Canadian Pacific Kansas City Ltd. framed its first quarter following a major merger as a tough one, as demand for container shipments and some bulk goods fell across the rail sector.

“No doubt it's a challenging quarter as we dealt with a softer demand environment,” said CEO Keith Creel on a conference call with analysts Thursday.

The company reported that revenues from container traffic, which moves everything from kitchenware to construction materials, fell 10 per cent in the quarter ended June 30 compared with the two railways' combined results from a year earlier as consumers spent more cash on services rather than products.

In better years, the corrugated steel containers have accounted for about a quarter of Canadian Pacific Railway's total revenues, rather than one-fifth as they did in its second quarter this year. 

Grain volumes also fell five per cent year over year while potash shipments plummeted.

“This is a long game, it’s not about the first quarter (following the merger)," Creel said, though he acknowledged the snarls caused by the B.C. port workers' strike earlier this month. “This is not to say that everything’s been perfect."

On the plus side, the railway hauled higher volumes of "frac sand" and steel as well as automotive products.

Creel said long-term growth opportunities are "undeniable" given the greater reach of the merged outfit.

CP's US$31-billion purchase of Kansas City Southern — the continent's first big railway merger in more than two decades — created the only railway stretching from Canada through to the U.S. and Mexico.

On Thursday, CPKC reported total revenues of $3.17 billion in its second quarter, compared with $2.20 billion a year earlier at CP — well before the marriage of North America's two smallest Class 1 railways in April.

Net income reached $1.33 billion versus $765 million the year before, the railway operator said.

The Calgary-based company said diluted earnings notched $1.42 per share, above the 82 cents per share of the same period in 2022.