Core Thesis - Canadian Pacific Kansas City Limited (CPKC) is viewed positively due to its solid financial performance and strategic advantages, despite some near-term uncertainties [1][4]. Financial Performance - CPKC reported Q2 2025 EPS of $1.12, an increase from $1.05 in Q2 2024, driven by a 3% year-over-year revenue increase [2]. - Revenue growth was supported by a 7% rise in volumes and favorable pricing, although it faced challenges from lower fuel surcharge revenue and the removal of the carbon tax [2]. - The operating ratio improved by 110 basis points to 60.7%, indicating ongoing cost efficiencies [2]. Guidance and Strategic Position - CPKC reaffirmed full-year EPS guidance of 10–14% growth, with strong visibility across various traffic segments despite macroeconomic uncertainties [3]. - The company has demonstrated capital discipline by buying back 45% of a 4% Normal Course Issuer Bid (NCIB) [3]. - CPKC's North–South network and resilient infrastructure provide strategic advantages, insulating it from U.S. transcontinental rail mergers [3]. Valuation and Market Position - The stock is trading at a premium valuation compared to U.S. rail peers, which may impact near-term performance [4]. - Uncertainty regarding CEO Keith Creel's 2026 contract renewal could also weigh on the stock [4]. - CPKC offers a modest dividend yield of approximately 0.7–0.8% and maintains pricing power against inflationary pressures [4]. Investment Outlook - CPKC is characterized as a structurally strong franchise with long-term moat characteristics, but investors are advised to hold existing positions and wait for a more attractive entry point [5]. - The emphasis is on near-term execution, volume growth, and cost efficiency as key factors for CPKC's performance [6].

Core Insights - CSX Corp.'s former CEO Joe Hinrichs was reportedly fired due to the board's belief that he mishandled a takeover approach from Union Pacific last year [2] Company Summary - The firing of Joe Hinrichs occurred after informal outreach from Union Pacific, indicating potential strategic missteps in handling competitive pressures within the railroad industry [2]

Canadian National today announced changes to its senior leadership, naming Patrick Whitehead as its chief operating officer and Janet Drysdale as chief commercial officer. Whitehead’s appointment as COO ends CN’s unique approach to developing the operating plan, planning the network of the future, and managing day-to-day operations. The company’s shares (NYSE: CNR) were up 16% in intra-day trading. Patrick Whitehead (Photo: CN) Traditionally railroads have a lone chief operating officer responsible for ...

Core Insights - CN has appointed Patrick Whitehead as Executive Vice-President and Chief Operating Officer and Janet Drysdale as Executive Vice-President and Chief Commercial Officer, effective immediately [1][2] - The appointments are aimed at enhancing operational, commercial, and customer service excellence, with both executives having extensive experience in the railroad industry [2][3] Executive Profiles - Patrick Whitehead, 50, has over 30 years of railroad experience, with more than 25 years in management roles. He holds a Master of Science in Transportation Management and has completed advanced management programs at Wharton [2] - Janet Drysdale, 53, has nearly 30 years at CN, with significant roles in Sales, Marketing, Investor Relations, and Sustainability. She holds an Honours Bachelor of Science and an MBA [3] Company Overview - CN operates a nearly 20,000-mile rail network, transporting over 300 million tons of goods annually across North America, contributing to sustainable trade and community prosperity since 1919 [4]

Core Insights - CN has appointed Patrick Whitehead as Executive Vice-President and Chief Operating Officer and Janet Drysdale as Executive Vice-President and Chief Commercial Officer, effective immediately [1][2] - The appointments aim to enhance CN's operational, commercial, and customer service excellence, with both executives recognized for their cross-functional leadership [2] Executive Profiles - Patrick Whitehead, 50, has over 30 years of railroad experience, with more than 25 years in management roles. He previously served as Executive Vice President and Chief Network Operating Officer since October 2023 and holds a Master of Science in Transportation Management [2][3] - Janet Drysdale, 53, has nearly 30 years at CN, with significant roles in Sales, Marketing, Investor Relations, and Finance. She has been serving as Chief Commercial Officer on an interim basis since July 2025 and holds an Honours Bachelor of Science and an MBA [3] Company Overview - CN operates a nearly 20,000-mile rail network, transporting over 300 million tons of natural resources and goods annually across North America, contributing to sustainable trade and community prosperity since 1919 [4]

