Good afternoon. My name is Marjorie and I'll be your conference operator today. At this time, I would like to welcome everyone to CPKC's Third Quarter 2024 Conference Call. The slides accompanying today's call are available at investor.cpkcr.com. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to introduce Ashley Thorne, AVP, Investor Relations, to begin the conference call.

Thank you Marjorie. Good afternoon everyone and thank you for joining us today. Before we begin, I want to remind you this presentation contains forward-looking information. Actual results may differ materially. The risks, uncertainties, and other factors that could influence actual results are described on Slide 2 in the press release and in the MD&A filed with Canadian and US regulators. This presentation also contains non-GAAP measures outlined on Slide 3. Please note, in addition to our regular quarterly financials, there's supplemental Q3 combined revenue and operating performance data available at investor.cpkpr.com. With me here today is Keith Creel, our President and Chief Executive Officer; Nadeem Velani, our Executive Vice President and Chief Financial Officer; John Brooks, our Executive Vice President and Chief Marketing Officer; and Mark Redd, our Executive Vice President and Chief Operating Officer. The formal remarks will be followed by Q&A. In the interest of time, we would appreciate it if you limit your questions to one. It is now my pleasure to introduce our President and CEO, Mr. Keith Creel.

Thank you, and good afternoon. Thanks for being with us today to discuss the review of third quarter ‘24 results. I'm pleased to share the results of our 20,000 strong CPKC family. I can tell you the body of work in what was a very challenging operational quarter with the significant derailment that Mark and the team faced in early July and the strike in August, both of which they did an exceptional job doing it. They bounced back and the network responded well as a result following up and get them back in sync. In spite of the challenges, I tell you, I'm proud to say we remain on track to deliver full year guidance, double-digit earnings growth, including volume growth, which is better than what we have projected earlier in the year. So specific to the results for the quarter, the CPKC family delivered revenues of $3.5 billion, which is up 6%, strong volume growth, an increase of over 4%, an operating ratio of 62.9%, earnings per share of $0.99, which is an increase of 8%. Most importantly, from a safety perspective, continuing improvement, the training accidents decreasing 17%, personal injuries decreasing 8%. On the operating front, continued strong performance across the network, which Mark will provide a bit of color to, but I'd like to specifically recognize the operating team, specific to those challenges with the strike, they did an exceptional job in preparing for and bouncing back from the outage that we've experienced as a result of the strike. Commercially, John and his team as well continue to generate industry-best, sustainable, profitable growth. We're delivering unique products to the market with strong service offering to our customers that's reflected in the results that we're going to share with you today. The MBNR, that's another exciting development…

Thank you, Keith, and good afternoon. Looking at the quarter, I'm extreme [Technical Difficulty] railroaders for the continued hard work, ensuring safe and reliable service. In the third quarter, we continued to drive strong year-over-year operating improvements. If I look at the average terminal dwell declined 8%, average train speed increased by 6%, locomotive productivity improved by 8%, and just to round off the fuel efficiency improvement by 2%. All of these results demonstrating an efficient, fluid, resilient network that is delivering strong service to our customers. These results are particularly impressive given the challenges we faced in the quarter. I'm proud of the resiliency this network and team has displayed. As Keith mentioned, we navigated through a four-day work stoppage across our Canadian operations and thanks to the hard work and preparation of the team, I'm pleased to say that we have a quick, efficient transition back to normal operations. I'll be frank, it was probably one of the best that I've seen in my career as we started this network back up. And you can contribute this to the operating team working closely with the customers and rail partners to minimize the interchanges and disruptions that we see as an operating team. But the work stop is behind us. We're well positioned to deliver -- to continue delivering the growth that we are committed to and strong service that our customers expect. Thank you to all the railroaders who contributed to this outcome. Looking at safety for the quarter, if I look at FRA train accident frequency at 1.27, that is an 8% improvement year-over-year. And to look at the personal injuries, we were at 0.85, which is a 17% year-over-year improvement. I'm pleased with these results, but safety is a journey. We will always strive for further…

