad created prosperity for our community.
I'm here today to talk to you about how CPKC is going to create prosperity for all of the customers and all of the communities that we serve all across the U.S., Canada, and Mexico. Before I get into the meat of my presentation and focus on my 2023 playbook and the opportunities that we have, I want to start by taking a look back to 2018. The reality is, you know, we've talked about the consistency of our playbook and the fact that, and I think John said this well when he said, "It's the same playbook, bigger playing field," right? When you look back at 2018, I had three core themes. I was talking about maximizing our existing franchise, I talked about optimizing equipment or utilizing assets, and I talked about extending our reach.
As we fast-forward to 2023, the playbook and the story is still very similar. You know, I'm going to talk about industrial development. These are new builds and initiatives where customers are putting new facilities on our franchise, or they're expanding existing facilities that are already existing on our franchise. I'm going to talk about leveraging the franchise. John talked about getting down to the ground level on what it means to combine the CP and the KCS networks, and how that flows through from an opportunity standpoint. The merchandise or manifest business that we're in, the carload business, is the perfect example of how bringing those two networks together creates power for CPKC and our shareholders, but also creates tremendous opportunities for our customers. Then finally, I'm going to talk about emerging markets.
When I talk about emerging markets, it's regulations that are driving opportunities and how we can participate in those opportunities in a disciplined, responsible way. As I mentioned, the first area that I'm going to talk about is industrial development. When you remember back to John's pie chart that he had up there, he had industrial development as one of the opportunities. Each one of these yellow circles that you see here on the map is a unique industrial development win that we already have in place in merchandise and energy, chemicals, and plastics. Each one of these opportunities is announced, approved, and in progress. Some of them are happening now and coming online now, and I'll walk through an example of that, and some of them are going to come in over the next five years.
They create an opportunity for growth for CPKC now and into the future. I'd like to draw your attention to two different aspects of this map. The first is, if you look at the logos of the different companies and the commodities that they produce, we have a diversity. It's spread across our merchandise space, it's spread across our energy, chemicals, and plastics space. We have investment coming onto our railroad in all kinds of different commodities. The other thing that I would point out is these yellow circles are spread all across our franchise, all across North America. We have a diverse growth story from a commodity standpoint and from a locational standpoint.
The first opportunity that I want to talk to you about is a now opportunity, and that's with ExxonMobil and their expansion at their refinery in Beaumont, Texas. This project was completed in Q2 of this year, and it's ramping up right now. It's a $2+ billion investment. It's the largest refinery investment in North America in over a decade. It's going to generate 250,000 bbls a day of incremental production every single day. To put that into rail terms, 250,000 bbls is the equivalent of a unit train a day of incremental production coming out of this facility. As it's ramped up over the second quarter, we've already started to see benefits at CPKC. One of the biggest lanes that we have with Beaumont and ExxonMobil out of that facility is going down to Mexico.
If you look at our historical business that we did with ExxonMobil into Mexico, we did about 18 trains a month with about 90, 95 cars per train. In the month of May, we did those same 18 trains, we did it with over 100 cars per train. We're able to run the same number of crews, same number of locomotives, and get more utility out of those people assets and locomotive assets. In addition to fully utilized or better utilized 18 trains, we also picked up two additional it trains of business that was moving between Beaumont and Mexico. 25% growth just in that one lane associated with this expansion.
Where the true value in this lies is us working with ExxonMobil into the future, and how we can grow and utilize our single line haul solutions to grow with them into other parts of North America as they continue to expand their supply chain and look for new markets to grow into. The second example within industrial development that I'm going to talk about is SDI or Steel Dynamics. Steel Dynamics announced a couple of years ago that they were going to get into the aluminum space, but they were not in the aluminum space in any way, so they had to build a brand-new end-to-end supply chain from the ground up.
When you think about this brand-new supply chain that they're building, I want you to think about the number three, and that's because CPKC has the opportunity to participate in touching the same piece of metal through this new supply chain three different times. At a high level, their end-to-end supply chain, they're going to have inbound feedstock of scrap and aluminum ingots that's going to come into their facility in San Luis Potosí. They're then going to create slabs that are going to move from SLP to Columbus, Mississippi, and then they're going to have outbound rolls that are going to go out to their customers in the marketplace. What's truly unique about this opportunity is not that they're creating this brand-new supply chain and that CPKC exclusively services SLP and their facility in Columbus, Mississippi. What's truly powerful is how this integrates into our franchise.
When I talked about that first inbound feedstock move, they're going to bring in scrap, and they're going to bring in aluminum ingots. 60% of the aluminum ingots that are produced in North America come out of Quebec. We're going to work with SDI or Aluminum Dynamics, to create a single line haul solution between Quebec and their facility in San Luis Potosí. That's the first move. The second move is it's going to go into their smelter at San Luis Potosí, and they're going to produce 1,750 cars a year. That's going to move out of SLP and go to their exclusively served CPKC facility in Columbus, Mississippi. A couple of facts about the facility that they're building in Columbus, Mississippi. First of all, it's the single largest industrial development investment in the history of the state of Mississippi.
They're creating a world-class rolling facility in Columbus, Mississippi, they're going to co-locate key customers close to their facility. That's going to create the opportunity after we move slabs in, for us to work with customers that they co-locate to move their product out, also it's going to allow us to work with SDI to move out to a couple of key markets that we believe they're going to need to take aluminum to. Those key markets, if I could actually pull back up Jonathan's slide, which I'm not going to do, was one of his last slides. It's automotive space. As you think about emission standards in the automotive space, cars are getting lighter so that they can meet these new emission standards. David talked about it as part of the nearshoring presentation that he did earlier.
Another key market is the beverage packaging industry. I laughed as I walked in here this morning because as we continue globally to phase out the use of single-use plastics, we've now moved to where we have aluminum bottles of water on our table, right? Think about two years ago, you would have walked in, and you would have seen plastic bottles everywhere. Now, think about your companies. Think about when you go to industry events or hotels, how many companies have moved to aluminum packaging? As we think about our partnership with SDI, and we think about their growth profile, we're excited about several different markets, but we're particularly excited about our opportunity to work with them on outbound product into the automotive kind of heartland or strength of our network in Canada and in Mexico, as well as the beverage packaging industry.
To wrap up my comments on industrial development, because I know you love to look at numbers, our view of the market when we look at just merchandise and energy, chemicals, and plastics, and we look at the 19 opportunities that I talked about on the initial map, we see the size of the prize or our guidance would be $600 million in opportunity. John talked about constantly recharging our pipeline and the fact that we're constantly working to create more opportunities and grow our pipeline. A great example of that is, I didn't even talk about it, but last week, Ternium announced a $3.5 billion investment at their facility in Pesquería, which is basically Monterrey.
That's going to create a massive amount of incremental steel capacity, where we're going to move the inbound product for them and then the outbound product for them. We continue to have meetings with customers, where every meeting that I walk out of, I hear more and more about opportunities. As a matter of fact, with Ternium, I met with them a month and a half ago in Mexico, and they let me know, "Hey, we're gonna make this announcement. It's not public yet, but it's coming, right? You need to be prepared." I'm having lots of meetings like that with customers, and it's exciting to look at what our industrial development pipeline looks like now, but what it's gonna look like as it continues to grow into the future. The next area that I'm gonna talk about is leveraging our franchise.
John used the term, getting down to ground level on what some of these opportunities look like. Given that I'm the merchandise and energy, chemicals, and plastics guy, some of these examples are going to be very ground level, because to really understand the power of this franchise and the value that it creates for customers and the value that it creates for CPKC, I think it's important to understand what it creates from an asset utilization perspective. I think it's important to take a step back and understand how each of the franchise operated alone, so that you can truly understand the value of bringing the two franchises together.
If you look back at the historical CPKC franchise, we were resource-rich in natural resources, and we had a tremendous amount of construction and building products in our portfolio or in our franchise in Canada, but we didn't have the reach to get them down to key consumption markets in the southern half of the U.S. On the other side, KCS had a tremendous destination footprint, but they didn't have the ability to reach all of these construction products so that they could bring them in. I think John talked about the fact that they were kind of leveraged out of the market or pushed out of the market by the UP and the CN because they weren't able to originate the lumber that needed to go in to feed the housing market.
The way that it plays out, I'll give you one specific example, is in the lumber space. If you look at our legacy lumber franchise, you know, we were collecting lumber all throughout Canada, as you can see by the yellow bubbles here at the top of the screen, then we had a franchise that came down and ended in Chicago or Kansas City. If you take the example of a lumber car or a center beam that's loaded in Montreal, I would load that center beam in Montreal, it would move on my line, loaded with revenue days for about four or five days. I would hand it off at Chicago or Kansas City, then it would be offline for 15 days before I got that piece of equipment back.
At CPKC, I'm able to load that same center beam of lumber in Montreal, get 100% of the miles between Montreal and Dallas, and go to my customers and say, "I can offer you the only single line-haul solution with high speed, high efficiency service between Eastern Canada into the number 1 housing market in North America, Dallas-Fort Worth." It creates a great story for CPKC, because now that asset that was underutilized and maybe getting 20%-25% revenue days, is getting fully loaded all the way down. Once I make that equipment empty in Dallas, I then have the ability to reload that equipment and find opportunities to sweat that asset by moving it back north, loaded.
The final piece to the overall puzzle for Dallas is to think about it this way: I gave you an example of how lumber comes down into Dallas and how creating a single line-haul solution allows us to better utilize our assets in the lumber space and gives our customers an advantage into that market. That's one example of one commodity, but the same principles that hold true in lumber, hold true to all of our construction products that want to go down into the Dallas market. The final piece of the puzzle that we need to put together is to build out a destination transload solution in the Dallas-Fort Worth market, and that's where Room to Grow 2.0 really comes back in.
If you look at our current Dallas land footprint that we have, we have three different sites in Dallas at Zacha Junction, at Wylie, and at Greenville. Across those three sites, we have 500 acres of developable land. In 2018, when I got up in Investor Day, I talked about developable land that we had in Milton, and I said, "Look for us to make an announcement soon on a new project that's gonna come in Milton," and I kind of smiled and winked and moved on. I'm gonna say the same thing relative to Dallas. Look for us to make an announcement on a project related to a new high-efficiency, multi-commodity, indoor-outdoor transload in the Dallas-Fort Worth market.
Once we have that transload in place, it's going to unlock the ability to move our customers more efficiently between their origin markets in Canada and bring those construction products down into key markets like Dallas. Look for us to replicate this same model across multiple markets that we see opportunity in. Another example when we talk about optimizing our franchise or the power of the integrated franchise, is in steel. If you look back at the legacy KCS franchise, they have tremendous steel production capabilities that come out of Mexico, but they had limited reach to get it to end markets. In many cases, they were short-hauled or held to only being able to take product to Laredo.
One of the first things that we did when we came together is, we looked at all of the business that they were moving that was going over multiple interchanges, where we could offer customers a single line-haul solution where they didn't have it today. One of the moves that jumped out to us immediately was a move from Veracruz up to Edmonton with TAMSA. It was a move where KCS wasn't providing the equipment because it didn't make sense, and what they were doing is they were moving from Veracruz to Laredo, handing it off to another railroad, who then moved it from Laredo to Canada, to our competitor, who then delivered it into Edmonton. We went to TAMSA a month ago and said, "We can offer you faster, more efficient, more consistent service.
We can provide equipment, because where this didn't make a sense for any of our equipment to move in before, now it's the highest and best use for our asset." TAMSA started moving loads with us a month ago. After they moved their first loads for a couple of weeks, they came back to us, and we said, "What do you think of our service?" Their answer was, "You're one week faster than your competitor." I'm going to say that again. We're one week faster than their competitor, and it's because we're taking out multiple interchanges, back to John's comment earlier about airline layovers, right? How we want to avoid those. This is a win for TAMSA, it's a win for CPKC, it's a great use of asset, but the story doesn't end there.
I have equipment that's made empty in Edmonton, we sent the team out and we said, "Hey, what are we moving in mil-gons that are moving between Canada, that we could move back down to Mexico?" We realized we were already moving a lane with Gerdau, where Gerdau was contributing some equipment, and we were contributing some CPKC equipment. We said, "Hey, Gerdau, instead of us contributing equipment and you using your equipment in that lane, why don't we take that and we'll go grow in some other lane? Let me take this equipment that I'm making empty in Edmonton, I'm going to move it over to Winnipeg, and you're going to run it back down to Mexico.
I'm going to then run it back over to Veracruz and start that cycle all over again." Now we're in a situation where we go from KCS, KCSM standalone, participated in one leg from Veracruz to Laredo, to CPKC participating all the way to Edmonton, creating the opportunity to reload that same piece of equipment and run it all the way back down to Mexico and repeat that loop over and over again. You know, when we talk about precision schedule railroading, and we talk about core principles, optimizing assets is one of the core principles of PSR. I think the easy thing to do when we look at the opportunities created by this new integrated franchise is say, "We're going to connect point A to point B, and we're going to have more business opportunities." That's absolutely true, and as a salesperson, I love that.
I personally love that story. I also understand that as a commercial person operating in a PSR railroad, that optimizing assets is ultimately what's going to allow me to win in the marketplace and provide a better service for my customer and create more capacity. Keith talked earlier about the power of a virtuous cycle, was the term that he used when he talked about PSR, that PSR creates a virtuous cycle. I use the same example when I talk to customers or when I'm working with my team on strategy, and it's really this: is when you're able to connect markets directly and create single line-haul solutions for customers, you're able to grow revenue. Then by growing revenue, you're able to optimize assets. Think about the lumber and steel examples that I walked you through and how we were able to optimize those assets.
When you take out interchanges and you're able to offer single line-haul service, you're able to move assets at higher speed, which creates more capacity and leads to more revenue growth. It creates revenue growth in two different ways. One, is it creates revenue growth by not having to reinvest in more assets because you're more efficiently utilizing the assets that you already have, but it's also allowing you to earn the right to grow and reinvest in growth capital and more of those assets. It's that continuous loop of sustainability that Keith talked about that's critical to PSR, is absolutely hypercritical within our carload and manifest business. Iain Gray is going to get up, and he's going to talk later about our disciplined capital process.
I would love for you to think back to this opportunity and this exact example when he's talking about the fact that disciplined capital processes and focusing on assets and focusing on returns is in the DNA in every single area of CPKC. Okay, numbers time. When we look at leveraging the franchise and all of the value associated with opportunities here, our view is our guidance would be $275 million in this space from a growth perspective. Okay, last area that I'm gonna cover, I'm watching everybody write notes feverishly. Last area that I'm gonna cover is emerging markets.
When we talk about emerging markets, the topic that comes up most frequently when I meet with customers, a topic that comes up most frequently when I talk to analysts, I even had a question about it last night, is around the Clean Fuel Regulations within Canada. I'm just gonna call it the Clean Fuels Requirement or CFR, if that's okay, just as we go through this presentation. CFR means Clean Fuel Act in my mind. When we look at the Clean Fuel Act, it creates significant opportunity for CPKC. It creates significant opportunities in two different strategic areas. The first area that it creates opportunity in, is the ability to grow our renewable fuels base as it grows to meet the new requirements within Canada.
The second area is the ability to put in infrastructure in destination markets that allow us to bring together all the different fuel types, blend them, and get them to the final fueling stations for our customers. When we talk about expanding our origin footprint, there are three pillars to the overall clean fuels growth strategy from a CPKC perspective. One, is to grow our biodiesel, this, our biodiesel production and crush capacity within Canada, and across North America. If you look at our current crush capacity, we have seven different facilities that we service, with the green dots that you see up here on the screen, are existing crush facilities that have 10 million metric tons of crush capacity.
Over the next five years, the stars that you see indicate new facilities or expansion of facilities, that is gonna increase it from 10 million metric tons a year to 17 million metric tons a year. You know, in any other year, outside of a year where we're bringing together two new railroads in it's transformational change, that would be a story unto itself. We have growth across all of our different renewable fuels markets. The other area from a renewable fuel standpoint that we see significant growth in, is ethanol. Each one of these yellow dots that you see up through the upper Midwest and into Canada, represents an ethanol facility that CPKC serves. We have a powerful ethanol footprint. We service 2.1 billion gallons of ethanol production every single year.
When we look at our ethanol production footprint, and we look at the regulations, we're excited about opportunities into Eastern Canada. We're excited because Ontario and Quebec have both moved their blend walls from 10% on ethanol up to 15%. We're gonna see a 50% increase in the amount of ethanol that wants to go to Eastern Canada. We're excited about flows out of the upper Midwest, going into Eastern Canada. Then the third pillar within our renewable fuel strategy is renewable diesel. What I can say about that is we're working on multiple opportunities in the Gulf to create a train a day of additional capacity to go between the U.S. Gulf Coast up into Canadian markets to meet the requirements of this clean fuel initiative.
The reason it's important that we're going after fuel to move from the Gulf up into Canada, is there's not enough production of renewable diesel in Canada to get anywhere near fulfilling the requirement associated with the CFR. The other area that I talked about, related to our strategies with the CFR, is around investment in infrastructure, and really, it's bringing together all the pieces at destination with liquids transloads, so that we can bring in renewable fuels, and we can bring in conventional fuels, blend them for our customers, and get them to their fueling station. If you talk to customers about what the biggest obstacle is to pulling together these clean fuel requirements, it's the ability to get from the farm all the way to the fueling stations with the right blend for whatever market they're operating in.
