A merger to create the first single-line railway connecting the USA, Mexico and Canada has been approved by the US Surface Transportation Board (STB).
The STB’s decision to approve the Canadian Pacific (CP)/ Kansas City Southern (KCS) merger paved the way for the two companies to form the Canadian Pacific Kansas City (CPKC) railway as early as 14 April, the companies said on 15 March.
The combined CP-KCS network would connect ports on all US coasts via a single-line, continent-wide network, Garrett Holland, a senior research analyst at Robert W Baird & Co Inc, wrote in March 2021, before CP completed its US$31bn acquisition of KCS in December that year.
CP currently moves around 1.2bn bushels of agricultural commodities, along with 1.3 bn gallons of ethanol, and the merger provides the potential to move these commodities - as well as fertiliser - further south in the USA and into Mexico, according to a 15 March Progressive Farmer DTN report.
Many of these CP customers only had access to export terminals in the Pacific Northwest, STC executive director Mike Steenhoek wrote for the Iowa Soybean Association in March 2021.
“Similarly, KCS customers may enjoy new access to markets served by the CP network [east and west coasts of Canada] with additional access into Mexico.”
However, the US Wheat Associates and the National Association of Wheat Growers said on 15 March that they were concerned the merger would impede competition in the rail market and increase rail rates for agricultural shippers.
In drawing its conclusions, the STB said it expected the new single-line service would “foster the growth of rail traffic, shifting approximately 64,000 truckloads annually from North America's roads to rail” while supporting investment in infrastructure, the companies said.
The STB said the transaction should improve rather than degrade the performance of the [rail] industry, Freight Waves reported on 15 March.
CP and KCS said the full merger would take place over the next three years.
While remaining the smallest of six US Class 1 railroads by revenue, the combined company would have a much larger and more competitive network, operating approximately 32,186km (20,000 miles) of rail, they said.