Core Insights - Union Pacific (UNP) is expected to report quarterly earnings of $2.99 per share, an increase of 8.7% year-over-year, with revenues projected at $6.23 billion, reflecting a 2.3% increase compared to the same period last year [1] Earnings Projections - The consensus EPS estimate has been revised 1% higher in the last 30 days, indicating a collective reevaluation by analysts [2] - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [3] Revenue Estimates - Analysts project 'Freight Revenues- Bulk' to reach $1.92 billion, a 6.2% increase year-over-year [5] - 'Operating Revenues- Other revenues' are estimated at $311.90 million, suggesting a decline of 3.4% year-over-year [5] - 'Freight Revenues- Industrial Products' is expected to be $2.23 billion, indicating a 5.2% increase year-over-year [5] - 'Freight Revenues- Premium' is forecasted at $1.76 billion, reflecting a decrease of 4.4% from the prior year [6] Operational Metrics - The 'Operating Ratio' is expected to be 59.0%, an improvement from 60.3% in the previous year [6] - 'Revenue Ton-Miles' is projected at 106.18 billion, up from 104.04 billion year-over-year [6] - 'Revenue Carloads - Total' is estimated at 2.17 million, consistent with the same quarter last year [7] - 'Gross Ton-Miles (GTMs)' is expected to reach 223.58 billion, an increase from 215.99 billion year-over-year [8] Fuel Consumption - Analysts expect 'Locomotive Fuel Statistics - Fuel consumed in gallons' to be 233 million gallons, compared to 229 million gallons in the same quarter last year [8] Additional Metrics - 'Revenue Ton-Miles - Bulk' is projected at 49.79 billion, up from 47.88 billion year-over-year [9] - The consensus for 'Average revenue per car - Bulk' is $3684.18, compared to $3641.00 in the same quarter last year [9] Stock Performance - Union Pacific shares have increased by 2.5% over the past month, outperforming the Zacks S&P 500 composite, which rose by 1.1% [9]

Core Viewpoint - Analysts expect Norfolk Southern (NSC) to report quarterly earnings of $3.18 per share, reflecting a year-over-year decline of 2.2%, with revenues projected at $3.09 billion, an increase of 1.3% from the previous year [1]. Earnings Estimates - Over the last 30 days, the consensus EPS estimate has been revised downward by 2.5%, indicating a collective reassessment by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate revisions and short-term stock performance [3]. Revenue Projections - The consensus estimate for 'Railway operating revenues - Merchandise - Agriculture, forest and consumer products' is $639.63 million, showing a year-over-year increase of 2.5% [5]. - 'Railway operating revenues - Coal' is expected to reach $389.94 million, indicating a decline of 8.7% from the previous year [5]. - 'Railway operating revenues - Merchandise - Chemicals' is projected at $560.89 million, reflecting a 3.3% increase year-over-year [6]. - 'Railway operating revenues - Intermodal' is estimated at $760.31 million, showing a slight decline of 0.4% [6]. Operational Metrics - Analysts predict the 'Railway Operating Ratio' will be 63.7%, up from 47.7% reported in the same quarter last year [7]. - 'Revenue ton miles' is expected to reach 44.60 billion, slightly up from 44.50 billion year-over-year [7]. Volume Estimates - 'Carloads (Units) - Volume - Merchandise' is estimated at 589.88 thousand, compared to 563.90 thousand in the same quarter last year [8]. - 'Carloads (Units) - Volume - Intermodal' is projected at 1.03 million, down from 1.05 million year-over-year [8]. - The total 'Carloads (Units) - Volume' is expected to remain at 1.80 million, unchanged from the previous year [9]. - 'Carloads (Units) - Volume - Coal' is estimated at 179.40 thousand, down from 185.30 thousand year-over-year [9]. Coal Tonnage - 'Coal Tonnage - Total' is expected to be 20.16 thousand, a decrease from 20.79 thousand in the same quarter last year [10]. - 'Carloads (Units) - Volume - Merchandise - Agriculture, forest and consumer products' is projected at 184.04 thousand, down from 186.30 thousand year-over-year [10]. Stock Performance - Over the past month, Norfolk Southern shares have returned +2.1%, outperforming the Zacks S&P 500 composite's +1.1% change [11]. - Currently, NSC holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the overall market in the near future [11].

