• KCS/CP Merger Discussion

  • Discussion relating to the past and present operations of CPR. Official web site can be found here: CPR.CA.
Discussion relating to the past and present operations of CPR. Official web site can be found here: CPR.CA.

Moderators: Komachi, Ken V

  by justalurker66
The point is CN doesn't want the carload customers.
  by eolesen
Depends. The customers and carloads they're giving up on the WI/MI trackage doesn't come close to covering the overhead.

Could be a totally different mix elsewhere.

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  by NotYou
Gilbert B Norman wrote: Fri Nov 05, 2021 8:32 am
NotYou wrote: Wed Nov 03, 2021 10:29 pm Do CN or CSX want access to Kansas City? Could see CP agreeing to sell the line to one of them to appease them during the merger approval process.
Mr. Not You, how do you foresee Chessie justifying access to Kansas City? I cannot see how she is adversely affected by CP-KCS.

CN; you already have the most direct "Lakes to Gulf" routing to your name. Mexico? Remember that is a franchise granted by the Mexican government. They are free in about fourteen years to take it back and again get into the railroad business themselves. Time to stop being a "sore loser".

I have to wonder if Warren is playing the "long game". When the franchise is up, and especially if CP is perceived to have mismanaged it, "Buffet's New Santa Fe" sweeps in.

Only rub; neither he nor I will be around to see it.
Mr. Norman: I don't see CSX justifying access to KC beyond a longer haul than Chicago. It is a question for others with more knowledge than I.
  by NotYou
justalurker66 wrote: Fri Nov 05, 2021 4:13 pm
Shortline614 wrote: Fri Nov 05, 2021 1:10 pmSidenote: If I were CN right now I would be buying up every podunk shortline and regional both railroads connect with to starve CPKC of carload traffic.
Which would be the opposite of selling 650 miles of railroad in northern Michigan and Wisconsin to Watco?
CN doesn't want to deal with carload end users.
Don't forget CN's Duluth -> Chicago lines are almost all former Wisconsin Central lines which were former Soo (CP) lines. CN has already purchased a lot of the connecting short lines and regionals of value: WC, EJ&E, IC, sure I am missing some.
  by justalurker66
What was the last short line CN purchased?

I simply don't see them spending money to purchase lines on the premise that they could siphon traffic from CP that would have come from that short line. That sort of purchase only works if CN makes the commitment to serve the line better than the short line they would replace.
  by NotYou

Agreed, I don't see them doing that either.
  by roberttosh
What I find interesting is that if the talked about CP/UP/CSX mega-merger ever takes place, the KCS route from KC to Laredo will probably lose much of its' Mexico business to the much more direct UP lines from Chicago and KC to Laredo.. That is certainly a ways off but definitely a distinct possibility down the road.
  by justalurker66
roberttosh wrote: Sat Nov 13, 2021 4:24 pmThat is certainly a ways off but definitely a distinct possibility down the road.
I don't see another Class 1 merger down the road unless one or more of the Class 1 railroads fails and would be shut down if not merged.

CN, CP and KCS all understood when they started this process that using the old rules would be needed to get approval of the STB. They even put having the process run under the old rules as a term of the merger. The exception was written in for and end to end merger with KCS. All other mergers of Class 1 railroads would be much more difficult to get approval for.
  by roberttosh
The East/West mergers may be further down the road but I think that CP+CSX and/or NS+CN could be in the nearer term.
  by Shortline614
Let me explain my reasoning for my sidenote. A not so insignificant amount of carload traffic terminates and originates on shortlines. CP has been going on a carload kick for the past few years and shortlines are a key part of their strategy. By buying shortlines that CP connects with, CN would make it harder for CPKC to continue to grow this traffic. I could see CN doing it. If CSX-PAR and CP-KCS have thought me anything, it's that the M&A scene is unpredictable at best. If you told someone that CSX would buy Pan Am back in 2018-2019 when they were actively selling lines, you would have been seen as insane, yet here we are.

As for potential UP-CSX and NS-BNSF mergers, while I would love for those to happen, it would require an entirely different regulatory and service situation then what we have now. No way in hell the "activist STB" that we have now would approve a series of mergers that would result in two transcontinental class Is. CPKC is special because it does not automatically result in future mergers. Even my suggestion that CN buy shortlines isn't strictly necessary. CP and KCS have support for their merger because they serve their customers well. CSX has been trying to serve their customers well but that isn't really working out. NS is on the verge of meltdown. UP does okay at best. BNSF is the one class I that could get support because of their decent service, plus Mr. Buffett has the money. BNSF could vastly overpay for NS and it wouldn't matter.
  by CN9634
This will be the last Class I merger at least this century if not ever. Maybe something involving Ferromex
  by JayBee
The only shortlines that they could buy that would hurt CP are New Brunswick Southern, and possibly Quebec Gatineau. In the US CP has paper barriers protecting their relationship with NPR, and DMV&W. That leaves TC&W, Progressive Rail, and possibly some that connect with KCS. Unless your thinking something like CF&E or WSOR, but I am not sure how big an effect that would have on CP.
Last edited by nomis on Mon Nov 22, 2021 5:43 pm, edited 1 time in total. Reason: Unnecessary Quoting
  by John_Perkowski
Meanwhile, at the STB…

LINK: Union Pacific and Canadian Pacific spar over KCS merger

Brief, fair use quote
Bill Stephens of Trains Magazine writes:

The operational plan is “superficial,” UP says, and boasts that CPKC will help alleviate congestion in Chicago. “However, the Operating Plan shows the proposed transaction will actually increase the amount of rail traffic moving through Chicago,” UP wrote. “Indeed, some of the traffic Applicants plan to move through Chicago would be [the] result from diversions of traffic that Union Pacific currently interchanges with eastern railroads outside Chicago.”

UP argues that the STB must reject the application as incomplete and order CP and KCS to refile more detailed paperwork that also includes a service assurance plan.
  by JayBee
The STB shot down the arguments put forward by the UP and supported by CN on Monday. They then formally accepted the CP - KCS merger application, but confirmed that the two companies need to also file an Environmental Impact Statement.
  by justalurker66
UP is just (appropriately) looking after their own interests. Perhaps they forgot that the STB will be reviewing the merger under the older rule or they simply want to write their own rules for the merger process. The EIS is not a bad idea ... but CP/KCS does not have to prove that the merger will be good for UP.
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