From a CPKC perspective, once again, Room to Grow 2.0, utilizing land assets comes in as a big part of our strategy. We're excited to announce that we're going to expand an existing facility that we have in the Greater Toronto Area, and we're going to open a brand-new facility. If you look at our current liquid transload capabilities in the GTA today, we have one facility on the west side of the GTA at Milton, where we have a partnership with Cando, where we do about 3,000 cars a year through that facility, and that's the max capacity of that facility.
We have an agreement with Cando for an expansion of up to 10,000 cars a day through that facility over the next three to five years, as it ramps up with the new CFR requirements and as those get higher into the future. In addition to expanding our facility on the west side of the GTA, we're going to open a second facility in partnership with Cando again, on the east side of the GTA at Agincourt. This is an underutilized asset that we have the ability to put in a highly efficient, world-class liquids transload solution that's going to allow us to bring in ethanol, biodiesel, renewable diesel, conventional fuels, blend it to specification, and send it to our customers. The obvious question that gets asked when I talk about our strategy related to the GTA is: Why are you doing two facilities?
Could you do 26,000 cars through either one of the facilities? The short answer is yes, we could do 26,000 cars at Milton, or we could do 26,000 cars at Agincourt, but we're not doing it by design and by strategy. The reason we're not doing it is for two reasons. The first reason is, if you've a lot of you here are from Toronto, and so you know what I'm about to say. Traffic in Toronto is very difficult. Getting from one side of Toronto to the other side of Toronto in the 401 traffic is a monster. There's limited truck capacity.
What our goal was when we set up our strategy for our infrastructure in the GTA, was to create two solutions, one on either side of the metro area, so that we could get our customers closer to their fueling stations from our liquid terminals, reduce the amount of truck capacity that they would need, reduce the amount of truck miles that they would have to use, and reduce their overall final mile expense to get from our liquids terminal to their fueling stations. The second reason that we're splitting it and doing two facilities, is it's the right thing to do. When you think about the overall principle behind the CFR, the entire goal behind this is to reduce emissions.
If we're able to put together a solution that makes more economic sense for our customers and requires less truck miles, it's going to produce less greenhouse gases to get those fuels to the fueling stations. We're able to put together a win-win situation, where we're able to put together a better economic model for our customers, and we're able to put together a better solution for the environment. As we think about it's the right thing to do, and it's the right way to go about putting together this strategy. With that, I'll wrap up my comments here. The emerging markets, when we look at our guidance on the size of the price from a, I guess, volume and revenue perspective, is $250 million.
As I wrap up my comments, I want to say this: when we look at the volume and revenue growth available on the new CPKC, you know, from a merchandise and energy, chemicals, and plastics perspective, we have significant industrial development initiatives that are announced wins, that are in play, that are coming. They're going to generate the revenue growth that we have here on the screen. We have the ability to leverage our franchise to connect customers and markets on a single line haul basis that we haven't been able to do in the past, and we're able to better utilize our equipment to create more capacity. Finally, we're gonna be able to capitalize on these emerging market growth opportunities that are created through regulation and driven by strong strategy at CPKC.
With that, I'd like to thank you very much for your time and the opportunity to speak today. I'm gonna hand it back over to John to talk about bulk and wrap us up from a numbers perspective. Thank you.
Okay, thank you, Coby. Look, I hope you came away a little supercharged there. We haven't been just all completely focused on other, you know, areas and doing things these last couple years. The team has been, as I said, actively out in the marketplace, uncovering these opportunities, developing solutions, teeing them up to get really to this point. We wanted to hit the ground running. I'm confident, and hopefully, you were able to see today, we hit the ground running. I'm gonna take you through our fertilizer and grain strategy as you think about it. Ultimately, this is a portfolio that'll report up into Jonathan with Joan's recent retirement. I think, as you saw, he's been quite busy in a number of other areas.
As many of you know, I love this, grain and fertilizer area anyway, so I'm happy to talk about it. I'm also, what I'm gonna do is, I'm gonna zero in on the last couple slides. I know you all peeked ahead in there because you all are already asking 1 million questions already during the break. I'll try to summarize just clearly a line of sight in terms of where we sit 75 days in, as you think about our synergies, but then also sort of how they layer into our multi-year guidance as high single digits. All right, I'm gonna focus on three areas as you think about our grain and fertilizer franchise.
Number one, let's look at the network, and I'll try to help articulate why we get excited about the combination of CP and KCS and what it does for the agricultural industry across North America. Number two, we're gonna have a little gut check on did we do what we said we were gonna do, as we reflect back to the story that actually Joan told you back in 2018, or maybe even I told you or previewed you back in 2015 when we did an investor day. Where we sit today in terms of our 8,500 ft journey and what's next. Third, we'll dive into a very similar story as Jonathan described, where customers are looking to actively find new outlets, maybe diversifying away from an L.A. Long Beach into Lázaro.
I'm gonna apply it to a different supply chain, and that's our potash supply chain, and thinking about movements out through Western Canada versus down in the Gulf. All right, let's get going here. All right, let's talk about this ag franchise. As you know, the grain business is near and dear to my heart. It's huge for our Canadian Pacific network. It's an area we take a ton of pride in in terms of our operating model and delivering for the ag industry across Canada. I can tell you, it's equally a huge part of the CPKC book. It's gonna be 30% of our revenues going forward. It's an area I talked about last night.
In some areas, we might have to go a little backwards to go forward, but rest assured, we're gonna take this franchise, use the power of it, and create it our 8,500 ft operating model down into the U.S. and ultimately down into Mexico. In the IR Day I participated in back in 2015, probably some of you were there, I said, you know, we're gonna try to bring sexy back to grain. I know it's pathetic. It has taken a long time to get anywhere near remote to that. If you Now, picture this, putting together these two franchises, there's no way independently we could do in grain, what bringing these two together will be able to create. That's as good as I can get for sexy. Let's talk a little bit about that.
The CP franchise, as you think about it, has 135 existing elevators across the prairies of Canada in the upper Midwest. By comparison, you can count on one hand the number of elevators KCS had on their network. Think about the connectivity of 135 producers producing different crops across the best growing region of North America. Our growing region outpaces the industry average in terms of production growth. We're seeing about a 3% production growth across our growing territory, The power of those 135 additional origins to now be able to link to a destination network that goes beyond Kansas City is a powerful thing. It's the ability for grain marketers to now be able to send products directly down to the poultry feeders or the cattle feeders across Mississippi, Louisiana, Alabama.
It's the ability for exporters to now pull grain out of North Dakota or southern Saskatchewan down to Houston or the Galveston area to export grain, or it's the ability to go into Mexico. Mexico imports 30 million metric tons of grain annually. It's the biggest trade grain partner with the U.S. It actually just moved in front, slightly in front of China. Corn in itself, in terms of those imports into Mexico, make up about 50% of the crop that goes into Mexico, and that's grown at about a 5% CAGR over the recent years. In our first 75 days as CPKC, what we've begin to see develop is the grain industry is beginning to trade and really just play matchmaker.
There, it's sort of like this game where they've now got all these different Clue pieces, and how do you put together and make these grain flows happen? We've seen, as of a couple weeks ago, we've seen 12 new origin and destination pairs just begin to merge with grain flows. I'll give you an example. Like, I just saw yesterday, a train of corn going from Elbow Lake, Minnesota, down to Mexico City. I saw a Weyburn, Saskatchewan, train of wheat going down to St. Louis. And in this case, this is nothing my sales team is doing. Look, not that we're out, not selling what the power of this franchise could be and planting these seeds across it.
This is truly the thousands of other grain trader salespeople out there that are now taking this network and trying to put these puzzle pieces together to create more value in this ag supply chain. If you think about this network, it's more than what I described in terms of whole grains. You got to think about also the grain products part of the business, exactly what Coby just spoke to, supporting the renewable fuels initiatives across Canada. You know, there's gonna be 5 million- 7 million metric tons of new crush capacity built that's well underway across Canada, all of it in CP's backyard. The power, just thinking about grain, the power to be able to pull canola out of our competitor's territory into those crush facilities.
The power to be able to take that oil out of those plants and ship it to the destination terminal that Coby talked about out in the Toronto area, but also the meals that are produced out of that to feed the cattle feeding and markets all down in the southern U.S., but also down into Mexico, is a powerful opportunity. When you combine the network with our 8,500 ft model, that's really the impetus to what's driving and wants to drive further investment in our ag and grain space. Let's talk about some of that in investment. In 2018, Joan really introduced our push to develop the 8,500 ft model.
As you think about back at that time, we described it, and I continue to describe it to our customers, of wanting to create this perfect conveyor belt where those the hopper car investment that we made, the 8,500 ft train, which can be as long as 147 cars. How do we create a system where that train lands in the country, gets loaded as fast as possible, has power on, departs that terminal, lands at a destination terminal, clears the main line, gets unloaded and shipped back. You know, part of that equation is we've had to create a lot of constructive tension with our customers to ensure that the disciplines there, not only at the origin, but also the destination, to make that sort of supply chain, that pure conveyor belt between origin and destination.
When you put it together, what we're seeing is these trains, these 8,500 ft trains, are creating and carrying about 44% more capacity, more grain per train from origin to destination. On top of that, if you begin to look at the cycle times of those trains versus our legacy trains that we used to haul, they're running at about a 30% faster cycle time. This model is unlocking resiliency for the grain industry, it's unlocking capacity, and it's unlocking more investment. We had six 8,500 ft facilities when we introduced this model back in 2018. By this time next year, we're gonna have 66 of those facilities across our network. Not only Canada, we'll have them across Canada, we'll have them across the United States, and we'll have them down into Mexico.
That's the power of the model we created, but the industry recognized, and now we've spent roughly about $600 million building out to match our model. That's powerful. Think about it this way, too, as you think about those 66 elevators. If we had those elevators back in 2018 and moved the same amount of grain we moved in 2018 with those 66 elevators, we could have done it about 300 less train starts. Okay, well, that's operating leverage. That's the ability to use that capacity that you free up to haul more grain, or maybe it's intermodal, or maybe it's automotive. Coby and Jonathan are constantly fighting for that capacity. It also frees up how we use our people. It frees up locomotives for other pieces of business.
It's made a marked change in how we operate our grain business, but it's also what excites me as you think about what the future of the grain business is gonna look like as part of CPKC. With that excitement, we're pleased to be working on a number of these investment opportunities across this new franchise. I'm gonna start. I know you saw the press release that we put out on Monday with Richardson International. Richardson is one of our largest Canadian grain customers, and they just announced that they're gonna be expanding eight of their existing facilities up to our 8,500 ft model. This is on top of last year, they just built a new greenfield elevator in Canada on CPKC that also is 8,500 ft.
It's just the tip of the iceberg for Richardson, but it's a $70 million investment in their franchise, again, to leverage the power of the franchise. You might be sitting there thinking, "Well, they're all up in Canada. Like, what does that really have to do with the new network?" Well, let me tell you. It's really Richardson's motivation to be able to take those products of Canada and expand their domestic footprint to service the Southern U.S. and also Mexico. I'll also remind you that Richardson currently owns the largest durum mill in North America, and it's located in St. Louis. We can create a single-line haul from these Richardson terminals with 8,500 ft trains out of Canada directly into St. Louis to service that opportunity.
The second one I want you to think about is a partnership and an immediate link that we are creating with ADM. ADM currently has a crush facility where they crush soybeans in Deerfield, Missouri. This is a facility, it's been there a number of years. It's right off the KCS mainline. KCS has never built into the facility. You say, "Well, why? Why does it work now, and why didn't it work previously?" Again, it's simply the power of the franchise. It's what we've been talking about for the last hour. This creates the ability for ADM's buyers to buy soybeans out of Minnesota, North Dakota, Iowa, Wisconsin, Southern Manitoba, you name it, and bring those soybeans down into their facility to crush at that facility.
It then allows them, and do it in an 8,500 ft train, it then allows ADM to take that product and meal and ship it with us down to the feeders down in Mexico. It creates this complete ecosystem for that crush plant at Deerfield. Finally, there's been a lot of news out there recently with Viterra. I'm excited to tell you that the Viterra is our single largest 8,500 ft shipper across our network. They have 21 existing facilities, I think four more in the pipeline this year. They are experienced and actually completely have been the fastest to leverage our 8,500 ft network, across our grain companies.
We're working currently with Viterra to bring that model, given their combination most recently with Gavilon, and now most recently, their announcement to merge with Bunge, to take that model that they've created up in Canada and redeploy it and develop it across the Midwest and then also down into Mexico. These are just three examples. Certainly, these are major ABCs of the grain companies, Viterra, Richardson, ADM, that have recognized the power of this and wanna now apply it to our CPKC network. Let's shift off grain and talk a little bit about fertilizer. Again, this is almost the exact same story as Jonathan described. This is the recognition of supply chain challenges and bottlenecks in one area, and wanting to create a new outlet solution in another area.
I'm pleased to say we're working closely with U.S. Development Group LLC on the development of a new export terminal down in Port Arthur, Texas. Again, the premise of this is we move a lot of products across Western Canada, through the mountains, in the winter, through fires, you name it, the disruption that we've seen over the last few years, to get to tidewater, whether it be in Vancouver, in Portland, to move these products to final end users. Again, it's not an area where we would ever displace the movement that goes west out of those locations. This is about building resiliency. This is about building a hardening a supply chain to create another option.
If you look at Canpotex's, in particular, growth over the last few years, they've really begun to fill a void to maybe demarket themselves a little bit from a dependency in China in terms of taking their potash, to growing their destination marketplace in Brazil. This Port Arthur terminal provides a direct shot from out of northern Saskatchewan, down to the terminal, and ultimately down to Brazil. Our expectation is to have this terminal up and running in 2025, with the capability of throughput to move about 2 million metric tons. I think the opportunity extends for decades in terms of the growth opportunity. The good news is, as we showed you, I showed you, Coby showed you, Jonathan showed you, the land footprint we have at Port Arthur will allow us to scale this opportunity as that demand materializes.
Let's just pause for a minute here and try to bring this all together. Look, you sat through probably two-plus hours of this commercial discussion, and it really was a culmination of a whole lot of work that's gone in these last couple of years to get us to where we sit today, 75 days in. 75 days in, I see a line of sight to $1 billion in synergies right now. All the things that we've talked about, we've announced, the press releases, when I add them up, the capabilities of those are right at about $1 billion of new revenue for this franchise. Look, the starting point of some of that stuff will vary. As Jonathan said, we're off and running 180, 181.
We're gonna work our tails off to fill that train as fast as possible and move on to the next one. You think about Hapag-Lloyd coming to town, you think about the temp-controlled solutions, you think about Coby and the industrial development opportunities with SDI. It gives me a comfort and really, actually, a lot of pride to stand up here today to sort of unveil to you where we're at in this synergy journey. Most importantly, how does that journey sort of fit into the multiyear guidance that we put out today in terms of high single-digit revenue growth? I'm not the finance guy. Nadeem will get into all the details there, but I think of this in a real simple way. Those first two areas are table stakes, the base growth, inflation plus pricing. You know what?
We've demonstrated at CP that we can lead the industry in growth, and our that historically base growth at 3%-4% should be right in our wheelhouse, and KCS has demonstrated the same. It's well in line with past performance. I promise you, and our CEO would promise you, that we will continue that discipline in terms of our pricing at inflation plus. You guys can peg that where you want. We've pegged that traditionally in the 3%-4% range. Then there's the cherry on top. It's the synergies. It's how big we can take this. You know, we've outlined it at 3%. We're off to a really fast start. The pipeline is $5 billion and recharging. I think the sky is the limit in terms of what that opportunity is on that 2%-3%.
Honestly, the opportunity is more about how I work and the team works with Keith and Mark Redd and the operating team and Nadeem and the finance team, to ensure we've got the network to bring on any upside in those synergies in a disciplined, responsible way as we look to the future. You put together the two fastest-growing railroads standalone, you layer on synergies now we're together, that gives me the confidence that high single digits growth is well in our line of sight as our multiyear guidance. With that, look, I'll thank you for your attention. I hope you enjoyed the presentations from my team. There's been a ton of work that have gone into that. We'll be happy to take questions at the end.
At this point, I'm gonna turn it over to Ashley, who's gonna do a panel for integration and IT. Thank you.
All right. I'd like to welcome to the stage James Clements and Pam Arpin for our fireside chat.
You need your-
All right. James,
You wanna pass her the handheld? It's backstage, right behind you.
All right, try this again. James is CPKC's Executive Vice-President, Strategic Planning & Technology. He has over 20 years of experience with the company. He's responsible for strategy and improving data integration and continuous process improvement. He's had a number of leadership roles at the company, including car management, logistics, finance, sales and marketing in both the U.S. and Canada, and M&A. At CPKC, James is known as the company's Swiss Army knife because of his broad set of experience and deep understanding of the company and industry. I'm also happy to welcome Pam Arpin. She is CPKC's Vice-President and Chief Information Officer. Pam has over 25 years of experience in a number of areas, including operations, finance, commercial, customer service, and of course, technology.
Pam is in charge of information systems, throughout her career, she's received a number of recognitions for her industry leadership and expertise. She was named Railway Woman of the Year by League of Railway Women. She was also named one of Canada's top 100 most influential women by the Women's Executive Network. Most recently, in 2023, she was an honoree for Top 10 Most Influential People in North American railroads. With that, let's get started. James, on the first quarter earnings call, we heard you talk about the Integration Management Office. Can you tell us more about what your team did to prepare for integration?