All right. Thank you, Mark, and good afternoon, everyone. I'm extremely pleased with the top line performance the team delivered despite the work stoppage in the quarter. We are creating and delivering on the unique opportunities, the strong service product we have and we're pricing to the value of the capacity of our service. Looking at our results, this quarter, we delivered freight revenue growth of 6% on a 4% increase in RTMs. This performance was despite the four-day work stoppage that Keith and Mark spoke to. And this was a 3% headwind to RTMs in the quarter. Our sense for RTMs was up 2% with strong pricing partially offset by mix. Now, taking a closer look at our third quarter revenue performance, I'll speak to the FX adjusted results, starting with bulk. Grain revenues were up 10% on 7% RTM growth. US grain volume grew 11% over the prior year. Our franchise is benefiting from strong production in our growing regions and increasing shipments to Mexico as we connect new markets and create new opportunities for our grain customers. Canadian grain volumes grew 3% with increased wheat to Mexico and the ramp up of harvest across the Canadian prairies. Now looking forward, we expect Canadian grain production in line with our five-year average and our comps in Q4 and early 2025 are favorable as farmers held on to their crop a year ago. Now that favorable volume set up coupled with regulated grain pricing of approximately 6.5% has us well positioned in Canadian grain. So looking ahead for grain as a whole, we are working closely with our customers across all three countries and expect to deliver strong grain results into Q4 and well into 2025. In potash, revenues were up 7% on a 20% volume growth. We moved…

Great, thanks, John, and good afternoon. This quarter was marked by strong core performance and the continued execution of our unique strategy that is delivering disciplined growth. I'd also like to thank our best-in-class team of railroaders who continue to focus on and execution helped deliver these results despite challenges in the quarter. Now looking at our result from Slide 12, CPKC reported operating ratio was 66.1% and the core adjusted combined operating ratio came in at 62.9%. Diluted earnings per share was $0.90 and core adjusted combined diluted earnings per share was $0.99, up 8% from prior year. Taking a closer look at our expenses on Slide 13, I will speak to the year-over-year variances on an FX adjusted basis. Comp and benefits expense was $644 million or $640 million on an adjusted basis. The year-over-year increase in comp and benefits was driven by higher stock-based compensation, along with inflation and volume-driven increases from higher GTMs. This increase was partially offset by efficiency gains from reduced overtime, improved trainways, improved crew utilization, and other productivity gains as we continue to optimize the combined network. Looking to Q4, we continue to expect average headcount to be roughly flat on a year-over-year basis, driving further labor productivity gains as we grow volumes, particularly at bulk. Fuel expense was $419 million, down 2% year-over-year. The decline was driven by lower fuel prices, and a 2% improvement in fuel efficiency from running longer and heavier trains, which resulted in $8 million in P&L savings for the quarter. These savings were partially offset by volume-driven increases from higher GTMs. Material expense was $99 million or $98 million on an adjusted basis. The year-over-year increase was driven by higher locomotive maintenance from increased fleet utilization along with higher GTMs and inflations. We also insourced the…

Okay. Thanks, Nadeem, John, Mark. Operator, let's open it up for questions.

[Operator Instructions] Your first question comes from Chris Wetherbee from Wells Fargo. Please go ahead.

Yeah, hey, thanks. Good afternoon. Maybe if I could start like kind of higher level, Keith, I was kind of curious if I could get your take on what we've seen coming out of Mexican legislation potentially about some rail reform down there. I want to get a sense of how you guys are thinking about that. Is it something we should be concerned about from a risk perspective?

Yeah. Great point, Chris. I think the best way to kind of summarize the way I feel about it is encouraged. We had some progress, had some face-to-face meetings, and clearly understood the mandate from the previous government. I would say that at this point, everything that's happened with the new president has only reinforced that. And the fact that it expanded upon that, I was very encouraged to hear a couple of weeks ago, I guess it was on a Sunday at [indiscernible] which is where the aspirational [faster training] (ph) would be destined to for Mexico City along our right of way. The president announced that not only they committed in their platform, but the vision is protect freight, create a dedicated corridor for two passenger tracks in the adjacent right of way. So I think it uniquely compliments, the other thing I'm being encouraged by, it's her commitment to the environment and her comments relative to the need to get trucks off the road to create additional highway capacity, be friendly to the environment, and bring additional business to the railway. So we are part of the solution, and as long as you're part of the solution, I think with a very sovereign country that's focused on growth and being part of a strong, free, consummate commerce system, I think you're in a good spot. So again, encouraged.

