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  • CANADIAN NATIONAL ENTERS BIDDING WAR WITH CANADIAN PACIFIC FOR KANSAS CITY SOUTHERN

  • For topics on Class I and II passenger and freight operations more general in nature and not specifically related to a specific railroad with its own forum.
For topics on Class I and II passenger and freight operations more general in nature and not specifically related to a specific railroad with its own forum.

Moderator: Jeff Smith

 #1567090  by JayBee
 
Looking at the 2020 full year results for the seven Class I railroads, if you combine CP with KCS the resulting railroad will have more revenue and more net income than either CSX or NS. By those measures CPKC would be the 4th largest Class I railroad. By other measures it will remain the 6th largest.
 #1567191  by HenryAlan
 
JayBee wrote: Sun Mar 28, 2021 12:03 am Looking at the 2020 full year results for the seven Class I railroads, if you combine CP with KCS the resulting railroad will have more revenue and more net income than either CSX or NS. By those measures CPKC would be the 4th largest Class I railroad. By other measures it will remain the 6th largest.
I haven't seen calendar 2020 figures, but if that's the case, then it's an outlier. Looking at prior years through 2019, the combined railroad would be sixth for revenue. I don't think we can consider 2020 as typical.
 #1567302  by John_Perkowski
 
I am amused that so many are worried about the name.

My concerns are CPs movement of oil to the Gulf ports in lieu of a pipeline.

The increase in volume of rail traffic here in Kansas City.

The impact on US rail employment, especially since KCS is headquartered here in Kansas City.
 #1567340  by justalurker66
 
Will eliminating the hand off between CP and KCS at Kansas City make a huge difference in their traffic levels? What is stopping a train from running through today that will be changed when the merger is complete? Is traffic taking other routes between CP locations and KCS locations that will be abandoned or used less when there is a CPKC railroad?

The overhead costs (two US HQ locations becoming one) seems to be the biggest change. I'm missing why the merger would cause a huge increase in traffic.
 #1567398  by John_Perkowski
 
I think yes. It will give CP direct access to the Port of Shreveport. No more trackage rights, no more following BNSF train size rules.
 #1567419  by JayBee
 
John_Perkowski wrote: Wed Mar 31, 2021 10:21 am I think yes. It will give CP direct access to the Port of Shreveport. No more trackage rights, no more following BNSF train size rules.
Port of Shreveport? Rather Port of Port Arthur and Port of Houston (through PTRA). Additional Oil Trains from Canada due to start Summer 2021 when the unloading facility is complete at Port Arthur, TX.
Last edited by JayBee on Wed Mar 31, 2021 4:43 pm, edited 1 time in total.
 #1567429  by Shortline614
 
G&W has sent in a support statement for the CPKC merger: https://dcms-external.s3.amazonaws.com/ ... 301857.pdf

More importantly, CP have collected 259 support statements from various entities, ports, railroads, and shippers: https://dcms-external.s3.amazonaws.com/ ... 301859.pdf

Some big names in there such as Nestle, Hyundai, Hapag-Lloyd, and Watco. However, most of these shippers seem to be on the smaller side? Am I incorrect?
 #1567638  by Gilbert B Norman
 
For subscribers, TRAINS Newswire continues the support of the CP-KCS combination.

Fair Use:
WASHINGTON — Several trade associations, a major agricultural shipper, and Norfolk Southern today asked the Surface Transportation Board to review Canadian Pacific’s proposed acquisition of Kansas City Southern under the more stringent 2001 merger rules.

CP and KCS have said they would seek to have the merger reviewed under the old rules, although executives contend that the end-to-end combination of the two smallest Class I systems would be approved under the current rules because it would boost railroad competition.

Major service disruptions after the wave of mergers in the 1990s soured shippers on additional consolidation in the rail industry. Those mergers — including Union Pacific-Southern Pacific, Burlington Northern-Santa Fe, and the split of Conrail between CSX Transportation and Norfolk Southern — prompted the STB in 2001 to impose much tougher merger review rules.
In the report, Bill Stephens recalls the service disruptions that occurred resulting from the SP-UP and BN-ATSF mergers. I would think that being an end-to-end combination, any disruptions would be limited to the KC gateway where the traffic consigned to points East could potentially "flood my MILW" and even "The Harbor", as "new management" seeks the most favorable for themselves.

Somehow, I foresee Surfboard imposed conditions requiring KC to be maintained as an "open gateway", enabling shippers to route traffic as they choose (Shipper's Routing). Pretty sure that the BNSF and NS Traffic - whoops Marketing in newspeak - Departments will have "boots on the ground" (and three martini expense accounts) to "educate" shippers that they ultimately decide how their traffic will be routed - and not a CP-KCS traffic salesman.
 #1567649  by Shortline614
 
Asisde from the normal New York Dock conditions applied to every merger, keeping open the Kansas City, St. Louis, and New Orleans gateways are the only conditions I see the Surf Board putting on CPKC. Such a condition would be a throwback to the "DT&I Conditions," where a merged railroad would have to keep open all gateways that existed prior to the merger. In a pre-Staggers world, the DT&I Conditions were a liability. Railroads were forced to operate lines with little to no traffic to serve hundreds of gateways few shippers used. The condidtions where abolished after deregulation however, I wonder if they could make a comeback. A modern version of the DT&I conditions might be seen as a way to protect shippers routings in the event of Class I megamergers. We are down to about two dozen interchange points between major railroads, and they work quite well, Chicago nonwithstanding. It also might be the first step towards open acess here in the United States.

There is some more news. The deadline for groups to challenge KCS's exemption from the post-2001 Class I merger rules was yesterday. From Trains Magazine:
WASHINGTON — Several trade associations, a major agricultural shipper, and Norfolk Southern today asked the Surface Transportation Board to review Canadian Pacific’s proposed acquisition of Kansas City Southern under the more stringent 2001 merger rules.
https://www.trains.com/trn/news-reviews ... ent-rules/

Here is a link to Norfolk Southern's letter: https://dcms-external.s3.amazonaws.com/ ... 301866.pdf

NS wants the CPKC deal to be considered by the current Class I merger rules. Interestingly, NS does not take any position on the merger itself. Strange, considering NS and KCS jointly own the Meridian Speedway line in the Southeast. Norfolk Southern and Canadian Pacific have been close partners in the Northeast for going on 20 years. So NS would not have any big issues with CP steping into KCS's role on the Speedway. NS continues to be a company that both fascinates and confuses me.

As I complete this post, BNSF sent their own letter to the STB, echoing what NS said in their letter. The CPKC deal should be considered by the current rules. No offical position taken on the merger though. https://dcms-external.s3.amazonaws.com/ ... 301876.pdf

Going back though the STB filing, UP and CN have also sent letters in saying the CPKC deal should be considered by the current rules.

CN: https://dcms-external.s3.amazonaws.com/ ... 301874.pdf
UP: https://dcms-external.s3.amazonaws.com/ ... 301871.pdf

Now CSX gets in on the action. Saying they don't care either way. https://dcms-external.s3.amazonaws.com/ ... 301873.pdf
 #1568013  by Shortline614
 
More shippers come out in favor of the merger. The count is now up to 300.

From Trains Magazine:
Canadian Pacific and Kansas City Southern says 45 more customers, ports, and other entities have filed statements with the Surface Transportation Board supporting their planned merger, bringing the number supporting the proposal to more than 300.
https://www.trains.com/trn/news-reviews ... or-merger/

Link to the press release: https://www.cpr.ca/en/media/cp-kcs-rece ... il-network

Link to the STB filing: https://dcms-external.s3.amazonaws.com/ ... 301895.pdf
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