Thank you, Ashley. As we looked at the possibility of putting CP and KCS together two years ago, we certainly realized it wasn't the CMQ acquisition. We had to be really thoughtful about how we went about putting the two companies together. Very early on, we decided we needed to engage some experts. We consulted with David Fubini, who I'd say writes the book on mergers and acquisitions. He teaches mergers and acquisitions at Harvard. As an executive team, we met with him and a woman named Elise EbeEberweinrweine, who we brought on board. She was fundamental in the integration of U.S. Airways and American Airlines to create the largest airline in the world at the time. She consulted with us. We created what we called the Integration Management Office.
Keith Creel was the leader of that office, and we had a regular cadence of meetings, and we really built a strong plan. We also had the principle, don't make day one bigger than it needs to be. With that planning activity that everybody has done across the company, we launched day one, and then we're into the plan to get everything else put together after that 1st step. When we look at it's about another two years we see and a lot of the technology plan to put it together.
What has been the most challenging thing about the first 75 days?
I wouldn't say the most challenging. You know, first 75 days, I've been surprised as to how well it went. You know, it was really thought out and successful, and as I look at how it's, the people have engaged, how the systems have rolled out, we're on a good track, and we're really moving forward.
It's great to hear.
I'm gonna say it maybe hasn't been without a little bit of turbulence, if we stick with some airline terminology. If we think about day one in terms of IT, we've had 600 changes that went through 27 cutovers and 6,000 cutover steps to manage all of the change for day one. We consumed probably about 1,800 cups of coffee as well. With all of that great effort and work, we were able to deliver to Mr. Mark Redd, an integrated operating plan within hours of day one. We were able to consolidate our financials and close our books in May. From across organizational HR perspective, we are able to ensure expenses are getting approved and all of our purchase orders are flowing through to our vendors to name a few.
From a customer perspective, you know, we have set up a hotline, and we have a customer service promise that was talked to earlier today, and we have had no customer calls into that line, except for a call to compliment us from someone from Chicago to talk about what it meant for this merger to happen. Very happy about that.
That's excellent. Speaking of the merger, James, I'm interested in hearing more about the requirements that were placed on CPKC as part of the STB's merger approval. Can you tell us what you and your team are doing to ensure that the company meets those requirements?
Yeah. Pardon me. First thing I'd say, when you look at what the STB did, they saw thousands of pages of evidence. They had many witnesses come forward, and I think they put forward a very thoughtful merger with some conditions on it. I would describe those as not onerous if we do what we said we're gonna do. If we run the railway the way we need to, if we look after the communities the way we said, and if we treat our customers properly and provide service, then the overall ability to comply with those conditions won't cause any negative impacts to our ability to achieve all the great growth that John and the team have talked about today.
The other thing is, with all the learning we've had around the planning for the integration, we're applying a lot of those same principles to the approach to compliance, whether it's the metrics production, environmental conditions that were imposed, or going to market in the way that we're required to. You know, again, I just reiterate, in the first 75 days, we've done everything we needed to be in compliance. We're building out the sidings and everything else, and as we go forward, I'm highly confident that we'll continue to be in compliance with all those conditions through the oversight period.
Great. Thanks, James Clements. Pam Arpin, after lunch, we're going to hear Justin Meyer talk about some really exciting operational technologies that he and his team are working on. What does that mean to you as Chief Information Officer, and how are you supporting that work?
Yeah. Very excited, very proud. Our combination of our business and IT group couldn't be stronger, particularly going through integration. I think I want you just to imagine an iceberg. You know, when you see some of what you're going to see this afternoon from Justin, that's the tip of the iceberg, but there's all of this work that happens underneath that to make it happen. For example, all of the work we're doing with multi-cloud and our strategy there, GIS, how we think about IoT and our readers and pulling that data forward, all of that kind of culminates in being able to create the framework for these opportunities to happen. I'll give you maybe one example because I know Justin's not talking to it this afternoon. I looked ahead. Railware.
As an example, some of what we've done in the technology perspective around Railware. You take all of this disparate information, whether it be, you know, what's happening with the track evaluation cars, how we think about tonnage and change in tonnage, and how that's impacting Railware, lubricators. John Brooks talked about lube oil this morning. I'll talk about lubricators. The application of lubricators, all of this data and information is available to us, and now we're surfacing that information and taking that disparate information, pulling it together to create predictive models to better help our operating team with safety and how to think about what goes into replacing some of our fixed and movable assets at the right times.
Can you tell me about other technologies that you're working on?
Absolutely. Maybe to build on that, we've created this framework around data. How do we get that into the right people's hands at the right time? We have a mobility strategy, and with that mobility strategy, everything from our auto compounds to our shops, to our car, repair, people that are out in the field, and our conductors all have mobile tools in their hands, not only to see data real time, to be able to work real time as well. I'll kind of go back to our conductors as an example of that. The tools that they have, they have iPads in their hands. They can report inventory. Historically, they would've had a paper, F-125. They would've been tying up, going back into the office and putting their inventory into our systems. Now, today, they can do that real time.
What does that mean for our customers? That means our customers get that information timely as well, and can make decisions about what they're doing at their facilities quickly as well. If we tie that to customer experience, you know, we're really trying to create that Uber-like experience where, you know, we have conductors that they're going into a facility. While they're going into that facility, we're letting the next customer know that we're gonna be coming to them next. As they're leaving that current facility, they're telling that current customer what work we've performed at their siding.
Tying that all together, if you think about safety, fluidity, and customer experience, you know, it's really creating that opportunity to enable our business strategy with the right investments in technology, and to think about both our bottom line efficiencies and our top line growth.
Pam, tell me a little bit more about your general IT philosophy?
Yeah, and I think, you know, maybe to get into that, people need to know a little bit more about me. Again, as you said, I've been pretty much everywhere in CP. I've been with CP, I like to say, for 26 years, and with CPKC for two months. You know, predominantly, the last half of my career has been focused on continuous improvement. Keith talked today about people, process, and technology. That's something that I feel very, very passionately about, and as you think about our philosophy for IT, it's tying those things together. How do we think about our processes and value streams, and how do we think about that overall strategy? One, we're an enabler. How do we, through business-led strategy, focus and invest in the right technology?
What I'm gonna say, though, is we're also a gatekeeper. There's a lot of cyber activity that's underway. Our job is to ensure the security of our technical assets, and also our job is to ensure that as we're thinking about the technology that we're putting in for our business, that we're thinking about total cost of ownership and how we're sweating those assets as well and doing the most that we can with them. Really, for me, our philosophy is very, very simple. We're an enabler, and we're a gatekeeper for the business.
Yeah, and I just wanna jump in, maybe at another level, we think about it as we don't wanna be on the bleeding edge of technology, but we certainly wanna be on the leading edge. When you bring it towards integration, the way we're approaching that is we have, I call it the North Star. We know where we wanna go in the longer term with technology, and as we're making integration decisions, we're working towards that North Star at the same time as we're putting the systems together. That's the other philosophy around technology.
Great. Speaking of leading edge of technology, can you tell us about what we're doing in the artificial intelligence space?
Yes. Everybody wants to know about artificial intelligence over the last three months. you know, what I will say is we've been involved in artificial intelligence for quite some time. Machine learning, artificial intelligence, and generative AI, they're all artificial intelligence, and they're just growing in terms of development. We've done everything, and you'll hear a bit this afternoon from Justin again on that, but our inspection portals through to broken rail, cybersecurity. We have AI involved in how we think about, our cyber, security and what we do in that domain, as well as even in our financial area, our Concur Expense Management. We use artificial intelligence to really look at fraud and opportunities for fraud, in that space. We are using it quite extensively already.
What I'm excited about with, you know, our next steps, and as you think about the discussion today, Jonathan touched on Lazaro, and he touched on the Port of Saint John. As we think about moving product to those corridors, we have regulation and customs as we move through the various countries. One of the things we're very focused on right now, and I'm gonna say we're co-innovating with one of our bigger customers, is what we're doing in that customs space. A very quick example of that is with our shipping lines, they ultimately have shippers that are moving goods with them.
We're working with those shipping lines to reach back to those originating shippers and looking at packing slips, anything to do with invoicing, waybilling, and pulling all of that data that we get, EDI, all of that information, so that we can help be part of the solution to dealing with any regulatory or customer documentation that's required for customs and fluidity. In this case, we're gonna be using AI not only to pull the information together but also to help us where there may be gaps in that information to look at historically what was shipped, by who, and how we can help fill in some of those gaps.
The intent with that is to create the most fluid network for any of our ports of entry and as it moves through our different countries that we now operate through.
Thanks, Pam. To wrap up, as we look to the future, James, just given your background in strategy and M&A and your deep understanding of CPKC's network and the industry, can you just give us your perspective of the announcement that we made this morning and our new connection into the southeastern part of the United States with CSX?
Yeah, absolutely. You know, Keith described it a little bit, but I see it as really opening up another gateway, and we've seen a lot of exciting opportunities that Jonathan's described, Coby's described. That southern connection to the U.S., which really I would have said was lacking, or not the U.S., the southern connection to CSX to get to the southeast U.S. was lacking. That 52 mi is really, I call it a missing link in the network and gets us that ability to diversify even more, access more markets, because today we either had to go through a short line in New Orleans, or we had to go through a short line in northern Alabama or have a direct connection all the way up in St.
Louis, which really, with the CSX, didn't allow us to offer a solution to shippers that want to go Mexico to the southeast using the CSX network. I see it as unlocking just one more piece of the puzzle and allowing us to, you know, continue to convert growth opportunities. I'm really excited about it.
Thank you, James. Thank you, Pam. It was great to hear about all of the exciting work that you're doing in the areas of strategy and integration and technology. For those of you here in Kansas City, we'll have lunch. For those of you joining by webcast, we will return at 12:20 P.M. Central. Thank you.
Hello, hello! Ooh, sorry. Well, that's loud. If I could, given that we're in Kansas City, I was thinking it is not only not proper manners, but would be a missed opportunity, given the gravity of this in Kansas City, the importance of Kansas City, to not have invited our Mayor to come by. As the Mayor of the city, as the steward of this wonderful town, the center of our U.S. network, and a wonderful host and leader in Kansas City, I wanted to give him an opportunity to welcome you to his city.
Thank you so much. Thank you. Thank you so much for the opportunity to visit with you. It is exciting to spend time with CPKC. Its predecessor firm had been a part of Kansas City almost since our city's founding, and we look forward to more great history from all of you. A few recommendations while you're in Kansas City. Step one, please spend as much money as possible. We always appreciate the tax revenue, but more than anything, you will get to learn not just about the great story of Canadian Pacific Kansas City, which I'm sure you already know, but of course, this outstanding community. I have been mayor now for four years. I have not accomplished much, but I take credit for every Chiefs Super Bowl victory, and so that at least is something positive for me.
For those who aren't American football fans, just know you should root for Kansas City's team. More than that, we've had the good fortune of celebrating outstanding business success from CPKC and from being a community that is truly growing. The leadership team that CPKC has is not just a group that I call when we're looking for new economic development opportunities, but is also a group that I worked with during the 2020 pandemic and protests, and a number of things. They have stepped up a lot to make sure that they have a strong and vital and diverse cultural and corporate impact in Kansas City and throughout North America. I thank them for their friendship and partnership in Kansas City, and I thank all of you for spending time with us.
I hope we have the chance over the years ahead to get to know each other even better. I thank you for spending time in Kansas City. If you didn't catch my name, I am Quinton Lucas, the mayor of Kansas City. There are some other bald mayors that look like me around the country, I always like to say that I'm the coolest one of them all. I thank you all so much for spending time with us. Thank you all continue to have a wonderful lunch. Appreciate it.
Okay, good afternoon, everyone. Hopefully, everyone had a nice lunch, and for those of you joining us in Kansas City, you got a taste and sample a little bit of Kansas City's world-famous barbecue. We're gonna start the afternoon session now. It's my pleasure to introduce to the stage CPKC's Executive Vice President and Chief Operating Officer, Mr. Mark Redd.
Should, yeah, thanks for the introduction, Chris. I gotta breathe deep 'cause I'm telling you, I just, you know, I'm in an atmosphere where I've been in the past. Spent a lot of time in this building in the past with my good former boss, Mr. Haverty. I see he's on the front seat, and thank you for joining today. What I thought I would do today is talk a little bit about. I'd talk about safety. I wanna talk a little bit about culture, and give you some just some facts of what we've been doing for the first 75 days. I think it's important that you hear that and kind of what we're gonna do going forward.
For me, I wanted to take a step back and just give you a background of who I am, why am I here today, and almost to the point to where I've almost been interviewing for this job 32 years. if I think about that, I'll let you know why. If I think about some personal information about me, I've been married for 31 years. I've been in this industry for 32 years. I've got two kids: one's Ryan, that's my oldest son. I've got a daughter named Caitlin. She's going to college to be a nurse. She'll hopefully finish next year, so she can move up here and be with me and my wife. I've put these pictures up here just so you understand, I am a lifelong railroader.
That's what I've done my entire career. I've spent my time in the operating department. I've done a lot of things within the operating department, I'll go through. The important piece is, understand from the right side, that's me with a trainmaster named Chuck Barham, that was instrumental in my life whenever I started. I'll talk a little bit about the fellow on the left, Andy Martin. I'll talk about him just a bit as well. First, I really wanted to say that I'm blessed to have a father-in-law that put me in this industry back in 1991. I started with a company called MidSouth Corporation. He introduced me to the business.
We spent a lot of time together, and before I got married, I lived with him for about a year and a half before I got married. What's important about him, to tell you is as I started day one in the business. Don't laugh when I tell you this, it's really kind of the DNA of me even today. We would literally. I was hired out as a brakeman. I worked in his yard. He was a trainmaster. At the end of the day, when I would go home, we would literally sit at the kitchen table, and we would go over every switch list I had for probably over a year. We would talk about different moves that went on.
We would talk about things that he saw that I should have done, some operating rules, some planning stuff in a terminal to understand what's next, what I should be figuring on, and just teaching me about railroading from just technical skill sets. That's what was important to me, is to learn the business from ground level. From two years of being a brakeman, I quickly got into a conductor at two years. If you think about being a brakeman, it seems odd to hire out. That was before crew change. That was before the elimination of brakeman back in the early '90s. When I stepped in that role, I was conductor, engineer. I qualified as an engineer. About that time, Mr.
Haverty come on board, we were purchased by Kansas City Southern in around about the sixth year that I started, that 5.5 years. What was instrumental to me at that time, there was a, there was a VP of Operations, CEO, Al Reese, that worked for Kansas City Southern at that time. Andy brought me on board as my first trainmaster position. The reason it's important to mention Andy is the fact that he started teaching me about leadership. He started teaching me about being a manager, and that's about the time I met Keith Creel. He's the conduit between me and Keith. I've known Keith since about 1999, 1998. He was assistant superintendent, I was a trainmaster, Jackson, Mississippi. One of the biggest interchanges, KCS had with Illinois Central at the time.
I'm telling you, we skated hard, and we wanted to look out for each other's railroad, and we made sure that we had plenty of constructive tension between us, even in those days. I think even for that taught me how to be a railroader, that taught me how to lead in that space. You know, much appreciated what the development I had with Andy. After Andy left, I've become a superintendent. I've been a general superintendent. I worked in a dispatch center, left the dispatch center, become the general manager of two different districts. During those districts, I'm actually the general manager that helped facilitate the capacity on the MLCC with Norfolk Southern. I'm also the general manager that helped facilitate the sidings, the crew changes that we had for the Rosenberg line with Kansas City Southern.
I've worked for Kansas City Southern for about 22 years, migrated and left Kansas City Southern as the VP of transportation, and I joined Keith's team. I promise you, when I joined Keith's team, I actually thought I knew how to railroad. When I was introduced to PSR, and I was introduced to Keith's team and Mr. Harrison, I knew then there was a lot for me to learn from that standpoint. I rolled my sleeves up, and I got busy, and I wanted to learn the business, and that's what I did. During that transition, general manager, a couple of locations, VP of operations, now I serve as his Chief Operating Officer even today. With that's a little bit about me.
I just wanted to share that so you understand my background, and I'm kind of back home, if you want to say that. I lived in this place three years, 10 years ago. What I thought I would do as an operating officer is to think about safety. Think about safety is foundational. To me, safety is where you have to spend time to keep people from getting hurt, to have less derailments. If you think about where we compare based upon lowest train frequency, we're the leader for 17 years. We've done a very good job in the FRA space with personal injuries, 40% better than we were back in 2016 compared to where we are today. How do you do that?
The question is: how do you get in front of people and have investment in people? That's what it's all about. It's about the people. You look at those metrics, those metrics don't mean anything if you don't bring people home safe. That's what matters to me, that's what matters to the organization, and that's what matters to the towns and communities that we run in, around, engage with. We want to make sure we have a safe product through these terminals or through these cities. The other piece is process. How can I set up processes to be successful, and how can I have a home safe moment, which, last night we talked at the table. A home safe moment is really about engaging my partner.
