Recently there has been a lot of speculation revolving around class 1 mergers in the next few years. Mostly in the "Selling Trackage" thread over on the CSX forum.
In October, Canadian Pacific President Keith Creel came out and said that the growth of Precision Scheduled Railroading will make class 1 mergers more likely. CSX President Jim Foote says that he is "completely open-minded" about class 1 mergers.
There does remain barriers to future Class 1 mergers. The Surface Transportation Board's stringent merger rules implemented after the CN-BNSF merger attempt in 2000. Shippers would certainly oppose any future mergers, for fear of service breakdowns, and having fewer options to ship by rail. A barrier to a potential CP-CSX merger comes from, ironically, Hunter Harrison. When Harrison left CP to become CSX CEO in early 2017, there was a clause in his contract stating that CSX could not legally approach any other Class 1s about a merger until 2020.
Union Pacific has not changed their position on opposing future Class 1 mergers, as reaffirmed by Lance Fritz at the RailTrends 2018 conference. Although just because they publicly oppose Class 1 mergers, doesn't mean they aren't interested in merging in the future.
From the Railway Age article: UP: More like CSX? Written by Railway Age Editor-in-Cheif, William C. Vantuono.
"There has been some speculation that UP 2020 is being implemented in preparation for a UP-CSX merger, which in turn could prompt a final round of Class I consolidation. Should that occur, two giant east-west transcontinental systems will probably emerge, with the likely combinations of UP-CSX-Canadian Pacific and BNSF-Norfolk Southern-CN. Whether Kansas City Southern is absorbed by one of these mega-railroads remains to be seen. If anything, KCS de México would most likely remain independent."
While there does remain substantial barriers to class 1 mergers from a regulatory standpoint, it seems that the overall industry opinion has changed on class 1 mergers since CP's attempts at taking over NS in 2016.
In October, Canadian Pacific President Keith Creel came out and said that the growth of Precision Scheduled Railroading will make class 1 mergers more likely. CSX President Jim Foote says that he is "completely open-minded" about class 1 mergers.
There does remain barriers to future Class 1 mergers. The Surface Transportation Board's stringent merger rules implemented after the CN-BNSF merger attempt in 2000. Shippers would certainly oppose any future mergers, for fear of service breakdowns, and having fewer options to ship by rail. A barrier to a potential CP-CSX merger comes from, ironically, Hunter Harrison. When Harrison left CP to become CSX CEO in early 2017, there was a clause in his contract stating that CSX could not legally approach any other Class 1s about a merger until 2020.
Union Pacific has not changed their position on opposing future Class 1 mergers, as reaffirmed by Lance Fritz at the RailTrends 2018 conference. Although just because they publicly oppose Class 1 mergers, doesn't mean they aren't interested in merging in the future.
From the Railway Age article: UP: More like CSX? Written by Railway Age Editor-in-Cheif, William C. Vantuono.
"There has been some speculation that UP 2020 is being implemented in preparation for a UP-CSX merger, which in turn could prompt a final round of Class I consolidation. Should that occur, two giant east-west transcontinental systems will probably emerge, with the likely combinations of UP-CSX-Canadian Pacific and BNSF-Norfolk Southern-CN. Whether Kansas City Southern is absorbed by one of these mega-railroads remains to be seen. If anything, KCS de México would most likely remain independent."
While there does remain substantial barriers to class 1 mergers from a regulatory standpoint, it seems that the overall industry opinion has changed on class 1 mergers since CP's attempts at taking over NS in 2016.
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