CP+CSX

[newpylong]

The D&H South End deal has been in the works long before the CSXT bid. CP has no reason to retain it, CSX or no CSX. The sale will go forward.

[Engineer Spike]

You are likely correct, but who knows how long Hunter has been planning the CSX deal. I blame Fred Green. Once I had a now retired roadforman riding with me. It was around the time of the recession of 2007- . He said that they tried to ride it out by doing as little as possible. No new marketing was allowed. We lost some big container contracts too. It just seems foolish to cast off an area which has the greatest population on the whole continent.

On the other hand, dealing with the trackage rights is a pain too.

[CN9634]

And it's done: http://americasmarkets.usatoday.com/201 ... ger-talks/" onclick="window.open(this.href);return false;

[CPF363]

Could the next effort be a merger with Kansas City Southern?

[CN9634]

Maybe, but NS won't let that go easily. They enjoy having a pretty dominate position on domestic container traffic in and out of the East Coast into Mexico via KCS.

[johnpbarlow]

Could the next effort be a merger with Kansas City Southern?

From press article re: CP's views on RR M&A:

"... Without mentioning Norfolk Southern by name, Harrison said CP had looked at the two eastern carriers and one had come out slightly ahead. He said CP is not currently focusing on another deal, though if something comes up he would look at it.

Harrison said a deal with one of the western "big boys" was less likely. Berkshire Hathaway Inc's Burlington Northern Santa Fe and Union Pacific Corp have the biggest networks in the western United States. He also said Kansas City Southern , the smallest of the major railways, is "very expensive."..."

[Gilbert B Norman]

What I am at a loss to understand is that if "Jager" knew this merger proposal would be dead on arrival, why did he ever propose it?

The "one day pop" went to the other guys; not to his corporate raider consort.

I can see how he made the comment that a CP+KCS combination would be "very expensive". As I previously noted earlier in the topic, I would think that Surfboard would be compelled to go along as they permitted CN to form a "T-Bone" system that, on paper, CP+KCS would emulate. However, KCS does not enjoy a "from the Mississippi Delta rolling on down to the sea" route of the IC, but rather an "over hill over dale" through the Ozarks. Further, much work would be needed to the MILW Chi-KC (CP has some kind of trackage over such) in order for it to become a contemporary road. While both roads serve New Orleans, I would guess more ocean traffic is available through Mobile (IC) than Port Arthur (KCS).

Who knows what effect a merger would have on KCS-M (NdeM); would a merged KCS retain the franchise to be the operator of such? Even in a post-PANAMAX environment, the port of Lazaro Cardenas, Mich, which KCS-M has sole access to, could provide lower costs (Does Estibador Jose make the same pesos as does Longshoreman Joe bucks?) and maybe even competitive with Trans Canal (those tolls ain't gonna be cheap; better have your EZ Pass filled up ). But in order for Lazaro Cardenas to have any potential the Federales and the Bad Guys will have to limit their shootouts to episodes of "The Bridge".

So as Mr. Barlow also notes, CP+KCS could be expensive.

disclaimer: author holds long position KSU (has done very well)

[Engineer Spike]

Is there a method for two companies to merge without one buying the other? I wonder about KCS' long term future, especially if Mexico plays games with the operating franchises. They would be surrounded. I'm sure both BNSF and UP routes could then make KCS redundant.

I saw an article about CP adding CTC in various locations. Parts of the IC&E were mentioned.

[CN9634]

Several. I would recommend however no merger as that would pretty much meltdown both systems. I would recommend a different approach -- the joint venture. NS seems to have some success, why not go a bit further and do the following:

CP & CSX start a new JV Railroad

CP & CSX grant the JV trackage rights over certain routes for certain commodities (oil probably)

Over time the JV gets more trackage rights/ownership.


Technically Conrail is a JV now with both NS and CSX.

[Gilbert B Norman]

During the industry's contraction during the '50's and '60's (which is when I started following railroad industry affairs), there were a number of physical combinations of facilities - one of such in Spike's backyard.

During the later 50's, the ERIE and the DL&W had their own ROWs Binghamton to Corning laid essentially parallel to one another. While they were still independent railroads, the DL&W abandoned theirs and began running over the ERIE. I'm certain that expenses were allocated by means of a Joint Facility "wheelage" agreement. Also, during that same era, the ERIE closed their Hoboken station that was located essentially adjacent to the DL&W - the present NJTransit terminal - and moved their passenger operations there.

However, today we are not looking at combining facilities and contracting capacity, for I'm sure railroad managers today think "what the devil were those boneheads doing back then?". What could evolve would be as Mr. CN immediately suggests - namely marketing arrangements such as NS has entered into with the Pan Am system.

The hard facts of life are that the KCS cannot move a ton mile of freight "Lakes to Gulf" as efficiently as can the CN/IC; and guess what volks, neither can move same as can the water carriers on their subsidized ROW known as "Ol' Man River" that God and Congress essentially "bequeathed" them.

Turning my attention to KCS-M I am confronted with "enquiring mind wants to know". Might anyone know salient points to the Agreement KCS-M holds with the Mexican government giving them rights to operate the NdeM (and likewise the UP with the FCM)? Could the Government strip the franchise at their pleasure? Down there where all too much business is conducted through "paper handshakes" (awful lot of the economy remains State owned), one has to wonder. While I defer to others more knowledgable, I like to think that private sector investment has "done a ConRail" with the Mexican roads. On that point, a recent TRAINS Grand Prize photo contest winner, once showed me a slide he took down there. This was of a room within Buenavista Station in Mexico DF where there was simply an army of telegraphers handling work during an era when teletype was the standard for telecommunications.

[CPF363]

Are some of the motivations for the CP-CSX merger related to CP's issues with getting its trains expeditiously across Chicago, with the thinking that if CP and CSX are one, they could use the B&OCT to as a faster route from one side of the city to the other? Hasn't this always been a problem for CP and is it further exacerbated by the advent of all of the oil trains? What is baffling is why CP did not try to address the Chicago issue years ago when given the opportunity to do so over the past many years. Was the railroad ever interested in purchasing the EJ&E before CN did? Even before that, CP could have put a condition on the split up of Conrail, with acquiring control or major stake in the B&OCT from CSX, and further, could have tried to acquire their own line across Southern Michigan that would have essentially connected the eastern part of their system in Windsor, Ontario with the western part via the Soo Line in Chicago. To make that run today, CP trains have to run on the IHB and over NS trackage rights, with restrictions, where CN has their own GTW-EJ&E route. Seems that this whole issue could have been solved years ago but wasn't. Hopefully, those more familiar can comment on why more proactive efforts were not made by CP when they could have been made possible years ago.