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CP Rail weighs strategic deals to boost crude-by-rail | Reuters

Canada’s second-largest railway said it expects revenue growth in the mid single digits this year, boosted by strong global potash demand, strength in energy and chemicals, and sees better pricing because of tighter capacity. CP said adjusted earnings per share growth would be in the low double digits.

“We see solid momentum growth heading into 2018,” Chief Marketing Officer John Brooks told analysts.

Canadian crude-by-rail shipments rose in 2017 in the latest sign that tight pipeline capacity is pushing more oil onto railroads.

Canadian railway executives, however, remain cautious about crude-by-rail demand after they were forced to slash rates for shipping crude in 2015 due to a rout in global oil prices.

CP Chief Executive Keith Creel said the railway was looking for customers that do business in both crude and in other lines to mitigate any future fall in oil prices.

CP also sees potential for higher pricing in 2018 as capacity gets tighter on rising demand.

“As shipment volumes expand, capacity tightens, and rail companies are able to negotiate slightly higher rates from their customers,” wrote Edward Jones analyst Dan Sherman in a note to clients.

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CP Rail weighs strategic deals to boost crude-by-rail.