Okay. That's helpful. And just one point on sort of clarification. Just, Nadeem, you talked in the short term about some improvement both sequentially and year-over-year in the operating ratio in the fourth quarter. I don't know if maybe you could put a little bit of a finer point on some of the opportunity here because obviously, RTMs seem like they're ramping back up. There's growing opportunities in the fourth quarter that could be probably accretive from an OR perspective. Any other incremental thoughts that we should think about for the fourth quarter specifically?

Yeah. And so we had that labor disruption that had a 100 basis point headwind to the OR in Q3. Obviously, we had a very unfortunate derailment in Bordulac, North Dakota, that was about $60 million expense hit. And so those are two unique items, the stock-based comp was a big headwind in Q3. So when I look at kind of those onetime items not occurring again in the fourth quarter and I look at the opportunity for operating leverage, grain has started off quite strong. We had a robust crop ahead of it. We had a strong bulk outlook as a whole. If we factor all of that together and the ability to move at a low incremental cost, I think, Chris, I believe that we have the opportunity sequentially to have a 500 basis point improvement in the OR. Well stay tuned.

Appreciate the time. Thank you.

Thank you. And your next question comes from Walter Spracklin from RBC Capital Markets. Please go ahead.

Yeah. Thanks so much operator. Hi, good afternoon. So I'd like to talk a bit about your volume growth here. I mean you increased your projection here on expectations for this year. Just curious, this is on a backdrop of still a weak macro environment. So presumably, you're getting a lot of kind of esoteric volumes here. Can you talk a little bit about those? And in particular, is it causing you to somewhat rethink your ‘28 targets of $1.5 billion revenue synergy on the upside or even your $5 billion kind of revenue pipeline as you've seen a little bit more opportunities and what's developing on this new network? Are you seeing upward revisions to that kind of outlook?

Well, maybe I'll start, Walter. Thanks for the question. Focusing on the near term, as the team has already spoken about, our bulk franchise is very encouraging. Not only do we have a strong Canadian grain crop that I think sort of well-known and moving well, but we also have a really strong crop, not only in our Upper Plains North Dakota, Minnesota region but also down into Missouri, the legacy KCS region. So really, I'm going to say the perfect storm as it relates to grain and opportunities to move a lot of freight in that space at low incremental margins. Now if you look beyond that in the bulk, we've got, as I said, record potash demand coming from Canpotex on the export front, but also given some of the struggles, Mosaic and others had in Q3 on the domestic front, we have a really strong domestic pull right now also. So I feel really good about the fertilizers and potash space. And frankly, we have some catch-up to do with Elk Valley and our coal opportunities, not only in Canada but also a fair amount of maybe stronger demand of our legacy coal franchise in the US. So the bulks are set up well. We've seen an uptick in our domestic intermodal business across Canada, and we continue to perform well in our new MMX service. I think the last I looked if you kind of neutralize for some of the headwinds on the business that left our network, we're up 27%, I believe, on the year in growth on that train. So good outlook there. International Intermodal, frankly, since COVID, it's been tough to really tell how those international intermodal volumes will move up and down, but the lineup right now to close out the year…

Great color. Appreciate it, John.

Yeah.

Thank you. Your next question comes from Jon Chappell from Evercore ISI. Please go ahead.

Thank you. John, I'm going to stick with you. From any way we measure yield, whether it's whether per RTM or revenue per carload, the numbers are pretty strong. So just generally on kind of core pricing momentum, but also I just wanted to highlight auto and intermodal from a revenue per RTM perspective, a little bit of pressure there. Is that a length of haul issue? Was that a new service kind of mark-to-market? Or were there any kind of more extreme competitive pressures between those segments that maybe have been lagged the portfolio?

