Kansas City Southern (KCS) is closely watching the economy, and the impact of inflation on consumer demand. We are also watching and managing to the lingering impacts of supply chain instability. While we view these inflationary and supply chain headwinds as an opportunity to compete for new business and strengthen existing customer relationships, it is also an important time for all surface transportation modes to collaborate to optimize service to customers and help heal some of the fractures in the global supply chain.
Sustainability is another important factor for customers and surface transportation providers and an area where collaboration is essential for the good of all. Increasingly, customers are taking advantage of the fact that rail is the most fuel-efficient form of ground transportation, which is an important competitive advantage as shippers seek ways to reduce their total carbon footprint.
A key example of surface transportation cooperation is the proposed combination of Canadian Pacific (CP) and KCS to form Canadian Pacific Kansas City (CPKC), which is pending regulatory approval. If approved, this transaction would create the first US-Mexico-Canada railroad. With the increased capacity and cooperation of a combined network, CPKC can provide competitive alternatives for existing rail customers, along with enhanced opportunity for truck-to-rail conversion. Grain, automotive, auto parts, energy, intermodal, and other customers will benefit from the increased efficiency and simplicity of the combined network. Another example of cooperation is when earlier this year, CP and KCS, on an interline basis, successfully launched the first dedicated international intermodal train between Lázaro Cárdenas and the US Midwest. This first Lázaro Cárdenas-to-Chicago train was born out of the need to avoid excessive delays due to the unprecedented and ongoing supply chain challenges affecting North America's West Coast.