When I see something they're doing wrong, I can engage that person and stop them to keep themselves from getting hurt, or vice versa, they may interrupt me to say, "Hey, look out for this scenario. You may get hurt doing this." That's part of the processes that we do to help each other. Last piece, I won't touch on technologies. I know Justin is going to talk a little more about that, the technology piece is very important to us. If we think about safety, we think about culture. What makes us different than any other railroad, to me, is this is where the space of culture is different. We're a railroad of accountability. If people ask me, you know, "Why do you like working for CP?" To me, it's a railroader's railroad.
What I mean by that is the fact that we don't have handcuffs on us. The operating department leads the group, facilitates the execution and the growth within this organization. John talked about a lot of stuff on the stage this morning amongst his senior VPs. The key to remember is we need to execute that, we need to work with them to make sure that we can get this done, and we'll do that. We'll do that through Mike Foran. We'll spend time together, and we'll make sure that we can execute and deliver that to the, to the customer. Part of that culture is communicating to all of our stakeholders.
I knew when I took this position, first couple of weeks on the job, we had to get in front of the FRA to make sure they understood who we were, what we was gonna do. It's not like we haven't been in front of them. We wasn't in front of them as a CPKC, united front, talking to them about what safety looks like. We did that within the first two weeks. Second thing was bringing the leadership team, the KCS leadership team, that was gonna be the CPKC of the future, bring them to Calgary I can spend time with them, I can talk to them about consequence leadership. I could talk to them about how we're going to railroad, why we're different, so they can see what good looks like. That campus in Calgary is unbelievable.
It's very impressive. People need to understand why we do what we do and why it's important we do what we say. That's what we learned during about a four-day excursion of having them on duty and teaching them that type of stuff. Union leaders, very important that we get in front of union leaders. Teach the union leaders how we're gonna change, transition, how we're gonna do business, how we're going to change some operating rules up to better facilitate not just efficiency, but safety as well. We want them on point. I actually have a meeting with them in about two to three weeks. I'll be back in front of them on a 90-day checkup, we can trade ideas and talk about different things that's going on.
The last piece is, as we all know, is regulators. We've got to stay in front of the regulators, so we can make sure that we deliver what we told the STB we would do. The last piece I thought I'd talk about is really just optimizing the operating model. What have we been doing these past 75 days? We've literally taken out about 130 locomotives. Mike could touch on that just a little bit. We've taken about 130 locomotives out and stored them. We've taken about, I show 1,000 cars, it's multiple thousand cars that we've been able to take out of the network, pull, put into storage, or deliver back to the other carriers that we don't need. We just don't need those boxcars at that point, so we can free up capacity into the terminals.
Capacity means that the service improvements that we have across the serving yards that we have with dwell, on-time departure, all of those metrics that's near and dear to the operating department. That's what we've been driving for, is just efficiency and delivering those results for the shareholder. The last piece I'll talk about is really just, you know, why this, why this industry is important to me, because the last piece I said I'd talk about my son. He is, as a family tradition, he's a third-generation railroader. He joined our company about three years ago, and the reason I bring him up, he works in the technology department. He's an IT specialist. The purpose of bringing him up is to understand the future of this organization.
He's gonna have a drive in this industry, a drive at CPKC, because he can make a difference. As he looks back, maybe one day he can tell me how to run the business better because he's gonna give me the technology to do my job better, that's what I look forward to. It's just like passing the baton from my father-in-law that worked in this industry for 50 years, teaching me as I grew up, teaching my son as he grows up, to make a better railroad for everybody. At the end of the day, from technology, that's what Justin's gonna talk about next, is what's next for technology. With that, I want to introduce Justin Meyer to come on up and talk.
Good afternoon. Again, my name is Justin Meyer. I'm our Senior Vice President of Engineering and Mechanical. In my role, I'm accountable for a number of areas, including our engineering department, which would include the inspection and maintenance of our right of way, our rolling stock with our mechanical car, the locomotive fleet, and also our operations technology group. For those that don't know my history as well, I've been with CPKC for 25 years. Hired on former CP, most of my career spent in engineering. Fortunate enough and proud enough and humble enough to lead in this role for the last year and a half.
You know, and as I think back on my career and what we've gone through from a change perspective that I've been a part of and that I've been able to lead, I reflect on that, and then I think about what 75 days ago means in bringing these franchises together, you know, like we hear, and then being here today. That leads me to what the challenges and opportunities are ahead of this franchise. A perfect starting place for that is really about our ESG and our climate strategy. You know, we know as an industry, we know at CPKC, the railroads must lead the transportation sector into a low-carbon economy. We will build on what we already have an advantage on in the trucking industry.
Last but not least, CP is investing and will continue to invest in its assets and its climate strategy. For those that were able to join us yesterday, you saw firsthand two of those assets right outside. You saw them operate, some of you even got to climb on them. For those that are joining us today by video or online, I'd like to take just a few moments and share a video.
I can't think of anything that would be more important than being able to create a locomotive that only outputs water as the exhaust. I had an opportunity to pitch this to Mr. Creel. He looked me in the eye and distinctly said, "I'll let you build one." That was truly the beginning. We have a team of nine people, from electrical engineers, to procurement expertise, to mechanical engineers, all working together, all bringing a certain expertise to the table. We had 42 days to get a lab up and running to have a fuel cell turn a traction motor. We had to figure out what fuel cells were, how they operated, how you interact with them. It was truly built from the ground up. All of the software is done in-house. All of the electrical design and drawings are done in-house. The fabrication is done locally.
We're creating an ecosystem of change. This project is the chance to change the industry entirely. By developing these retrofit kits, we can rapidly transition our own fleet. You can literally leverage the exact same platform, remove the emission generators, and then you retrofit it with the zero-emission components. It's really exciting to see that there's a transition path that's right in front of our eyes. What is truly unique about what we're doing at CPKC is that it's not just ticking the boxes around sustainability. This team has been able to deliver two fully functional prototypes that are on the cusp of entering into service. We did what we said we would do, and it will literally find its way within the history books.
I've watched that video a number of times, and I can tell you, even right now, my heart rate is still racing. It makes it jump a little bit, and I think it does for a couple of reasons, and I'd like to start with sharing why with the story. If you understand a little bit, going back in time, it was late 2019. I wasn't in my current role, but my predecessor was, and we had a stakeholder challenge CP. What was its transition plan to climate change, and as we looked to 2050, what were we thinking about with our fuel? As we threw ideas out, the transition plan wasn't transformative enough. With that, CP was challenged at the time to come up with a strategy on what type of fuel was gonna be our future fuel.
What you see behind you is a result of that. When you think now and look at the timelines that we started with on that, as Kyle said in that video, it was a Mr. Creel discussion, and once approved, we took that concept, designed, assembled, and had its first movement test within 12 months. It takes a unique group of individuals to do something like that and to accomplish something like that. You saw a few of their faces in the video. There's PhDs, there's master's degrees, we have professional engineers, you've got system engineers, mechanical engineers, but what makes this a CPKC story is the other qualifications those individuals bring. It's the locomotive engineer qualification, the conductor qualification, the rules qualifications, and our operating rules, even qualified welders.
What that allows them to do is actively work on that technology, test it, go back and work on it again. It cuts the time down, its asset utilization, and it moves, and that's what made those timelines possible. Why hydrogen? I'll give you two reasons. First one, back to where I started: challenge for that transformative fuel. Hydrogen fit that bill, we feel. It may not be the only solution in the future, but we believe it's a solution we can build on and make part of the CPKC strategy. The second reason is back to how we operate. As a PSR railroad now, but even looking back, we've used diesel fuel as a fuel type for over 60 years. As you can imagine, process, infrastructure, scheduling of trains, how we operate in our yards, it's part of our DNA, it's part of how we operate today.
By choosing a fuel that could at least align with the similar strategies and processes that we do with diesel, it helps us understand that transition may be a little simpler from a change management perspective. I'll give you a little bit more of an example. We have fixed fueling today for our diesel fuel. We also have the option of bringing diesel fuel to our locomotives via truck. With hydrogen, we'll have those same abilities as we go in the future. If we would have chosen just the battery electric path, the fixed facility would be there, but picture an operating yard that is heavy with volumes from customer demand or possibly impacted by a winter weather event, and we're not able to get to that fixed fueling point. What options do we have?
At the type of railroad we run, an extension cord wouldn't be able to be run across an operating yard. It's not there, now you have an asset that you aren't able to charge. For us, the flexibility of the fuel type was very important. As we started, and you were able to see those two locomotives, those were what we call our low horsepower locomotives, and if I describe our fleet, it's really just two types: low horsepower and high horsepower. Once we started down our project early on, we partnered with the government of Alberta, and with their support, as those two low horsepower hydrogen locomotives come online, we'll have fixed fueling facilities at Calgary and Edmonton. Our fixed facility at Calgary, the electrolyzer there, will be a green source of hydrogen as well.
The two locomotives that you saw outside will be operational by the end of Q3, which really means we're gonna hand them over to Mark and his team and let the operations start hardening that infrastructure, our asset. How do we convert them? What did we think about as we went through the process? Again, I'll keep it simple. As you heard Kyle say, we removed the emission components of that diesel engine, and we replaced them with a hydrogen fuel cell. As you remove that, from the space that's created, the idea is to put as much of the hydrogen fuel cell technology as we can, including the batteries, the compressors, the cooling systems, the control systems. It's done in a way, the locomotives, if you noticed outside, there was a four-axle and a six-axle.
Those are the two types of low horsepower locomotives we have in our fleet. By completing the design for each of those, we now have a scalable solution for our low horsepower fleet. As battery technology or fuel cell technology advances in time, we will upgrade our technology using the same platform and the same process we do today. With that, we have a scalable solution to converting our diesel engines to hydrogen as we go into the future. As you may have heard, eight days ago, we had an exciting announcement with a partnership with CSX. Partnering with a Class 1 railroad is a pivotal point in this project. It's gonna allow us to do a few things. One is, with a partner like CSX, we will gain their understanding and help on the conversion side with the facilities they have in West Virginia.
We bring our technology to them. Working together, we will accelerate the number of assets that go into service. I used that word earlier, called hardening. What that really means is we need to get as many of these in service as we can so we can begin to work them through the seasons, through the operations, through the different areas, and understand the long term, make them more reliable. With the CSX partnership, we will accelerate that process, and we really do look forward to working with our new partners. I mentioned the two types of locomotives we have. High horsepower, I'd like to talk a little bit more about now, and it is important. Our climate goals will not be realized without understanding what we do with our high horsepower fleet.
It is that critical because over 90% of our Scope 1 emissions come from this fleet. Today, we have a high horsepower unit back in Alberta that's being stripped down and being prepared and rebuilt, designed, and will have a hydrogen fuel cell technology similar to our low horsepower, with one difference: Our low horsepower fleet are DC locomotives, are traction motors. Our high horsepower, our AC traction motors. The design will take that into account, and we expect by early Q1 of 2024 to have our movement test complete. Once complete and ready to go into operation, we will take our high horsepower locomotive to Golden, B.C. Why Golden? A couple of interesting things really go on in our freight or our route through Golden.
One, a little about four or five months ago, we had talked about a Teck agreement. As part of that agreement, we have a hydrogen strategy partnering with them. For those that don't know what Teck does, they move metallurgic coal from southern British Columbia to the West Coast of Vancouver, or excuse me, to Vancouver on our West Coast for export. Those coal trains are 152 cars long, they currently run today with four AC locomotives. Our strategy is once our locomotive is up and running and we're ready to test it in service, we'll pair it with a tender to give it the extra fuel it needs, we will begin operating that locomotive with those coal trains in that service.
The Canadian Rockies also offers an ideal opportunity for not just testing it on its grades that we have through our mountain ranges, the curves, but also the weather conditions that the Canadian Rockies can do. As I finish today, I'd like to talk about safety and build on what Mark has talked about. CP has been an industry leader in train accidents for over 17 years. This comes through hard work, investment in its people, investment in technology. You know, when we take that technology, it's really what do you do with it? What results do you generate? As we've proven, we are generating those results, but we know we cannot rest on our laurels as safety is a journey. One example, on my left, is what we call our rail car inspection portal. This, again, Pam mentioned, is data we're collecting on trains that move through.
We inspect those trains at a high rate or 60 mi an hour. One last example. Excuse me, I lost my train of thought. Our cold wheel technology. Using our wayside detector systems, we were able to use data as it flows into the back office, and we're able to check the brake effectiveness and exactly how our trains are performing from that standpoint. Finish with talking about two particular types of technology that are currently underway. Washout detection. With weather and climate change, we know the impact that can have on the railroad with water.
Our goal is to use satellites and back-office technology and look at specific areas in the track, and as water levels change in those areas, the technology in the back office will alert us, so we can send a track inspector to a site and identify that risk and mitigate it. This technology is very in its early stages as we speak, but we are seeing promising results. We expect to have 2,000 mi of our railroad protected by the end of this year. I'd like to finish with another success story similar to what you've seen with our hydrogen locomotive. Broken rails are a leading cause of derailments, both in the North American freight as well as at CPKC. To help us mitigate what we know is a concern, we have CTC in place today, and really what CTC is, it's centralized train control.
As trains move at a greater rate, at a high volume, excuse me, on corridors where that are busy, not only do we get the benefit of the train control to help move our trains, but we also have the benefit of broken rail protection. Unfortunately, that is a very expensive capital asset to put in as well as to maintain once we're done. With our territories that aren't protected by that, we knew we had an opportunity we need to take advantage of to continue to drive down our train accidents. Again, our solution, you can see on my left, it is as simple as an antenna, a solar panel, a small electronic box, which is connected by wires to rail.
You space that every mile on a subdivision, you turn the system on, and as it begins to run loops and talk to each other, we're able to run trains, excuse me, across. Using our back-office technology, we use and look for changes in the signal waves, and basically, as the technology identifies that change, we're able to deploy a track inspector again once trains are stopped, identify the broken rail, correct it, and then begin train movements again. As I conclude today, I hope you can see the type of technologies that we're developing in-house with our people, and it's through our people, process, and even investments that we do, that we know we will continue to generate results like you've seen today for our future, including our shareholders, people, or excuse me, communities. Thank you.
All right. Thanks very much, Justin. A lot of really exciting stuff going on in the operations technology front, and I agree, my heart picks up every time I see that hydrogen locomotive video. I'm very pleased to welcome my next two guests to the stage, Mike Foran and Iain Gray, to discuss planning excellence at CPKC. Mike Foran is CPKC's Senior Vice President of Network and Capacity Management, but in truth, he's better known by his other title as Mr. Constructive Tension. Mike has been railroading at CP for over 25 years. CPKC is operations led, and traffic does not come on the network without his blessing. Mike is tasked with guiding the strategic use of company assets to drive sustainable, profitable growth. Mike has also been qualified as a locomotive engineer.
Iain Gray joined CP in 2016, and has been the Vice President of Financial Planning and Accounting since 2018. Ian works hand-in-hand with Mike in planning capital projects and ensuring the right projects get executed at the right time to derive the highest rates of return. Ian is responsible for capital planning and budgeting, the multi-year planning process, CPKC's financial statements, and accounting systems. In addition to being a CPA, with a master's in accounting and an Oxford MBA, Ian has qualified as a mechanical car inspector in Canada. Gentlemen, thank you for joining me.
Thanks, Chris.
Thank you.
Ian, we just heard about some very exciting and potentially industry-changing technology in the hydrogen locomotive. How do you go about allocating capital to a project like that?
Yeah, the hydrogen locomotive is very exciting. It's a very unique capital project that we've been investing in. It shows our commitment to really challenging the status quo. We came out with our net zero targets, and Justin gave a bit of the history on how we approached it, but it fits well within how we approach capital in general. Kyle mentioned in the video that he went to Mr. Creel and was told that he could build just one. Proof of concept first, before we start putting a lot of capital behind it. We also then stretch the capital dollars. They approached governments, they got funding from emission reduction to make that initial funding stretch that much further. Then they're using retrofitting. We have existing locomotives.
They replace the inside with the hydrogen power, and then that breathes new life into assets that might have otherwise been parked or mothballed. Again, stretching that capital dollar, trying to squeeze as much value as we can out of it. 'Cause it gets back to our commitments. Again, we don't make commitments lightly. We're a very results-oriented management culture. When we say we're gonna get to net zero by 2050, we know we're gonna have to invest, and we'll put capital behind it to make sure we do achieve that.
How do you balance something that's, you know, more kind of research and development-focused with the regular capital discipline process?
I think Mr. Creel teed it off very well this morning, just talking about value, and value amongst a lot of different things. To get there, we need to balance it. We need to manage it like it's our portfolio. When we look at things like the environmental side, we have commitments to achieve. We talked about the hydrogen locomotive, we go beyond that. We look at things like the biodiesel or deploying technology like Smart HPT to make sure we're squeezing out the efficiencies. When we're looking at capital cases internally, we're also having an internal price on carbon so that we can continue to consider that future impact that carbon pricing might have on our operations.
It's value from the environmental side, but kind of fundamental value is on safety, and Keith talked about that this morning, that this management team has a history understanding what happens and how inefficient you are if you're not investing in safety. We spend hundreds of millions of dollars each year on the network. We make sure our equipment's in good operating order, that the track, the ballast, the roadway, that everything is working. When it's not, we have detection technology so that if an issue does emerge, that we can take action before it becomes an issue. We have a corporate obligation, we have a moral obligation to make sure our workers get home safely, and that we operate safely in the communities in which we operate. We also have commitments to customers.