Yeah. Thanks, John. You nailed it. I'll give you the stats. Our automotive length of haul in the quarter was up 17%, and our intermodal length of haul about 20%. So that is exactly what you saw in those numbers. You don't have a whole, I would say, I'm confident that this team has taken out of park in terms of pricing for the value of the service and the capacity that this network has. I'm super pleased with our year-to-date performance, just be candid. We're actively running north of 5% in a lot of those discussions and outcomes with those contracts. And what makes me feel good about that is as we do that, that gives us a nice tailwind as you think about 2025 and what our same-store looks like. No doubt there's certain areas we're feeling more pressure. And certainly the intermodal space with all the trucking capacity and the cheaper spot rate for trucks. That has been a little more challenging. But look, we start to see a little bit of tightening as we move into 2025 in that space. And honestly, there may a little bit of catch-up opportunity. I guess maybe the last point, John, and I think this is important just to point out, if you look into Q4, as you know, we are looking at pretty a significant fuel headwind as it relates to that sense for RTM, but maybe just something to keep an eye on.

Helpful. Thank you, John.

Thank you. Your next question comes from Fadi Chamoun from BMO Capital Markets. Please go ahead.

Yeah. Good evening. Thanks. Kind of staying on the commercial side a little bit. So the Gemini alliance, I think, announced some schedules, they start up their service in February. And we've noticed kind of they're highlighting three ports that you serve being part of their loops. And I was wondering if you have any insight into what this might mean or translate into your network or your share in that kind of lines as we go into 2025. And kind of a follow-up on some of the discussion earlier, like Keith, if you're not kind of prepared at this point to talk about volume growth guidance for 2025, can you give us an idea what you feel this synergy pipeline will look like as we progress in 2025? Or I think you said in the prior call, $800 million exit run rate for '24, what does this look like 12 months from now, if you can provide any kind of insight into that? Thanks.

Okay. So there's a few pieces to unpack there, Fadi. I'll start off with Gemini. Certainly, we have had a long-standing and really, I would say, strategic at the highest level relationship with Hapag-Lloyd, a tremendous amount of respect between our companies to grow, to expand our partnerships where we can to be very strategic. So certainly, we feel very good about their prominence as part of that alliance. As we know also, we've expanded our relationship over the years, most recently with Maersk in the development of our transload facility in Vancouver, where we utilized our land assets and build partner with them to build that facility. But also we've steadily grown our trust and our relationship with their IPI business not only into Canada and down into the US. So naturally, I think we feel really excited about the Gemini opportunity. Frankly, their precision model that they want to deploy and how they deploy their ships in their assets and their port terminals really matches up philosophically with how Mark and Keith drive our rail operations on a daily basis. And I think that could yield a really positive strategic relationship. Now look, it's in the early days, and we're working through what that's going to look like, but I just take, for instance, Lazaro, and specifically to the synergies you were asking about. That scenario where it hasn't grown in that opportunity for cross-border out of Lazaro, maybe hasn't grown as much as we initially thought or as fast as we initially thought but with APM terminals and making the investments they're making and I think the commitment Gemini has to grow that business, along with the investments that Hutchinson's making, we see a tremendous opportunity to begin to see that volume grow through that Lazaro terminal.…

That’s great. Thanks.

Thank you. And your next question comes from Scott Group with Wolfe Research. Please go ahead.

Hey, thanks. Afternoon, guys. So I don't know if this is for Nadeem or Keith. As I think back to the Analyst Day last year, you talked about a sort of multiyear high single-digit revenue, I guess, probably mid to upper teens earnings growth. And I think you told us '24 might be less than that, right, because you don't have the buyback yet. It sounds like the buyback is going to start next year. So I know Nadeem, again, Nadeem, Keith, any puts and takes we should be thinking about for next year that you know about at this point that makes that algorithm more or less likely to play out?

Yeah, Scott, I mean, obviously, we'll give our formal guidance in January with our Q4 results. But I think you captured it well. Nothing is changing as far as our multiyear outlook. We're holding the line in terms of what we guided to last June, which was, as you said, high single-digit revenue growth double-digit EPS growth, CapEx and that around $2.6 billion to $2.8 billion range. And as you said, we're not getting no benefit to the buyback now, but we should start seeing that benefit next year once we reinstitute a buyback program. So as I look at where we're exiting 2024, we know we've got a strong crop ahead of us. We know some of our key wins and synergy opportunities are going to give us a very idiosyncratic opportunity to grow and be an industry leader growth again next year, I would fully expect. So you can assume that what we guided to is we'll start hitting our stride in 2025. And so no reason why we shouldn't be able to hit what you just mentioned in terms of our 2025 numbers.

Helpful. Thank you, guys.