Core Viewpoint - The proposed merger between Union Pacific (UP) and Norfolk Southern (NS) raises significant concerns among chemical industry executives regarding reduced competition and potential monopolistic practices in the U.S. freight rail system [2][5][7]. Industry Concerns - The chemical industry, represented by the American Chemistry Council (ACC), emphasizes that the merger could exacerbate existing issues in the freight rail system, leading to higher rates and service disruptions [2][3][11]. - Executives from major companies, including Cabot Corporation and Huntsman Corporation, have signed a letter expressing their opposition to the merger, citing historical negative outcomes from past rail mergers [3][4]. Economic Impact - The chemical industry contributes over $633 billion annually to the U.S. economy and supports more than 550,000 jobs, making it a critical component of manufacturing and various sectors [4][5]. - The merger is viewed as a threat to U.S. manufacturing competitiveness and the broader economy, with concerns that it could harm the ability of chemical companies to compete globally [5][6]. Regulatory Aspects - The ACC has called for the Surface Transportation Board (STB) to maintain stringent approval standards for the merger, requiring clear evidence that it would enhance service, safety, and competition [14][17]. - The burden of proof is on UP and NS to demonstrate that the merger would not degrade service but rather improve competitiveness [6][14]. Historical Context - Past rail mergers, particularly in the 1990s, have led to severe service disruptions and increased costs for businesses reliant on timely rail deliveries, reinforcing the ACC's concerns about the proposed merger [10][12][13]. - The merger could centralize control in the rail industry, potentially leading to fewer competitive routes and higher costs for shippers, particularly affecting those near current UP lines [11][12]. Proposed Solutions - The ACC advocates for an expansion of 'reciprocal switching' to allow shippers more flexibility in choosing rail providers, which they believe should be a condition for any merger approval [15][16]. - The industry expects to play a significant role in discussions around the merger as regulatory processes unfold, pushing for concessions that would enhance competition [16][17].