We have lots of existing customers, and we're not forgetting about those in the integration, that we have the capacity and equipment in order to deliver the service that they've become to expect. That same service excellence is what's given to new customers as they do come onto the network. That's balanced again with and underpinned with shareholder returns. I hope something that's come across in the discussions today is just the financial literacy of the sales and marketing team and others. You have Coby talking about asset utilization, Jonathan talking about return on invested capital, and Megan bringing it up, that it's very near and dear to our hearts. When we look at everything like that, it has to be balanced.
It has to be managed as a portfolio, and if you understand that interplay, you can just stretch that capital that much further.
That makes a lot of sense. Mike, shifting to you, your infamous nickname is Mr. Constructive Tension. Tell us what that means.
Chris, I'm named quite a bit, or they call me a lot, but constructive tension, I describe it as that, the role in the company that creates the friction that ensures that we are maximizing the value of our capacity. I have a team of professionals that sit between the operating side and the commercial side. I report directly to Keith, and my job is to protect the network, it's to grow smartly, not overcommit, and ultimately make this fit. I've been in this similar type of role since 2017, when Keith became CEO, and there was a recognition, we heard about the transformation earlier, that it was necessary to have a mediator or a policeman given to protect the PSR principles and grow smartly.
The role's evolved since then, and different departments have come in and out, but the fundamental stays the same. I've been blessed in my career that I, you know, prior to Hunter and Keith coming on, I had a long background in commercial. Many different commodity groups. I was either an account manager or led the group. I understand the business really well, but I also recognized the and lived with the consequences of overcommitting and not being able to deliver. Fast forward to when Keith and Hunter joined the company, Hunter took a chance on me and made me his Vice President of network transportation, a commercial guy.
I got to learn the principles of PSR one car at a time, one phone call. It was a trying time, but it was fruitful as well. Ultimately, I'm carrying those principles forward. I think another key attribute, and another name I'm called is Dr. No. That's not no for the sake of growth. It's sometimes you have to say no to look at a problem or an opportunity holistically. I'm all about growth. I'm usually the first person to get the phone call when we're off targets. I'm very excited around what we, what we heard today.
Yeah. Just building on that, on what we heard today. We heard about a lot of growth opportunities this morning. What does that mean to you from a network capacity and operations perspective?
As I just mentioned, I'm excited. We have a proven process. We've been very proactive in our planning so far. I believe that's gonna avoid a massive capital bubble because we've been so proactive. I also am very pleased with the team that's come over to me from the KCS because they're very knowledgeable, and we've hit the ground running. I, to be specific about what I see and why I'm excited, at number one, it is our operating model, the virtuous cycle that we heard about this morning, we're seeing it in action already. We know as an organization how to convert, and we'll see that very quickly, if not already.
Second, we've really put the network or our CP legacy network in great shape, through the $hundreds of millions of network investment that we've made, over the last several years. Our rail line from our transcontinental line from Montreal to Vancouver and our Chicago to Edmonton secondary mainline, I would call them green or free from bottlenecks. We also are in the midst of several terminal expansions, multi-year, different phases. You know, Chicago and Toronto would be good examples of those, where the business case for expansion there was already compelling, and now you layer on what we heard this morning, it's just ever more of a strong business case.
You take those two elements, you layer on to that what I would call a very well-thought-through, proactive plan as we shift our focus north, south around infrastructure. We've made very public a $300 million investment in the corridor between St. Paul and Laredo through siding extensions, new sidings, and CTC. I'm not going to steal John Orr's thunder, but when you combine that with the good thinking that's been done on the KCSM side of the legacy KCS network, it's exciting, and it creates such a good foundation. Finally, we're also bringing on assets. You heard Jonathan talk about the 1,000 reefers that we just announced.
You need assets to grow a compelling market story. Similarly, on the automotive side, you know, over the next 12 months, we'll be taking on about 1,400, you know, well-priced, bi-levels through competitive leases and just to enable that growth. All in, I truly believe that we are well positioned to stay ahead of growth.
That's terrific. Maybe talk to me about how your teams think about capacity and capital planning and the processes that you use to align those?
Sure. Maybe I'll kick that one off. We're very bottoms up. We're very detailed-oriented. John mentioned that this morning, as an executive team, we're not afraid to get into the details. It's a process that we've built at CP, we've been fine-tuning as a management team over the number of years, we started to roll it out at Kansas City. It's understanding the volume, it's understanding the sequencing, it's so much important now, just the new product offerings, the new reach, the new customers that we need to bring online. We use that for the short term just to make sure we're resourced effectively in a cost-effective manner. We also use that same detailed approach for the long term. Again, we're not order takers. As you know, Mike mentioned constructive tension.
No group or person at CP is shy to have those candid debates and challenges the assumptions because that allows us to put forward the best volume forecast, the best revenue forecast, so that when the team then hands it off to Mike to operationalize, he's very much ahead of the game and has a good product in which to execute on.
Yeah, and to layer on to what Ian says, my fundamental job and my team's fundamental job is to match that demand or that forecast to capacity tomorrow and 10 years out. We rarely just rubber-stamper ever a forecast. We push back, we set expectations, we smooth out demand, and that dialogue is constant. The other thing is that we are deep into the weeds as a leadership team between Mark and myself and the operating lead teams. We know all the elements of what's going on in our business day in, day out. Mark's the biggest driver of revenue on the property.
That dynamic allows us to push back and to know what our capacity looks like in the moment. I'd say a core competency of this leadership team is our ability to operationalize the forecast, to squeeze out as much capacity out of our network, out of our rail cars as possible in good markets and in bad. I think case in point, it's been referenced a couple of times already, but just a few examples in the last 75 days. Jonathan spoke with great pride about the Mexico Midwest Express and its performance. We didn't add assets. No more power, no more crews, no more locomotives.
This is about setting the right schedule, the right accountabilities, adjusting and making sure everybody knows what they need to do to deliver. You know, similarly, Mark mentioned 130 locomotives that have been taken out so far. That's pure productivity. That's a proven methodology. It's a proven playbook. It's challenging, it consists makeup, it's longer hauls, it's putting the right locomotives in the right in the right business. The value proposition is there when it's latent capacity for growth, and it's cost savings when you don't need them. Mark also mentioned the cars and that 1,000 cars, I think, that was up there, where the cars were physically moved off the off the property.
There's several thousand more system cars that we parked, and it takes a little longer to actually get the savings on those cars, but the value proposition is the same. It's either savings for the customer for better cycle times or more room to grow.
I think that that utilization is so key, and you even heard it come across in Koby's remarks that, you know, in terms of executing for growth and starting to digest some of these growth opportunities from a capital planning perspective, it's fantastic. Just that focus on asset utilization is one of our key core principles because we know what good looks like. We're not an organization that buys assets on nice to have. That's a good way to destroy your ROIC. We need to exhaust the operational efficiencies before we start deploying capital. As we exhaust those operational efficiencies, the expense savings get realized almost instantly. When you're redesigning trains, you need less crews, you're more efficient on your fuel. As you park locomotives and cars, you're saving on maintenance.
Again, it gives good confidence and good line of sight on our ability to meet or exceed our expense synergy targets. More importantly, from a capital planning perspective is that we're growing with no capital or very low incremental capital. Once we have to get to the decision to grow, be it on the reefers front or compounds, that we have that dry power to then deploy to those high return projects.
Maybe just building on that, when you get to that point where you need to spend some more incremental growth capital invest, what does that kind of planning process look like?
Sure. I mean, the growth in front of us is a financial planner's dream. We're having a lot of fun with all the opportunities that are coming up. John, as a pipeline, we like to manage it as a portfolio. We got to make sure that we're getting the returns, that we have the capacity and appreciate the interplay amongst those. It is a living document. It's a lot of analysis that needs to get done in advance. So as things progress more quickly or maybe take a little bit more time, that we know exactly what type of thresholds we need to hit. The sales and marketing team understands the volumes and revenue and profitability that they need to deliver before we start green-lighting capital.
That line of sight that John has on the pipeline is fantastic for us to do a lot of proactive work.
That pipeline, for as big as the specific opportunities were today, you know, the $5 billion of it that continuously refreshes, there's got to be an effective process for managing that. My team quarterbacks the prioritization of capital based on, you know, the business needs. We act as a clearinghouse. We look at again, a holistic, the holistic business, what the network fit looks like, what the complexity of handling the business, the strategic fit, profitability, and I think most importantly, the sequencing, 'cause you got to get that right. A key in this is you can't do it in a vacuum. We as a leadership team are meeting weekly, reviewing opportunities, reviewing statuses.
We take a project from inception right through to completion, and that allows us to be adaptable and to adjust where needed. When I, when I look at Jonathan's announcement earlier about moving forward with a Dallas auto compound, I think that's a great example of. That's a project that we knew was somewhere on the horizon, but as we communicate and work through these details, it's clear and present. We've adjusted the priority, the planning, and are going to be able to meet the customer or the commitments that we're making in the marketplace, just through that dialogue.
When I listen to David and the nearshoring and the Mexico opportunities that are there, you know, that same nimble but thoughtful and adaptability principles need to apply. I think all of the lead team are pleasantly surprised just at how large the opportunity really is in front of us. It's not going to change our approach, where we are implementing a disciplined operating model, and we're looking at the capabilities of the network and where to invest holistically, so we can put as much throughput as possible over the long term on our network.
I think, you know, it's extracting value for our capacity. Before I used, like, a portfolio approach, and again, we need to understand the balance, bringing customers on, having new terminals, new equipment, and how all that interplay works. Ultimately, growth is somewhat discretionary, so we view it as discretionary capital. Again, when we say we're good stewards of capital, and we take that role very seriously. A lot of the analysis that happens in advance has that high hurdle rate, so that, again, it's got to fit the network, it's got to extract value, but it also has to hit that high return on invested capital, target that we have internally.
We do that, we prioritize, we continuously churn, we continuously discuss and collaborate and challenge each other as a management team because it's not easy. It's not easy when there's a lot of different projects coming, a lot of sequencing that needs to happen, and then if you have that in with the interplay of macro headwinds, macro tailwinds, there's a lot of analysis that needs to go through it. We've done it at CP, and we've been successful there, and we're rolling it out at CPKC. I think that approach will be really impactful as a tailwind for return on invested capital. Again, we've assets that are parked, so when growth comes in, we grow at low incremental capital costs, and then when that discretionary projects start to need to take shape, that we have a process, it's worked.
We can prioritize based on returns, so you get the low incremental growth or on the capital side, and then that high return on invested capital, beyond that, and again, it's just magical from a return on invested capital standpoint, and something that I'm very excited about.
That's great. It sounds like a very collaborative and constructive process that has us well positioned to execute on the growth. Thank you both for the time this afternoon and joining us on stage.
Great. Thanks, Chris.
Thank you. Okay, it's my pleasure to welcome our next guest to the stage, CPKC's Executive Vice President and Chief Transformation Officer, Mr. John Orr.
Thank you, Chris. I can't tell you what a pleasure it is to be here today. As Chris said, I'm John Orr, and I am the newly minted Executive Vice President and Chief Transformation Officer at this wonderful company. It has been a journey. I started my career in London, Ontario, as a brakeman in Canada. I progressed through a series of promotions in transportation to a yard master, a locomotive engineer, and for about 1five years, I was also a union representative for the United Transportation Union. In early days of change, Mr. Creel often would turn the page on an article and ask me if I was a party to this atrocity. I had to admit, in some cases I was, and sometimes I was an innocent bystander. It was a great experience.
From there, I began life as a manager in the Canadian landscape, moving from the eastern part of Canada to the western part of Canada, addressing new opportunities, challenging the convention of the service in those areas, or solving problems and creating new opportunities. As a, as a family man, you can imagine how disruptive that can be, uprooting our family every couple of years. We had a bit of a tradition. We had a hot tub. We had family meetings in there, and there was a day that we talked about uprooting, and the kids surprised me. My son, Ian, and my daughter, Margaret, they embraced the changes. At one point, my son told me, "Dad, this is not uprooting.
This is embedding our roots across North America." We have had the privilege of living across Canada and the United States, it was only through that kind of support that we generated from our family, creating roots, deepening engagement, committing to one another, the way I was able to do the wonderful things that I've been able to do. When Keith Creel and I talked about the transformation of the CPKC network, he didn't get transformation out of his mouth before I was signing up. What a privilege it is to be a part of this organization and be a part of the industry that I've committed my entire adult life to. It's with humility and excitement that I'm sharing with you some of the areas that I've been focusing on.
They're really long lead value creators that have been ongoing for some time, that I'll give you a little bit of insight to how I see transformation and bringing the power of the team together. By any slice of the imagination, we're already leading a lot of these areas, but in true form, we always have to get better and prove ourselves day in and day out, and manage the infrastructure and the responsibilities to the utmost so that we can continue to service and be relevant to our customers. We'll talk about how we're investing in our cross-border transformation, the infrastructure that we're building out in order to optimize solutions, and working with labor to modernize our labor relationships, as well as our labor agreements.
I believe these initiatives are central to unlocking the full value of the CPKC network, and they're also the catalyst for many of the initiatives that John and company have talked about all day long. I've worked for some great leaders in this industry throughout my career. I remember very fondly some of the leadership discussions I'd had with Hunter Harrison, particularly when I was in my early days in management, leading change in our most important, largest hump facilities in Canada. One of the things that Hunter really impressed on me: in order to serve your customers and deliver value for the people you're leading, you have to understand your differentiating assets. Not only understand the differentiating asset, but then create value around it, improve it, optimize it, and then concentrically build out more value.
In this case, the hump lead, a 10,000-ft hump lead, in the middle of a 20,000-mi network, was that differentiating asset. Boiled down, was the hump crest, the apex, that fed the network, and that 500-ft span was critical. It didn't take me very long coming to KC to understand that the border complex at Laredo was that differentiating asset, and the bridge at Laredo was the hump crest. We set about to optimize, and no matter how you sliced it, whether from the view of ESG, security, or service, we were already the leading transportation mode in that gateway. To be competitive and to be relevant for growth, we had to continue to improve that. We set about optimizing. On that bridge, we were stopping trains to change crews.
We worked across two nations in a multi-agency approach to create and pioneer international crews. Working with CBP, working with the FRA on the U.S. side, the ARTF on the and SAT on the Mexican side, we were able to qualify Mexico workers, Mexico train crews, to operate trains from our Sanchez Yard to Laredo Yard and create a trusted traveler scenario where they didn't have to stop at the bridge in order to change crews and move off the bridge. Instead of stopping in the middle of the bridge to change crews, we're able to move those 18 miles across, through the complex and create more efficiencies on the bridge.
Through those discussions and that reputational equity that we built, we're able to work with, again, cross-agency engagement to create a unified inspection location for the border services and security services, inspecting the trains coming across the border on U.S. soil. They share the same data inputs, the same equipment. You can imagine how much that accelerates any kind of disputes, uncertainty, or any situation that might impede the flow of a train across the border. They're right there talking to each other. That whole process now is evolving. We're building a facility for SAT and CBP to coexist, to work together in the same office, same desks, same monitors. That's allowed us a lot more fluidity across that bridge.
Those are kind of regulatory environments, from a physical environment, we set about investing in our Laredo sub and our Rosenberg sub to decongest some of the high volume flow-through on those 2 core subdivisions that lead to and from the U.S. border. We also invested over 9 mi of track in the Laredo yard itself. On top of that, we resolved the queuing, staging of trains from Laredo to the bridge by building triple track from Laredo to Arkansas Ave. Why Arkansas? That's the furthest point we could get from the yard to the bridge without interfering with public and public crossings. We're continuing to work with the city of Laredo to resolve that even further. I can say all this, a picture is worth 1,000 words.
Why don't we roll some video and I'll show you a train leaving Monterrey, Mexico, coming into our Sanchez yard and going through this critical infrastructure at the border. Our Sanchez yard is a 1,500-acre facility. You can see on your right the arrivals, then the departure tracks, and off to the left, our bull facility. One thing that I really recognize is the people before me investing $130 million in building this great facility. One thing that struck me was the value of the same safety management systems and management oversight that we have in Kansas or Shreveport, applying in the yard.
You can see the orderliness, the cleanliness, the disciplined structure of engineering and mechanical coming together to provide this great facility to allow us to ingress and egress from the border. You can see there's room to grow. Most recently, for those with a trained eye, you can see we separated the switching leads and the main lines as they go through Sanchez, in order to give us more flexibility. Moving to the bridge, here's one of John's new trains coming across from Mexico into the United States. I draw your attention to the white building, that's where we work together with CBP and CSA. Here we have the on-ramp for the new bridge that we're building, and it's well underway. As others have said, it comes online Q4 2024.
It's not just a bridge, it's a parallel opportunity to run two trains at the same time, anytime, in any direction. I'll take you up to Laredo yard now. Again, it's a 350 acre facility, room to grow, room to expand. What we've done, again, is separated switching leads and main line, and we've also double-tracked a lot of the main line out of Laredo Yard. That helps us target and resolve issues, not only into the yard and the border complex, but adds a lot more accuracy in the use of capacity in places that are critical to the United States network, like Houston, Shreveport, and even as far north as Kansas. These optimizations of our secure corridor have really lent themselves to an improvement across the entirety of that critical asset.