And your next question comes from Tom Wadewitz with UBS.

Hi, good afternoon. I wanted to see, John, if you could give some thoughts on what -- where you might be more optimistic in 2025 just in terms of which markets do you think can really continue to go strong and be drivers of growth. And then also, I guess, Mark made some content at the beginning about some capacity investments that potentially enable you to, I don't know if that creates more growth opportunity as you add some capacity. But just some thoughts about where should we be most optimistic in '25 in terms of specific markets? Thank you.

Yeah sure. Thanks, Tom. So I think 2025 could shape up, at least in my mind, a little bit how we're closing out this year in terms of I don't know what we're going to get out of the organic base book if we're going to see a turnaround and rebound and some tailwind there. And certainly, hoping for, but we're not count on it. This kind of is going to rinse and repeat in terms of self-help initiatives and over-deliver the synergies. And it is really that list that I just spoke to that excites me. I do believe there's an opportunity for good growth in international intermodal not only with Gemini or as I spoke to quite a bit with other players. And now with our diversity across Vancouver, St. John and down in Lazaro, I think, gives us a strong growth platform. Ramp up of MMX still get marked on me quite a bit that we're not running long enough trains on that service. And so I have a definite opportunity to continue to price into and fill up that North-South service. Now the good news is I see a strong pipeline of opportunity on drive-in, and on auto parts, on a whole variety of different items, and we haven't even really scratched the surface on our refrigerated product. I'll remind you that facility that Americold building will be up and running here of, call it June, July of '25 but I can also tell you, we've been very candid about, this is about creating an ecosystem. It's about creating a differentiated product in the marketplace that really go after truck volumes that are moving today. So I see the opportunity as we move into 2025 to expand the number of terminals we have co-located in this area, two or three or four more facilities which again gives us that ecosystem that excites me. And on maybe one of the last areas, and we don't talk about a lot is our carload business, Tom. It's an area of kind of the world of singles and doubles. But again, also really accretive business to our portfolio. And the team there has done a great job as I think about how we expand our presence in the markets in Texas, particularly Dallas. How we continue to expand our fuel terminals in the Toronto and in Eastern Canadian markets. And then also the ongoing demand that we're seeing, really, as you think about that Gulf region to grow our aggregate business down in there and creating transload and solutions to service those markets. So those are a few of the key ones and I really didn’t even mention auto, Tom, as you think about that area because we still have a lot of contracts out there that are going to be rolling over that we think we've got a really good service product to offer those OEMs.

Great. That's very helpful.

From the capital side, what I would say, as John brings this business on, obviously, we still need to work on getting some of these locals off the mainline where we can pass trains. When we talked earlier, that's what we what we're focused on to make sure yard separations, local separations. We can continue to run an operation parallel with the road services. The biggest thing we'll hit at the end of this year is really double the capacity of Laredo Bridge. KCS made that investment. We finished it. We'll bring it across the finish line here soon, and that will create a lot of capacity to get across the bridge 181, 180 amongst other grains and other product that could go across as well. Another piece is really just Kansas City just as we treated it as two railroads years ago, as we look at it today as one network. We don't want to drive everything into Kansas City, we want to create that path where we could bypass Kansas city for dwell purposes, for speed, for car miles, for car days. So working through those capacity changes as well. So, John, we can continue to grow the business, but we can serve the customers as they expect us to serve.

Great. Thank you.

Thank you. And your next question comes from Ken Hoexter with Bank of America. Please go ahead.

Hey, great. Good afternoon. Nadeem, that was a great rundown before on the kind of potential for 500 basis points sequential OR improvement. You talked about the 100 basis point impact. Can you clarify, you just want so quick that the 300 basis point impact you just went there. I just want to make sure I understand the difference. And then my question for John is thoughts on potential for additional tariffs. If we get an administrative change here, your thoughts on imports to Mexico, Canada, maybe cross-border. How should we be thinking about this as we prep over the next few weeks?

Yes. Ken, the year-over-year impact of stock-based comp was part of the 300 basis points. And then we had a $50 million increase year-over-year on derailment costs, $60 million came from one in particular in Bordulac. So, that combined with 100 basis points from the impact of the work stoppage is the full 300 basis points.

Thanks.

