RBC, in its Dec. 9 rail update, reports that CPKC put up the best growth this week on the back of continued strength in Grain. Volumes at CN Rail were down driven by lower petroleum & chemicals RTMs.

QTD CP is outperforming CN mainly due to higher Grain shipments at CP and reflecting weakness across most segments at CN, in addition to being less exposed to Canadian port issues.

CP last week placed a follow-on order for the initial supply of 98 fuel cell engines. This follows the completion last month of construction of hydrogen production and refueling facilities in Calgary and Edmonton (both of which are now operational). CP is also retrofitting several diesel locomotives with hydrogen fuel cells so they can operate directly without generating emissions. These new fuel cell engines and fueling facilities are an important step forward in utilizing hydrogen as a fuel source, notes RBC.

"We continue to view this as a positive development from both an ESG and profitability standpoint-and highlight that CP currently has three hydrogen locomotives in operation." Diesel-powered locomotives is the rail industry's most significant source of greenhouse gas (GHG) emissions. Fuel comprised 14% of freight revenue at CPKC in 2023, RBC added.