It's one thing to have a, an incredible infrastructure and design. It's another thing entirely to have the resources dressed and ready when the trains present themselves. As David Eaton said, "This is Mexico's time." This merger could not have happened at a better time. The USMCA has a backdrop for labor reform and labor consistency that unifies the approach to labor across all three countries. The administration is lining up to support workforce development, better wages, better conditions, and we are front and center to that.
We are actively working with our labor unions to give them a once-in-a-generation transformation on how they work, how they provide service, creating functional flexibility that allow our customers to be able to rely on the service they need to increase their transportation with CPKC or to even come online adjacent to us and start to grow with us. In Mexico, labor is front and center to our transformation. We're also taking that approach in the United States. There's a long and successful history on the former CP network for the transformation from a conventional CVA in transportation and an hourly. I've worked in both systems as an employee as well as a manager, and I can tell you get rewarded in an hourly environment for the investments you make to increase velocity and efficiencies.
In a conventional hourly agreement, a train progresses from A to B, and whether they do it in six hours or 10 hours, that's the ending event. In hourly, as you invest to resolve conflicts, bottlenecks, accelerate throughput of trains, you're rewarded either at the front end or the back end by having that crew available to provide first-mile or last-mile service. It's not arbitrary. You create the discipline, then you can design that service. We're taking that approach that was so successful at CP, we've brought it into the consolidated area, the legal definition of the affected area of the merger between Pittsburgh, Kansas, St. Louis, and Ottumwa, Iowa. Our unions actually had the choice of which system they wanted. They chose the hourly rate.
They chose the system that was legacy CP, and we're in the midst of that continued transformation. I've talked about ongoing long-term investments in creating capacity. At a worker level, we're creating a once-in-a-generation opportunity for workforce development and reliable service in Mexico that has never been paralleled. On a sector level, we're bringing competition, we're bringing service standards and safety standards to Mexico and beyond.
At an economic level, we are aligned with the Mexican government and the public policy of nearshoring and reshoring, and creating that private sector stability and the catalyst for investment across our territories. As the Chief Transformation Officer, it's my job to create the tension and to create the in evolution of data so that we create action, and we create change, and we keep driving transformational ideas and thoughts in the middle of all the action. I have the distinct pleasure now of introducing our Executive Vice President and Chief Financial Officer, Nadeem Velani, to come up and wrap it up.
All right. Hate to break it to you, the CFO doesn't get any videos. All the marketing guys got all the montages and videos, they let me have the coolest walk-up song of the day. I think we can all agree. I am gonna close it out today with the formal presentations, we're gonna have a chance to go through the Q&A. We'll have Keith and John and Mark join me upstage, all the questions you guys have been saving for the end of the day, we'll get a chance to address, Keith will wrap it up. Hopefully, today has been a great opportunity for you to understand just why we're so excited about the CPKC story and the CPKC future.
It's something that we are all more than enthusiastic about. We've been chomping on the bit through that trust period and through the back and forth on acquiring it. We're gonna mine the value that we see out of putting these two great organizations together. Let me take a moment though, and just talk a little bit about, you know, it's been five years since we've had our Investor Day, and just talk to you a bit about our accomplishments. I know Keith has touched on a lot of this, but let me give you my perspective as well.
If you look at today, just the people that you've had a chance to meet, why we believe we've got the strongest and best management team in the industry. The 13 people you saw present earlier, the passion, the knowledge, the deep history they have in what they do, the financial literacy, Ian pointed out. All of that to us, it gives us great pride on how we're gonna deliver and why we've been able to deliver. If you look at the bench, I got a chance, Keith, and with the support of the board, to get out and spend time away from the railroad, get on the property, spend time in various parts of the network.
No matter where I was, whether I was in a tower of a hump or in the cab of a locomotive, or in the classroom getting conductor training, it was very clear and very evident across our great group of railroaders, that our culture is ingrained. It's very clear that everyone on the property knows we're an operating company, first and foremost. The people know the role that they play in making CPKC better, delivering our results. They understand our goals and our objectives on safety, on personal injury, on, you know, our train accident ratios, what it is that drives not only their compensation, but what it is to make us a better company.
It was clear across the board just how ingrained our culture is. It, it gave me, and it gives me great satisfaction to know that we've got this great bench, this great team of railroaders out on the property that make us who we are, that make us what I think is the best in the industry. It gives me great satisfaction knowing the sustainability of what we're gonna deliver. It's in the hands of these 20,000 future railroaders. When we look at our safety metrics, Mark talked about the culture of safety that's ingrained in us, the Home Safe program, and it's been a huge, huge factor behind why we've been able to be the safest railroad in the industry.
We are extremely proud of that, and it's something that we will never let the foot off the gas in terms of ingraining that safety culture and mindset, you know, how we invest in our capital into safety, and what we do day in, day out to make us a safer railroad. We were able to achieve the strongest revenue growth in the industry. This has been on a consistent path, despite even having the effects of a drought last year, over the five-year period. A challenging macro didn't necessarily go as planned over that five years. We still delivered on our commitments, and we're the fastest growing railroad in the industry.
I think if you've had a chance to spend time with the team and see their presentations, I think you can understand just why. The playbooks, the thoughtful planning, the markets that they created, the self-help story, it's a big part of why we were so successful in growing the top line. We didn't just do it for growth's sake. You know, we continue to see margin improvement, bringing it to the bottom line. As Keith likes to say, we don't move traffic for practice. It's about profitability, bringing it to the bottom line, and that's something that we are very focused on, sustainable, profitable growth. One thing I'm probably the most proud of is our return on invested capital.
You heard that probably many dozen times today, it is a focal area. It's what we've traditionally had as our long-term incentive. To us, it's what brings everything else you do, it's what good looks like. If you're taking on revenues at the right margin, if you're being safe, if you're investing capital thoughtfully and efficiently, it all comes down into that return on invested capital. We were highest in the industry prior to our transaction with KCS. From an EPS point of view, we delivered high single-digit EPS over that five-year period. We had many years of double digits in there.
You know, again, we had the grain drought that impacted us in the last years, but delivered consistently high single-digit EPS growth. We look at, where we could improve, what we've been able to do the last five years in terms of our network reach. you know, Keith talked about some of the opportunities that we had to expand our network, CMQ. What that did in terms of getting us reach into, East Coast, take away an area that was.
We're under-serving our customers and create an opportunity, a lane that Jonathan's team have been able to leverage, and we see further path for expansion on the intermodal side. Of course, as we took on and completed the transaction to get deeper into the U.S., into the Gulf, and of course, Mexico. Not only did these transactions extend our reach, we were able to do it in a what's gonna be a look back and say, very reasonable prices. The CMQ is clear. We've been able to do the post-audit on that one very clearly, and a terrific return.
I'm optimistic that five years from now, when we look back on this transaction with KCS, it'll be a very significant achievement to buy it at the price we did. We also improved the diversity of our network. Think about what we were before at CP. Let's call it a smallish northern bulk railroad. We've been able to transform ourselves, create diversity, you know, lower our exposure to Asia, and, you know, put ourselves in a position to benefit from regional trade, from North American trade, nearshoring, and also diversify our book of business, take on more merchandise traffic, again, profitable, sustainable revenues, and expand our reach into faster-growing intermodal areas, which I think is a great improvement in the overall network.
We've put ourselves as the only true North American railway, and we've put ourselves in a position to capitalize on the CPKC advantage. Let me talk a little bit about our five-year guidance and five-year outlook that we've laid out today. John and team made a very strong case for long-lasting and sustainable growth and diverse growth. I would characterize this as more for longer. You know, if you add up his summary chart, kinda high single-digit revenue growth. Is there an opportunity to do more than that? If you take the outer ends, it could be double-digit growth. I think we've been a bit conservative on the base business.
The synergies are certainly from our vantage point, stronger than we originally looked at when we first talked about the synergies of about $1.2 billion revenue. That was kind of over a three-year timeframe. There's upside potential on the synergies. Pricing, same thing. We've always talked about 3%-4% pricing. Could there be upside in the current environment? Absolutely. Longer term, our view is that high single-digit revenue growth. It's, you know, combine that with the KCS franchise that has been extremely successful. It's been one of the fastest-growing railroads in the industry as well.
We plan to bring it on in a measured manner, but we also plan to bring it on in a low incremental cost. You know, our headcount's elevated. We've always talked about this being a growth story. In this macro environment, our headcount's probably higher than it should be. We didn't want to get caught short. We wanted to ensure that we hired and trained, and we're ready for day one to be able to take on the volumes and meet our commitments to our customers and have service in a CPKC manner, which is a premium service and a premium product.
I expect this to fully grow with high incrementals and generate significant margin improvement over this timeframe, as well as through the capital planning process. Ian and Mike talked about what we do there. We spend a lot of money on our network. KCS while they were in trust, spent money on their network, so we can hit the ground running and generate these revenues and bring them on. That's gonna come on at a low incremental cost, so it's gonna be very accretive to our margins. From a free cash conversion, you know, I'll talk a little bit more about that on the next slide. We see a very strong path over this timeframe of significant value creation from a free cash point of view.
We think we can achieve about 90% over that five-year period. I think in the outer years it'll be 90%+ but on average, about 90% free cash conversion. As far as our ROIC, we see a return to double digit. When you factor in the free cash, the ability to pay back our debt, what we've been able to do already, also look at shareholder returns in the future. We expect our ROIC to return to double digit levels. Finally, from an EPS point of view, we laid out guidance for double digit EPS growth in the 2024- 2028 years. You know, certainly double digit is pretty vague.
I would characterize it as this: over that 202- 2028 level, we certainly see line of sight to be able to double our EPS, meaningfully double our EPS over that timeframe. Hopefully, that puts a little bit more transparency on what we think we can achieve, but it's a pretty significant opportunity. I would characterize it, there's absolutely no railroad in the industry that's gonna have the opportunity over the next five years to deliver the earnings growth that we have in front of us. We talked about synergies when we initially laid out our plan, about $1 billion over the first three years. Certainly, we see a longer runway and a larger scope.
John talked to you about the, call it $950 million, that the team has clear line of sight over the first 75 days. From a cost perspective, we also see significant opportunity. This is about growth, but naturally, as we operate and bring these two companies together and operate and make it a true PSR railroad, we're gonna see cost synergies. You know, we talked about our culture a lot. Ian talked about how we interact with our team on the operating side. I can tell you, we're bringing that same level of constructive tension and feedback and engagement with the business that we had at the legacy CP to the new CPKC. What does that mean?
It means our financial partners, as he said, aren't order takers, aren't clerks, aren't reporting variances, but they engage with the business. They meet with their, you know, the GMs or the vice president of the territories and give them a task or a list of how they've achieved and where there's opportunities. It's a two-way kind of feedback model that gives line of sight to the key metrics, what we can achieve, how are you doing relative to your budget, but more importantly, where are the opportunities to improve? I think it's a very unique way of how we engage with the business. You know, it's not one of just trying to pat each other on the back when we say constructive tension.
It means getting the most out of each other. That means getting the most out of each other's business as well. We're bringing that accountability and constructive tension to the operating side and how we look at our expenses. As we've combined systems over the next few years, Pam and James have a great plan, it's gonna take a little bit of time to get more visibility into some of the key metrics we need. That's gonna give us another lever into how we manage the business.
I'd say that, on the KCS side, they haven't had as much visibility to the level of detail of expenses as we're used to on the, on the CP side, and so that's gonna be an area of opportunity as we give the business leaders, greater visibility into how they manage their business and ultimately, how they manage their costs. Just running the two networks, better, the train speed, the dwell, the locomotive productivity, we see a huge opportunity for operating leverage and ultimately cost synergies from that space. Fuel efficiency, that's gonna be another key area for us. Admittedly, we have a gap between us and our Canadian competitor, that shouldn't be as big as it is. We have an opportunity on the legacy KCS network to improve fuel efficiency there.
As we look towards delivering on our 2030 GHG emission reduction targets, we see fuel efficiency as a key opportunity to improve not only our emissions, but our cost structure and lower our expenses. On the procurement side, you know, we're a much larger organization. We have duplicate costs between the two. Procurement, spending, and contracts and third-party expenses is an area that we see, again, more opportunities from an expense point of view. Lastly, I'd say that from a workforce point of view, it's gonna take us a few years, but we'll see optimization on our general workforce. Some of that's gonna be systems driven as well. Our employees are gonna be not impacted by... We're not gonna have a one-time charge or anything.
We're gonna let attrition do its work. That's gonna be over the course of this planning period. Over this guided period of five years, we expect to see headcount come down from a, from a G&A perspective. Then longer term, as John pointed out, could there be opportunities on the from a collective agreement, from hourly agreement? Certainly, we're gonna see it on the U.S. side near term, but there is potential down the road in other parts of the network that's also gonna drive efficiencies on the labor side. When we talk a little bit about capital, you know, we do pride ourselves in being good stewards of capital. First call on capital is always reinvestment in the business. We've grown capital or capital spending since 2012.
Our network's in excellent shape. Certainly, it's been a big focus of ours to be able to support our PSR way of operating things, our network speed, the service that we expect. We've been diligent in our kind of consistent capital investment. If you look at the graph over the course of the next five years, we expect 2024-2028 to be in line with our 2023 spend of about $2.7 billion. We expect capital synergies as we incorporate the two companies. You know, Ian talked about our meticulous detail on how we look at capital, how we look at... It's very much return-based and so forth.
We see meaningful opportunities in terms of capital efficiency. That's why I think we can, we're gonna be in a position to be able to hold that relatively flat over those five years. We're gonna see benefits even from KCS. You know, they have a tie treatment plant that Justin and team are gonna be utilizing to on the former CP network to take advantage of their tie treatment plants. Near term, we're gonna see our capital profile, more growth and infrastructure-focused, and over time, we'll see it shift in the outer years more to IS investments, and potentially some rolling stock. Rest assured, we're gonna be very disciplined in how we invest our capital.
You can expect return on invested capital to be a key measure of ours going forward. From an incentive clients, we're gonna hold ourselves accountable. A few of the major projects that we touched on, I'll just quickly highlight, but we have the Bensenville project that's gonna give us an opportunity to leverage the tollway deal and optimize one of our biggest terminals. That's a $300 million U.S. investment that we should have completed over the next three years. The Laredo Bridge, we talked about a fair bit. That's gonna support the MMX train and Train 181-81. We have about $275 million in capacity expansion that Mike Foran talked to you about.
That's gonna support, you know, through extended sidings, that's gonna help our train length. It's gonna improve our train speed, as well as CTC, it's gonna help with our safety and train speed as well, as we're committed with the STB. The bottom line is, we have the capital plan in place. We don't have major CapEx bubbles whatsoever. We expect kind of consistent $2.6 billion-$2.8 billion of capital. Last Investor Day, I talked to you about this money clip that Hunter gave me. Some of you might recall, and it said, "For the good times." This money clip is still empty. And it's not a result of not having good times. We just spent it all.
We spent a fair bit. We'd had the highest financing in rail history, $8.5 billion of offering issuance that we had at, I think, 2.29% all-in coupon. It impacted our leverage. But I'm proud that we've been able to reduce our leverage already. We're at the 3x level. By the end of this year, we expect. We have been able to pay back $2 billion U.S. of leverage since we closed the transaction, another $500 million of credit facility. I expect us, a year from now, to be back at that 2.5x level, sometime around this time next year.
The model and the CPKC company is gonna generate a significant amount of free cash flow. This is, I think, a huge opportunity for us. We are gonna continue to be balanced in how we invest, how we look at high-return projects, but ultimately, we're gonna have a lot of cash to use for other sources. The pension is not a use of cash. Our main Canadian DB pension plan is at 133% solvency, surplus, I should say. We've had a contribution holiday for two years, and we'll have a contribution holiday this year, so it's certainly not a use of cash. We also have $426 million in prepayments available.
On the pension side, we're in a very, very solid position. I'm proud of how we've been able to deliver on our capital allocation in the last decade. If you look at what we've been able to do to reinvest for safety, reinvest for growth. Reinvest for technology, and even look at some of the innovation that we've that Justin highlighted. We're gonna focus on protecting our balance sheet, but rest assured, a year from now, we'll be in a position, like I said, to revisit our shareholder return strategy. And I'll tell you, we'll discuss with our board, but we've been historically big proponents of share buybacks.
If you look back at what we've done since post-turnaround, starting in 2014, we had buybacks from 2014 all the way through till 2020. We were able to buy back 25% of the outstanding shares that we had since the turnaround. Spent about CAD 10 billion in buybacks and bought back shares at half the price of what we're trading today. Shareholder returns will be a big part of our ability to generate value for this company. We're gonna be balanced. We are committed to our BB B+ rating, rest assured. More to come on that. When you generate, call it greater than 90...
Around 90% of free cash conversion, it's gonna be put us in a good problem to have with the yields. I think that could be industry-leading. As I said, there's more good times ahead. We talked about our unique, long-lasting growth. But that's not the only unique thing I think that we have. You know, relative to our industry, everyone outside of maybe one have implemented PSR, but they haven't generated the same level of results as we do. Why is that? I'd suggest that our culture is unique. You know, Keith talked about it. You know, we all have to earn our seat at the table. There's a culture of accountability. It's a high-performance culture.