Yeah, Ken, I -- look, it's a little bit of wait and see, obviously, on how that's going to play out. Again, I'm really encouraged, basis the comments Keith made earlier around kind of the administration in Mexico staying the line or maybe even double down a little bit here most recently around the desire to grow and to support commerce in Mexico to support North America. I kind of resting a little bit on the fact that whatever administration comes into play, I think commerce for North America is important. And ultimately, I think whether you look back at the current administration or maybe the one previous to that, that is what won the day. USMCA was obviously created during the first Trump administration and ultimately turns into, I think, a good piece of policy for the three countries. So we'll navigate it. Obviously, we're staying close with our customers on this file. We're going to be active, no doubt with whatever government in place in the US and also in Mexico and Canada. And we'll navigate whatever those tariffs may or may not look like as we move into the future.

Great. Thanks, John. Thanks, Nadeem.

Your next question comes from Brian Ossenbeck with JPMorgan. Please go ahead.

Yeah. Thanks. Appreciate taking the question. So, maybe just a couple of quick follow-ups for John there. Would you say you've already felt some of the impact of this uncertainty with constitutional reform, the passenger rail, just the broader tariff question in the elections and the transition of both administrations in the US and Mexico. I mean, foreign direct investment has been pretty soft for a little while. So do you think you've already felt and seen some of this and the potential for it to improve when there's some certainty in terms of what the rules of the game are? And then just maybe more specific, it looks like there's been some trouble south of the border with your competitor handling some of the green shipping over there. So you talked about a strong grain harvest in the second bridge of the Laredo, do you think that's an opportunity for you guys to pick up some additional share given the circumstances? Thanks.

It’s hard to tell. I think in terms of any sort of impact, we were talking about it actually prior to the call a little bit. There's so much activity that's been announced in Mexico to support the auto industry, plastics, appliances, live goods, that we continue to work through with those customers down there that presents huge opportunities for our cross-border shipments. It really gets tough for me to see, is there a marked slowdown or not. I think my answer is, no, I really haven't seen any effect at this point. And actually, just most recently, I can tell you we are down in front of some folks that just announced some recent production down in Mexico, and there was no apprehensiveness from them whatsoever in terms of moving forward with their investments. And that was foreign investment going into Mexico. So I'm going to have to just see how that plays out. I think the fundamentals just continue to support a North American economy continue to make sense. You mentioned about the grain, some of the grain challenges in that. Yeah, I think we've certainly seen some opportunities migrate to our network. But I'll also tell you, you've heard this from us long time, we're not going to oversubscribe, we're not going to oversell. We're going to be very disciplined on what those opportunities look like. And that doesn't mean we're not willing to work with our other Class 1 partners because we certainly we are and we do. But I also want to make sure that if we're going to take on the new business down in those lanes, then Mark and his team can execute it because as we've said a number of times, building that trust with the customer is paramount. And once you have earned it, it becomes a lot harder so to get it back on railroad. And then I guess last, you said the second bridge, you're darn right, I believe it's each sales tool. It is something that myself and my team and our team down in Mexico are making sure our customers understand that additional capacity lifts that we're going to gain that not only will continue promote, I think, world-class fluidity through Laredo, but also give us the capacity to grow and grow with certainty with those opportunities that I'm talking about. So, yeah, that presents a significant opportunity for my team in the future.

Very helpful. Thank you, John.

Yep.

Thank you. The next question comes from Steve Hansen with Raymond James. Please go ahead.

Thanks for time, guys. John, I want to follow up on your last comments on grain. I think you've spoken pretty positively to the North-South grain movement here for the past two or three quarters now. It's obviously somewhat crop dependent, but how would you characterize your progress so far in grain in establishing that new North South Corridor or North South Lane you've been trying to work on relative to your initial expectations? Thanks.

Yeah, I'd say we're ahead of pace a little bit on that front. If you just think about our makeup of synergies and grain that's coming off of the legacy CP network terminating on the legacy KCS network, we're, I would say, ahead of pace. But in no order, I want to be on that front, Steve. I truly believe we're just scratching the surface in terms of creating optionality for those grain companies to sell into different markets like they've never had in the past. My CEO would always tell me, I always complain that I didn't have enough grain markets for my shippers, and we don't have that excuse now. We've got a really good service product to go into the South and into Mexico. So I'm super excited what 2025 can bring in that space in terms of not only grain out of Canada, down into Mexico, but across all of our Upper Plains terminals.