Summary of Key Points from the Conference Call Industry Overview: Global Logistics Core Insights and Arguments - **Deceleration in Demand**: Signs of deceleration in ocean and air freight demand are emerging as ocean volume growth slowed to +3% globally in August, with a significant decline of -12% in Transpacific Eastbound volumes [1][3]. Air freight volumes also showed a modest deceleration in September, likely due to the expiration of the de minimis exemption [5][23]. - **Pressure on Ocean Rates**: Ocean freight rates are at their lowest levels since 2023, with the SCFI down over 50% year-to-date [3][20]. Key indicators such as the SCFI and WCI have seen declines of 54% and 58% respectively [20]. - **Orderbook Expansion**: The container shipping orderbook grew by +6% in Q3, with new orders equivalent to 3.4% of the in-service fleet, indicating continued investment despite oversupply risks [4][21]. - **Airfreight Performance**: Airfreight demand grew by 4% in August, but the growth rate moderated in September, with revenues below last year's levels [5][23]. The expiration of the US de minimis exemption is expected to impact future demand [23]. - **Surface Freight Outlook**: U.S. surface rates contracted in June and are expected to remain flat or decline in the second half of the year due to a softer freight outlook [6][24]. Additional Important Insights - **Global Trade Volumes**: Global trade volumes increased by 4.9% YoY in July, driven by a 6% rise in emerging market exports, while U.S. and European exports remained largely unchanged [2][18]. - **PMI Indicators**: September PMIs showed an increase in China (+0.7pt to 51.2) and the U.S. (+0.4pt to 49.1), while Europe saw a decrease for the first time this year (-0.9pt to 49.8) [2][18]. - **Market Sentiment**: The sentiment in the logistics sector remains weak, with companies expressing pessimism regarding international ocean demand and potential challenges in achieving a meaningful peak season [3][19]. Company Ratings and Valuations Key Company Ratings - **DSV**: Rated Outperform with a target price of DKK 1,700. Expected to become the largest freight forwarder post-acquisition of DB Schenker [9]. - **DHL**: Rated Outperform with a target price of €42.00. Strongly levered to e-commerce and world trade, with a solid long-term holding outlook [10]. - **Kuehne+Nagel**: Rated Market-Perform with a target price of CHF 165. Underperformance in volume growth noted, with execution issues impacting investor sentiment [11]. - **AP Moller - Maersk**: Rated Underperform with a target price of DKK 10,600. Facing challenges in container shipping with declining spot rates and a high orderbook [12]. Valuation Comparisons - **Valuation Metrics**: DSV shows a strong growth trajectory with an expected EPS of DKK 100+ by 2028, while Maersk's strategy has been criticized for failing to deliver promised synergies [9][12]. - **Market Cap and Share Buybacks**: DSV is projected to repurchase DKK 24 billion of shares annually, compared to its current market cap of DKK 310,654 million [9]. Conclusion The global logistics industry is experiencing a notable deceleration in demand across both ocean and air freight sectors, with significant pressure on rates and a growing orderbook despite oversupply risks. Companies like DSV and DHL are positioned favorably, while others like Maersk face challenges. The overall sentiment in the logistics sector remains cautious as companies navigate a complex market landscape.

Market Overview - Major indices are experiencing upward movement, with the Dow up approximately 300 points, S&P 500 and NASDAQ both up about 0.6% [1][2][3] - Over the past week, all major indices have risen about 12%, indicating a recovery from previous volatility [3] - The VIX index, a measure of market volatility, has decreased from around 28-29 to 22, suggesting reduced market anxiety [5][6] US-China Trade Relations - President Trump has expressed optimism regarding US-China trade talks, stating that threatened tariffs are "not sustainable" [9][10] - Upcoming meetings between US Treasury Secretary and Chinese officials are expected to solidify discussions for a broader trade deal [12][14] - Despite Trump's previous threats of a 100% tariff on China, he has not completely ruled it out, indicating ongoing tensions [13][14] Regional Banks and Credit Quality - Regional banks are showing signs of recovery, with Huntington Bank reporting a 12% year-over-year revenue growth and nearly 20% increase in earnings [109][110] - Credit quality remains stable, with charge-offs reported at 22 basis points, consistent with previous quarters [112] - Concerns about systemic issues in the banking sector are viewed as idiosyncratic, with the overall banking sector remaining strong since the financial crisis [115] Earnings Season Insights - American Express reported better-than-expected earnings, driven by a successful refresh of its platinum card, which saw initial demand exceed expectations [45][46] - CSX railroad company exceeded revenue estimates for Q3, with analysts optimistic about the new CEO's strategic direction [50][52] - The focus on profit margins in Q3 and Q4 is critical, as companies may face challenges in passing tariff costs to consumers [29][30] Cryptocurrency Market Impact - The cryptocurrency market has seen a significant decline, with Bitcoin dropping approximately 12% over the past 10 days, attributed to increased trade tensions and market volatility [103][104][107] - The overall crypto market has shrunk by $600 billion since last Friday, indicating a broader sell-off in risk-on assets [103][104]