You know, it's focused on investing in people. It's the one thing you've heard today, it's the people side. You know, Mark, Megan, and I lead our leadership and diversity steering committee, with many of the people here presented today are a big part of it. We're meeting again tomorrow to kickstart the CPKC leadership and development steer co. It's a big part of what we do. It's ingrained in us, and we're all accountable for it. Development of people is a unique skill set. I think that that's an accountability that we all are responsible for. Mike and Ian talked about our unique structure and how we collaborate and how we hold each other accountable, that constructive tension that we have.
When you think about our alignment with shareholders, how we look at incenting, motivating, retaining employees. You know, from a sustainability point of view, you know, Justin talked about our hydrogen locomotive, our view on our climate commitment that we've announced recently. Mark talked about our safety, the core of our PSR foundations. Sustainability is part of everything that we do. This isn't a new team anymore. You know, five years ago, many of us were new in our roles. We've seen a lot more gray hairs and a lot more people have lost hair since then. It's a team that's been working together. You know, John and I also worked together for many years with Keith as well.
It's a team that's very experienced, that's been collaborative, that is gonna be in through this for the long term. Keith talked about the leaving a lasting legacy. It's something that we're all accountable for and passionate about. I think it brings a unique opportunity for us. It's I think part of the reason why we've had such a strong track record of success and why we've been able to deliver, and part of the reason why we've been able to generate such a strong multiple. No one else has the earnings outlook that we do over the next five years. I recently celebrated my 25th anniversary in the industry and 10th anniversary at CP.
I've had the opportunity to have a front-row seat through turnarounds, through PSR implementations. I've seen, you know, pivots to growth and seen a lot of value created in this industry over the years. I can assure you, and I can tell you that there's never been a more exciting time for a railroad than this one right now, in my view. The opportunity that we laid out, the long-lasting opportunity, the value creation potential is tremendous. Is everything perfect? Nope. You know, it's a tough macro environment. Absolutely. You know, we've got some near-term challenges. At the same time, now is a pretty good time as you start an integration to have a bit of a softer macro environment.
You can take on business Bring on business a lot easier in this environment. You can hire, you can bring people on. I think you get that benefit of self-help. Again, we've got a team here that's in its prime, that's energized. Let's take advantage of benefits of nearshoring, diversification, of a stronger network. We had a strong origin network. You saw what we delivered. You put it on arguably what we think is the best network in the industry. I think what we can deliver can be even more. You see the first two chapters that have generated significant amount of value.
When you factor in what we have in front of us, which is high single-digit EPS growth, the ability to bring on business with low incrementals, what we think we can achieve in terms of margin improvement and have the best margins in the industry, the ability to generate a significant amount of free cash that can reward shareholders, and the length of the opportunity that's in front of us. I think it's an opportunity to deliver the most significant value this industry has ever seen. I think the CPKC advantage could be one for the books. Thank you.
Nabeem. We're just gonna take a quick 10-minute break and come back at 2:10 P.M., and we'll kick off Q&A at that point in time. All right? Thank you.
Did you guys put me up here? Nobody wants to sit by me anymore? Is it time? Are we ready? Got some energy in here. I gotta shake things out here. We've got it quiet. We've gotta finish strong, I'll let Nadeem be the moderator here and pick up. If we can, let's get one more mic so that we have the next person.
Okay, thank you. This is Fadi Chamoun from BMO. Maybe first question on the guidance, Nadine. What is the cost synergies implied in the guidance? I see the revenue between 2%-3% over the next five years. Then, you know, in the context of maybe continued, maybe soft economic outlook over the next 12, 18 months, is there a possibility that you can accelerate some of these opportunities, you know, going into 2024? If you have any framework to kinda help us to think about what 2024 look like and maybe the pace of that synergy over the next few years. Maybe my second question on this M&NBR opportunity. You know, obviously, you know, it looks like potential, you know, growth driver for you know, over time.
Is there more opportunity than a pipeline like this, that you can share with us? Thanks.
Let me take that one first, and then I'll let Nadine speak. We're going to assess the entire network.
from, when I say network, the new network to me, the new network to us, the partnerships that we have with other short-line partners. That was the first one, Patty, because it obviously creates a bridge and a connection to a market that doesn't exist today. Essentially the same approach we've taken at Canadian Pacific, we're gonna analyze each of the short-line partnerships, those lines that we might have leased out, to see how the dynamics have changed and to see what this network does. The predecessors, when they made the decisions for some of those lines, to lease them out to short-line partners, they didn't have this whole network to feed those lines. I think I'm not saying we're gonna change it, I'm gonna say we're gonna validate it. If it makes sense, we'll maintain it.
If it doesn't make sense, we'll have constructive discussions with our partners on the short line side, and if we need to patriate another piece of the line that years ago perhaps was handed to a short line, that's exactly what we'll do. We're gonna do what's right for this core network, but we're gonna do it very transparently, and we're gonna work with our partners on the short line side that might be operating those properties today. It won't be called flat-fted, but at this point, my focus, our focus, is gonna be to optimize that piece of railroad. Again, we're gonna work within that capital envelope that Nadine has guided to. We're gonna do this thing in sizable bites.
You know, we've got a lot of time and a lot of opportunity and a lot of network, so that's the one that kind of complements what we're doing and doesn't distract us. It actually, I think, is a force multiplier for us. Once we get through this period, we'll go through this period, we'll be reevaluating. I've already got a couple of things I've asked to look at, the team will look at, and that will set the next set of opportunities. There'll be more to come on it, but the immediate future is just this one at this time.
Patty, on the expense synergies. Originally, we had guided to $180 million of cost synergies. You know, over like with the revenue side, we see a larger scope, larger scale in terms of the size of the expense synergies. We expect about $300 million of synergies over the five-year timeframe. To your point of can you accelerate some of that, the one thing I'd caution to is just in a weaker demand environment, as we're seeing today, weaker volume environment, you know, we've pre-hired, pre-trained, and didn't want to get caught short, so we're long people right now. I think that'll give us an opportunity to have strong incrementals as we grow into the workforce.
In terms of accelerating some of the cost synergies, I'd say, you know, a small opportunity to accelerate, but a larger pie. Call it $320 million of synergy opportunity over that five years.
Okay. Walter Spracklin here with RBC Capital Markets. Thanks very much for the questions. I'm over here. I made eye contact with Chris, so I was able to grab the mic, so it's good. Starting with your one question for John, and the second one for Nadine. John, I really like the kind of business you articulated, where it was kinda hand off business that you were taking over, taking from that interchange player, where whether it was Coby talking about TAMSCO or if it was Jonathan talking about the Schneider business, that seems like very low-hanging fruit type of business, where you're just taking over where another railroad was doing, was running that business.
How much of the $5 billion would you say is characterized in that kind of low-hanging fruit, easy to take over business that perhaps another interchange player was doing that you can now easily do? My second question, just for Nadine. You mentioned double-digit. You gave us a little bit more guidance that doubling by the end of the five-year, which would suggest a 15% EPS CAGR out for those five years. Can you talk a bit about the cadence of that? Does that start kind of faster, and then slows at the end? Is it something that ramps up? Just so we can get the cadence right when we put out our annual numbers out for the next five years. Thank you.
Yeah. It's really that rail-to-rail category as you think about as I went through that pie chart. I think we pegged that at about $925 million, Walter. That's really traffic, that now that we've come together as a company, we've always been able to look at our traffic takes and identify, you know, business that currently CP was running, handing it off at Chicago, and maybe a different western carrier was bringing it into Texas to service the market. Now it's like, well, how do we work with those partners to not hand that off and bring it into that same Texas market, CPKC direct? You know, now, since we have control, we've been able to sort of dissect and really go through the KCS book of business to identify those similar opportunities.
It's really that rail-to-rail conversion, that those share opportunities, those length-of-haul opportunities. To your point, I do believe that's low-hanging fruit. It doesn't mean it's super easy. It's grunt work. To me, that is. I'll just tell you, it's like the CMQ. We've segmented all that, we've broke it down, we've got it in spreadsheets, we hand it off to our salespeople, we drive accountability. Their job is to focus on what you just described, that $925 million, one at a time. Honestly, I just, this gets me emotional. I don't care if it's 10 cars, 1,000 cars, or one car, I wanna convert them all.
And we will systematically go through that list until I feel we've exhausted every one of those opportunities.
Walter Spracklin, on the EPS guide. We've guided today to 2023 EPS growth of mid-single digits off of 2022's core adjusted EPS of $3.77. What we're implying for 2023 is about $3.95, $4.00 EPS. We see over this time, five-year timeframe, over from 2024-2028, the ability to more than double that EPS number from 2023. In terms of the cadence, you know, the synergies, you know, we just got control in April, and we're ramping up some of the synergies. I think we'll start hitting a sweet spot of synergies, you know, really starting to see the value of them, kind of late this year, early next year, we'll start seeing kind of the synergies really come to fruition.
I'd say, you know, the ramp in terms of the cadence, you know, you're gonna have some years that are kind of in that closer to 20%-22% type of EPS growth. We're not gonna get the benefits of a, of a buyback in the near term, right? Our, our leverage, we're still gonna be focused on paying down debt. I'd say you shouldn't get the shareholder return benefit in the first year or two. That, that kind of implies a stronger EPS growth in years two to three, rather than year one.
Scott?
Thanks. It's Scott Group from Wolfe. Maybe one for John, one for Nadeem. So John, the $1 billion of revenue synergies you've got today, how much of that hits in 2024? More broadly, would you say it's more linear? Is it front-end loaded? When you combine the synergies with what's going on in the freight market right now, just when do you think we should expect to start seeing some volume growth again? For Nadeem, your slide said strong margin improvement. Any more color you want to give on, you know, if it's a 40% margin today, are we going to mid-40%s, high 40%s, or if you want to answer it, incremental margin, however you think about it.
Let me take that one first. Like I said, we've, on a headcount point of view, which is a large component of the cost, we're long people, so the incremental margins should be strong, 60%-70% kind of level. We didn't guide to margins, but I think one of my slides said, industry-leading margins. I think if you do the math, if you factor in the high single digit revenue growth with strong incrementals, you're gonna get up to a very favorable margin level, industry best. Let me leave it at that.
Scott, it's, look at this a few ways on that $950 million. Number one, I view that kind of tying to our STB-provided revenues over the first three years. That's kind of how I see that $950 all phasing in. I do believe, though, it's more front-end loaded. Like, we're off to a pretty strong start. You know, we talked about the 180, 181, that's paying dividends immediately. We talked about the rail-to-rail conversions that Walter asked about in Koby's area. Those are delivering immediately. You know, I sit here today with, I think, a high level of confidence that Lazaro will start delivering sooner rather than later. We've got the reefers, 250, already on. We don't have to wait for the Americold building to go.
That's gonna be the catalyst, which is probably a year out, but we can get those reefers going now. Maybe not give you a direct answer, but I would say more front-end loaded in terms of that number than back end. Your part two was? You know what, Scott? I, three, four months ago, I would've thought our ability to bring the speed at which we're bringing on synergies would outpace sort of what's falling off the back end. What I didn't have in the calculus is some of the stuff we talked about with Canpotex and the Portland Terminal and some of this increased softness with grain. I don't know when that pivot... I would say as we move towards Q4, we've got a pretty I think we're set up well. This grain crop looks good.
Canpotex can get their act together out in Portland and get some of that tonnage back running, combined with we're not gonna sit idle, like this team will continue to pile on these synergies over the next quarter. To me, that sort of sets up a nice inflection point.
Thank you.
Tony's been patient back there. I've been watching him persistently raising his hand.
Yeah.
No, Tom, go ahead. Tony, we'll get you next.
And then-
No, Tom, go ahead.
All right. I got the mic, so I'll just... Yeah. Thanks, Keith.
Make it an easy one, okay?
All right. Yeah, Tom Wadewitz from UBS. Wanted to get your thoughts on how we should weave in some of the comments on Mexico operations and labor. Obviously, you've shown tremendous skill in the U.S. in getting this deal done and working with STB. I think, you know, you've given us some optimism on what can happen in Mexico, but how much sensitivity is there in your service plan and in your plan, if things don't go the way that you're anticipating in terms of, you know, crew size and some of the changes. I think that's the first question, and then the second is for John on contractual constraints. How do we think about that?
Is that really just in automotive, where maybe you have to wait a bit, you know, in order to get more of a kicker on that? Just, you know, one for Keith, one for John. Thank you.
Let me take the first one, Tom Wadewitz. I would say this, the Mexican modernization of that agreement, if we break through there, that's incremental. That's not in our plan. It was never anticipated. It's an initiative that John Brooks started in discussion relative to the opportunity, you know. We're doing our work to educate the union, we're doing our work to educate the government, we're doing our work to educate next the employees. We've gotta be patient, I'm talking to myself, not just to you, because it is a different labor environment. We've gotta make sure that we do our job to make sure they understand what's in it for them, because it represents significant change, much like what we did, you know, in our previous lives.
It took nine years to do the first hourly deal in the U.S. property. It wasn't on our railroad, it was on another railroad. It took four years to get it done on CP, with nine years of experience doing it before. Again, this won't happen overnight. It's a journey. I've learned this: you can't force anything on anyone that they don't want. I can educate them, there's value in it for them, and if they're prepared for that change today, then that's an incremental gain that we'll get. If they're not pre-prepared today, if they understand the value creation, it doesn't mean that as things change, it won't make sense tomorrow.
If we need to back away from the table and just run the railway the way we've ran it and the way KCS de México has ran it successfully, plus, and if we do our job selling that value proposition, it's more likely to happen than not. Again, I'm not banking on it.
Yeah, Tom, I would say you're spot on. It was really that auto sector space that we felt the tail or sort of the opportunities would be more back-end loaded in terms of opportunities because of contracts. The reality is, what we've realized in the first 75 days is, given the state of the, I would say, automotive network, the amount of vehicles that are North America-wide, held ready to be shipped, combined with less than optimal operations across the North American rail network to move and cycle bi levels, has created nothing short of maybe a little bit of a crisis in the auto industry. That's presented an opportunity because I think what we've found that the auto companies are very keen to listen to a new model that Jonathan described.
I don't mean in the context of, you know, doing something different on their existing agreements. Maybe so, if they have the ability to squeeze out some opportunities, I do believe it's pulling forward the opportunity to CPKC. I think the second point I'll make on that, Tom, I've spent, I did a blitz and met with every automotive OEM company and really talked through opportunities with them over the last couple of months. The amount of truck and short sea business that doesn't touch another railroad today, that could be converted sooner to CPKC was staggering. That's the opportunity in the near term itself. Then, as those contracts come up and then we prove our service over the next couple of years, I think we're gonna be poised to win.
You know, I'm just drawing from memory a little bit. I think in our STB submission, if you go back to that, I think we had $75 million in the auto space. Jonathan, you can correct me if I'm right or wrong. I think you saw Jonathan had a $250 million number on the screen. Frankly, there's upside down the road to that.
I wanna add a bit of color to that, probably from some of the scars I've got as an operating officer over my career. I remember the days well when I worked in Battle Creek, Michigan, and when I worked in Flint, Michigan, and when I worked in Detroit. I remember the drives to the OEMs and the complaints about car supply. We were the origin road. We had to have the empties back, so we could spot them. We were held accountable for the damages, and we were held accountable. We were the ones that got screamed at, for lack of a better term, if they didn't have a rail car to spot. It was not a very pleasant experience, especially when you couldn't control it.
You're only as good as your supply chain partner, your interchange partner, I'm not casting shade or a shadow on any of our partners. It's the system. It's the way the networks in the U.S. were built, two east, two west, two on the top. Nobody went cradle to grave, really. That's what's so unique about this. From the very beginning, when you can connect the bookends, you can connect the assembly plants, you can create your own car supply, you can create this supply chain of ecosystem of a closed loop, I've dreamed about that for 20 years. To be able to sell that, the value in that, the complexity it eliminates, the excuses it takes away, and the value it will create for the first mover that takes advantage of that, it will make a difference for them.
It won't be all the market, to John's point, it might be 10%, it might be 15%, but I guarantee you, it will be the first step with the first-mover advantage that they'll create unique value in their supply chain. They'll get their vehicles in a reliable, ratable way to those empty parking lots. They'll take market share if they've got a good product to sell to the consumer, and we're gonna be the enabler to make that happen. It's, it will come, but I'm telling you, it was never possible without this transaction. It is today, and this is the only network that can do that. The only one, this one, and that's just one piece of the uniqueness of this. Tony, and then Chris.
Thanks. Great job today. Keith, I wanted to ask you in general about regulation in light of the East Palestine and STB coming forward pretty soon with the reciprocal switching notice and, of course, interswitching in Canada. Specifically, John, you did not, I think, mention the number of the revenue gains from grain. You talked a lot about all the new facilities and whatnot, and I'm wondering if it's because of the interswitching threat, either to your margins or to BNSF coming in your territory, as well as Brazilian market share gains into Mexico with corn and the GMO fight, which I don't understand at all. If you could put those pieces together and see how that impacted. Keith, what do you think about the changing regulatory world we're in now? Thanks.
Well, I'll be short in my words, or I'll try to. We have a very active regulatory environment. We have a regulator in the STB that I believe, and I've learned, especially through this process we've gone through, they mean what they say. Their mandate is to create and provide and ensure that we have a strong, robust rail network system. If the system's not working the way the system needs to work, this is a regulator that I think is willing to make changes. At the same time, I do think it's a regulator that understands balance and unintended consequences, and I think that they want history, my view, my words, to reflect well on them and their decisions. I think it'll be thoughtful.