And I think, Steve, I would add to the, you can’t underestimate the power and the value to the customer of a reliable gateway. That gateway is the single line gateway only grown stronger with more capacity, the alternative, the competitive alternative is very congested gateway, that's much more complex because you've got three railroads involved as opposed to one. Just by nature, the complexity adds additional risk to the supply chain. So in these times, the competitive alternative is challenge. As it has been challenged, it even makes the value proposition for route even more compelling.

Makes sense. Thank you for the color.

Thank you. Your next question comes from Ravi Shanker from Morgan Stanley.

Thanks, everyone. So just to follow-up. Kind of, our surveys have shown a shift by customers towards the MMX service in recent months. Is that just a maturation of the offering since you launched it? Or has something changed recently with your commercial and go-to-market strategy there?

Ravi, I think you've called it right. It is a maturation. It's going through the sales cycle and process. It's going through -- we have -- in the example, we have one customer that we literally tested one box a day for 45 straight days and every day measured our performance on a per box basis to see if we could deliver what we said we were going to do. And I'll tell you the good news is we did exactly what we said we were going to do, and they've rewarded us with a significant piece of business that's actually starting up as we speak. So I do believe it's a natural progression. I’ll tell you, doing it in the face of the sort of trucking challenge in the headwinds of all the capacity in that quarter that now has been a little bit of a surprise and more of a challenge than I anticipated. I'm pleased with the work our sellers have done. Schneider, our partner in that corridor has really worked hard and performed quite well. And when you begin to now be able to expand your sales offering with a product such as the Meridian Speedway either to the NS or the CSX now with this transaction, just kind of continues to open up the portfolio of options we can offer shippers. So I continue to be optimistic that you're going to -- you'll see more of a step function of growth in that train pair.

Very good. Thank you.

Your next question comes from Ari Rosa with Citigroup. Please go ahead.

Ari?

Ari, your line is open. We'll go next to Benoit Poirier from Desjardins Capital Markets.

Yes. Thank you very much, and good evening, everyone. Obviously, labor issues have been very topical this year. When we look at the volume in Mexico, we've seen a great cross-border activity level. So I was wondering whether there was any pull forward in demand with respect to the US election. And also, John, you've been able to quantify that labor issues impacted RTM by about 3% during Q3 that got lost. So I was just wondering about whether you see opportunity to recover and maybe the latest discussion with shippers retailer about the opportunity to get back this volume on the network.

So, just a couple of comments there. I do believe we sell off a fair amount of pull forward, but maybe not on our south product, but ahead of our labor stoppage in just ahead of that in August, July and August. Now I think it's normalized. As I said, actually, we've seen now and we move into October on that domestic intermodal front, I think a little bit of an off in our volumes, our transload volumes and where optimistically the customer feedback seems to be that we're going to see that continue to close out the year. The 3% RTMs related to the strike. I think the good news is the bulk of that business was our old business. It was products, coal, grain, opportunities like that, that simply will roll forward. And part of the reason when I say we've got record demand for coal in Q4, we got record demand for potash in Q4. Part of it is that roll forward, so it's not lost. Now certainly, we lost some domestic intermodal in that, but I think that's kind of washed itself out in the system already. And as I said, we've actually seen a little bit of pickup in that volume. So I'm not -- that was the impact over those days. I'm not -- I don't have any concerns, just plenty of freight out there for us to close the year strong.

That’s great color, John. Thank you.

Thank you. And we have run out of time. So I will now turn the call back over to Mr. Keith Creel.

Thank you. Listen, I appreciate the time this afternoon sitting with us and discussing our results. I hope you would definitely agree what you've heard in spite of the macro, we continue to be a very unique value-creating story at CPKC, outpacing the industry's growth. Most importantly, bringing it to the bottom line safely and efficiently. We created a premium network in parallel in our industry with new growth opportunities and this team has and will continue to convert it, creating unique value for our shareholders. Stay tuned for our fourth quarter results. Thank you.

Thank you. And that concludes today's conference. We appreciate your participation, and please have a wonder way.