I think that we're probably more likely than less likely to have some kind of interswitching that's created, some mechanism in the U.S. As long as it's fair, that's truly all that I'm worried about, 'cause we live in that world in Canada today. What I've learned over the years is, if you provide good service to your customer, you provide good rates, and there's that value proposition that we talked about, you don't have to worry about somebody coming in your backyard and taking your business from you. I think a lot of customers, especially as over the last several years, have learned sometimes the lowest rate is not the best decision. You know, if you're buying something that you really can't count on, is that really a value proposition?
Those are the kind of partners that we love to do business with. That's why we pick our partners wisely, and we will with this network. We're gonna methodically build this out. We're gonna create value for the people we partner with, that choose to partner with us, and we choose to partner with them. When we help them win in their end markets, 'cause they can count on our service and our capacity, which we will protect, then we don't have to apologize for charging a little bit more money, because guess what? The quality is there. The value proposition is there. That's what this operating model, that's what this network has done and will do as we grow forward.
If the regulator feels that they need to do something, I'm gonna respect it, I'm gonna understand what the rules are, and we're gonna do our job to make sure that we're not disadvantaged by it.
Yeah, Tony, I just might add that, if you think about those grain projects, they kind of fit into... actually, if you think about the pie, the industrial development piece of that, they're a little longer term horizon as you think about those opportunities. You know, I think we pegged it, and I didn't put it on the slide, at about $150 million-$250 million in our grain space. That's about where we pegged it, when we did our STB submission in that original buildup. Do I think there's upside in that? Absolutely. As I said, I'm super pleased with sort of the initial reaction in terms of the amount of 8,500 ft development that wants to push itself southbound.
It's just gonna take some time to see how that develops and specifically, what the timeline is we're able to bring that sort of on to the network.
Thank you. Chris Wetherbee from Citi. Maybe, first a question for you, John, on the pricing side. When you think about the 3%-4%, seems like maybe we're running a little bit above that as it stands right now. As you look at the KCS opportunity, I know there was some, a schedule of fees that was released. I think that goes into effect later this summer. As you think about the pricing opportunity on some of the existing business on KCS, is that going to be a source of potential upside near term? Then maybe one, Keith, for you as a follow-up: As you sort of think about the big picture and what the opportunities and challenges are, maybe specifically on the challenges side, what might be the most difficult part of the integration ahead of you guys?
On the pricing front, yes, we're definitely running above that right now. Look, in-inflation is still 6%+ out there, our mandate on pricing is above that right now, and it remains there. Honestly, unless you see something different, we are holding, trying to hold as firm as we can in that space as I look forward. I do believe, and that's why we've guided to 3%-4%. We do see that sort of maybe back half of this year, beginning of next year, begin to moderate more into that, what I would call typical range. On the challenges front, tell me, Chris, if I'm.
you know, I've spoken to some of you about there are a few business units that as we've got in and really understood, similar to back when Keith and Hunter came to CP, some areas of business that we're gonna have to go backwards to go forward. We're gonna have to, you know, work with some customers, and I can tell you, we've already had some tough discussions in some areas where there's opportunities that where they're consuming service and capacity. We've got to work with them to improve sort of what their books look like in our total portfolio. Frankly, that's never easy, but this is sort of a principle that's it's got to be growth for good growth. It can't be growth for growth's sake.
I'm not surprised those opportunities have presented themselves. Yes, it's frustrating and it's challenging, we'll work through them just like we did it in the past. You asked about KCS pricing. You know, it's part of the business discipline area I had up on here. Yes, I do believe there's upside in that we will instill, or we already have instilled from day one, April 14th, a mandate on how the marketing and sales arm within the KCS that focuses in that areas thinks about those business disciplines, and that's contract renewals and expectations in that area in line with what we expect to achieve.
I think, Chris, on the challenge, I think the challenge is more reflective of maybe the political environment we live in today. obviously, this industry is an industry. We've had a pretty tough couple of years. again, I said this last night or maybe this morning, I think a bit unfair, the perception I don't agree with. I think this is a very safe industry. I think I'm particularly biased about my own railroad, about our railroad. Obviously, we try to be the golden standard, but we're not perfect. This is not perfect technology. This is not a perfect process.
Navigating that to make sure, not that it hasn't always been important, it's always been first in order of business, but ensuring that we dot all the I's and cross all the T's and exhaust everything we need to exhaust to make sure we keep our trains on the rail, we prevent all that we can prevent, and we create and maintain the right culture of accountability when it comes to our obligations to provide service and safety excellence. If we do that, what I hope and what I believe can be true is, even if the industry is looked at in a certain way, we want to be looked to and respected because we do do it a different way, and it is a different outcome.
Ensuring that the unique way we approach it and the unique outcome that we produce is respected and maintained, because I do think that story matters. It's never mattered more than it matters today, given the political environment that we're in.
It's Ken Hoexter from BofA. Thank you for the presentation and the analyst day. Great, great overview. The 15%, and Jim, I want to revisit the maybe a waterfall on the guide. Maybe talk about your upside, downside from there, that you start off with 8% rev or upper single-digit revenue growth. What scale of the $5 billion revenue potential is built into that, just so we can understand the upside, downside kind of as you move? Can you clarify if the $1 billion of synergies is still within that three-year target? Is that still built into that same time frame, or is that extended? Secondly, can you dig into the cost synergies of $320 million.
Is that bringing KCS's network to CP standard of service? Obviously, they've seen some operational issues over time. Is there maybe still overhaul work to go there?
All right. Thanks, Ken. That was a lot. I'd say that the $5 billion, as John and team talked about, that's kind of the entire pipeline. When you look at kind of his summary slide, I think that puts it in, puts it well, because at some point, the synergies, it becomes... Is it base growth? Is it synergies, right? Let me put it this way. I think from a revenue synergy point of view, we see a number closer to $1.5 billion plus. When you look at the opportunity, beyond, you know, kind of that $5 billion, that wasn't just synergies, that's kind of the entire pipeline. Let me just qualify it that way. What was your third question?
KCS.
Yeah. Absolutely, there's aspects, you know, KCS has done a tremendous job of improving their cost structure. I'd say that they were still relatively early in terms of the PSR implementation, so there's opportunities. I think that if you look at, you know, what we've always talked about in combining these two networks, getting that longer length of haul, you know, a lot of the traffic that was interchanged kind of at the Texas border, you're gonna be running longer haul into Chicago, into southwestern Ontario, into Alberta. You know, the benefits of combining the networks and getting train length, getting the density of the network, and getting that origin and destination, I think you're gonna get benefits overall.
It's not necessarily just bringing it to the CP standard, but it's mining the benefits of one network, is a big part of it. Yeah, there's aspects of, you know, where we had better measures operationally, that we've always talked about, improving fuel efficiency, for example. Train length, train speed, a lot of those operating measures are gonna be bringing it to the CP standard. $300 million is what we see as overall cost synergies. That's embedded into the long-term guide.
If I could just add one more thing. As we go through whiteboarding, we've done some whiteboarding with KCS, not to the degree we need to. We've done a first round to take some blocking out of some terminals and different things like that. There's still opportunity in that space for us to get KCS, CP, Soo Line type of traffic moved around, blocked in the right location, so we can bypass some of the yards. That's just some of the things I'd be working on.
Yeah. Allison? Allison.
Hi. Thank you. Allison Poliniak-Cusick with Wells Fargo. First, on those hydrogen locomotives, is there any thoughts, I know it's early stages, on how we should be thinking about the operational or maintenance cost differences of those locomotives versus the diesel that you're targeting? Second, with CapEx outlet, how much of that are you allocating towards sort of those growth-type projects that we should be thinking about?
Sorry, the second part, how much-
The CapEx with outlet. How much are you allocating towards those growth projects versus, say, pure maintenance?
Yeah, from a hydrogen cost point of view, I'd say it's early days, right? We just got a few locomotives. I think the Justin talked about the initiative with Teck. That will be a good opportunity for us to really kind of understand and get a test case of what that could look like. From a operating cost point of view, I'd say I certainly wouldn't model anything, and that'll be an opportunity for us to understand. From a growth point of view, growth CapEx, the $2.7 billion rough numbers, I'd say around 8%-12%, 10%, maybe the mid-range over that five-year period.
Like I said, near term, there's gonna be a lot more growth focus. You know, we talked about the Dallas auto compound, the reefers that Jonathan talked about, you know, so it's gonna be a combination of rolling stock and investment in our Room to Grow 2.0 strategy, to call it kind of growth capital. The other, you know, aspect, when you think longer term, when we deliver this high single digit and maybe then some type of volume growth and revenue growth, we will look at further kind of growth CapEx, and a lot of it will be around rolling stock, and then potentially locomotives. We have, we haven't bought a new locomotive in some time.
This transaction gives us an opportunity from a capital synergy to get benefits of locomotive synergies in the near term. Maybe down the road, 2028, as the hydrogen experiment kind of continues and gets good traction, we'll look to spend more on locomotives, maybe hydrogen side, but also on the Tier 4 side. Yeah. We're getting the clock signal from Chris and Ashley, so.
We have time? Maybe take a couple more.
Yeah. Ask maybe two more? Yep.
You've given us an easy-to-follow view of what you're managing the business to, tops-down, over the next five years. In the interim, how are you internally measuring what's working and what's not, or, you know, year two, year three, so you can kind of, you know, change what's not working and confirm what is? Ultimately, you know, how are you gonna communicate that to investors, you know, your progress? Will there be a structured way to do that? Thank you.
As far as measures, we're a measure-intensive rail network, so we have already set up common operational measures as well as revenue measures. The same disciplines that we've measured CP with, we have applied to a CPKC network today, so we measure it now. I think the report card to the investor is gonna be the earnings that we drive, and it's gonna be the business that we bring to this network. I don't know any other better way to share with you our progress. I can tell you, though, from an accountability standpoint to our board of directors, we've had a lot of shareholders that gave me feedback, that have given investor relations feedback, and given our board feedback. We made a commitment to these synergies. Our board is gonna hold us accountable.
We're accountable, and we're incented to make sure that we deliver on those synergies. To me, that's just the starting point. That's table stakes. That's what we're gonna do over the next three-year period, four-year period. We've given you a five-year vision. I'm gonna be extremely disappointed, if we're not 50% higher than what we committed. When I say $1 billion after year three, if we're not at $1.5 billion by year five, I'm gonna be extremely disappointed. Now, again, there's a lot of work to get there. It's, to John's point, it's car by car, it's initiative by initiative. We have to build some of these things out, but at the end of the day, this platform, this momentum has started, and we fully expect, and I expect this team to exceed anything we've committed to.
I'll just give you an example on the revenue. Is this working?
Yeah.
No?
Yes.
Yeah.
Yeah.
Give you an example on the revenue side. Oh, it is on. It's not my team. Like, we have built out the playbooks. We, car by car, the opportunities we spoke to in the, like, the rail-to-rail conversion. You know, I hold myself, my team, accountable.
Systematically go through every one of these and make sure we've exhausted every one of these opportunities. It's not my team that's actually been measuring the success. We've created, like, an independent audit group led by our finance team to actually then fact check what we say in terms of, well, what's the synergy? How are we categorizing it versus, you know, baseline growth, or is it touching both networks? There's a very distinct process we've put in place, we've shared with our board, that then will report back to us on a monthly basis to actually say, "All right, Brooks, here's how you and your team are doing in these areas." Same on the cost side.
We've actually set up within our governance, within our board, many of you in this room probably know Mr. Ed Hamberger. He's one of our very valued board members. The integration committee for the board, we're accountable to the board, we're accountable to the synergies, Ian is the tension. Ian is the master accountant, he's the gatekeeper. We have rules of engagement, we have rules to qualify what is a synergy, what isn't a synergy, that we're gonna be accountable to our board as well as to our shareholders, too. That, again, is something that's already started. These are all levers that we use to drive the discipline, I think in a very unique way within this company.
Jonathan Chappell. This is the last one, Keith.
Thank you. Jonathan Chappell, Evercore ISI. Probably better for Mike and Ian, but since they're not up there, I'm going to ask all you guys this. This is just the last one. The opportunity set's tremendous, the way you've laid it out, your speed, your efficiency. We've heard anecdotally, both from you and from shippers, that they want to do business with you, but you don't want to oversell this network, you want to manage this integration very well. What's the gating factor? Is it long-term oneustomer relationship? Is it geographic breadth? Are you using price to make sure you're getting the right freight on the network, and how do you plan on managing that over the next three to five years?
I think it's all the above. That's exactly part of the formula. You know, I'm not going to, because I know the damage it does, allow John's team's ambition and the opportunities to put us in a position where we oversubscribe our network. We owe our existing customers the capacity we've committed to them. We owe KCS, former KCS existing customers, we're gonna honor all of that. We're gonna grow responsibly on top of that. There's a very methodical approach and plan, and operating plan. We laid it out for the STB, it's in our submission, it's contingent upon the sequence of the sidings, the capacity that gets built, the bridge that gets built, the yards that get reworked. I'm gonna make sure we have tension.
When we look at maybe shifting opportunities, we're gonna be part of the conversation, I'm gonna be part of the conversation, Mike Thorne's gonna be part of the conversation, and we're gonna weigh it against what we've committed to, what we have obligations to handle today, and can we grow and handle this today, or do we need to wait? The reality is, the beauty of this, some of this business, as we build this infrastructure, is locked up in contracts. I shared this last night, this is part of our playbook we've done before building out the CP network. It doesn't stop us from having discussions about two years from now or one year from now. What % of your business makes sense for our network, customer A or customer B? What do we need to build to prepare for it?
There's a couple of very large contracts we've enjoyed at Canadian Pacific that were part of our self-help initiatives, that were 12, 15-month plans. Again, to me, that discipline's important so we don't put ourselves in a position where we promise the sun, the moon, and the stars, and we irritate everybody, we make nobody happy, and we give people a case, customers and/or the naysayers perhaps may not want us to succeed because they have to compete against this, to go to the regulator and say, "These guys and these gals are not men and women of their word. They're not doing what they said they would do. This is not creating public interest." We take that responsibility seriously. We think we can do both. I know we can do both if we do it responsibly, that's what we'll do.
We've done it before, we're gonna continue to apply that formula. That's how we're gonna create long-term sustainable value, picking the partners, building the network out. That's how we'll become the most relevant railway in North America. You get one shot at doing this. We're not gonna get a lot of do-overs. We're gonna do this right. If it means we go slower, I'm gonna slow it down. If it means that we can put our foot on the gas in certain lanes, we're gonna put our foot on the gas in certain lanes. Just like that decision that we made to negotiate the Meridian piece, there's no way in the world we would've done that if I would've thought in my heart for a moment that that would deter our focus, or we couldn't digest that and still do everything else we're doing.
In fact, I think they're gonna complement that. That's the approach that we're gonna take in this company. Listen, let me say a couple things. I've thought about this. I started this session thanking each of you for trusting us. I wanna thank my team. You know, you've been exposed to individuals, leaders in this industry that, I think you've seen the depth and the breadth of their experience. Again, what I said last night, I never would've imagined the past, the steps in my life, that I would be sitting on the stage, but each of those steps prepared me to do my job, and each of their steps and their histories have prepared them to do their job. We have a very, very unique team.
We have a very, very unique franchise, and we have a very unique culture. I can tell you, without that, I wouldn't have the confidence and the conviction that I have to create this value. I couldn't do it without this team. I'm dependent upon them, just as they're dependent upon me. We do this together. That's part of this, that's part of this formula. The second people that I want to thank, I want to thank the KCS, former KCS board of directors. They had a choice. They trusted us. They trusted CP with their franchise, with their employees, with their customers, and I don't take that lightly. I wanna thank them for their trust, and then I wanna thank my board of directors.
My board of directors as well, for us to go to them with this case and this opportunity and the battle that we had to go through, for them, again, to trust us to deliver on that is not something I take for granted or this team takes for granted. It comes with responsibility. I can tell you again, in closing, to each of you, we've laid out a very compelling story. You have to make your own decisions, I know you have choices. For those of you that choose us, that trust us, we will not take that for granted. We're gonna remain hungry, we're gonna remain humble, and we're gonna work to create value for all shareholders and all stakeholders that are involved in this, that's the beauty of this opportunity. It is unique. It's extremely unique. It is a one and only.
Again, we hope you join us for the ride. If you do, I think you'll be handsomely rewarded. I know that we are committed, and I know that we have the potential to get this thing done. The last thing, because I wanna be a man of my word, what I told you I would do, I'm gonna share with you and share with our employees the final vote winner for our livery. Not yet. No. I'm just gonna tell you, and I did this for a reason as well, how much our shareholders' interests are aligned with our employees. The winner, when I reveal this, out of 5,327 employee votes, 40% chose this winner.
Out of this room, out of every vote we took from our investors and our shareholders, guess what the count was for the same locomotive? 40%, you can't make it up. That's the facts. Again, another closing point of legacy and shareholder alignment. With that said, let's reveal the winning locomotive, and this will be in the future, the way our locomotives will be painted, both in Mexico as well as in the U.S. and Canada. He's got the button. That's it. Option A, 40%. The second option five, was second by a long way, so it's, I kinda call it Ricky Bobby time. If you're not first, you're last. That's the locomotive. Let's shake and bake. You guys have a safe trip going home. Thank you.