KCS/CP Merger Discussion

I feel that the decision to allow KCS to merge was made decades ago. CP is the only Class I that would qualify as end to end with KCS. The approval of the Voting Trust was a major signal.

There could be some compromises made by CP/KCS ... the Trackage Rights CN has asked for do not sound too oppressive.

Well volks, for better or worse, it certainly looks as if the KCS-CP combination will soon be a done deal.

Noted earlier in the topic is the "reshoring" of manufactured goods. The manufacturing "base South of the Border" appears to be centered around Monterrey, NL. which is exclusively served by KCSM, or soon-to-be KCS-CP. I continue to hold, even if the "crisis" confronting ocean shipping from inadequate maritime port berths has abated, if security issues can be addressed, the Port of Lazaro Cardenas, Mich could become a "world class" facility. It's a very safe assumption that the costs to handle a vessel there, are considerably less than at, say, LA or Savannah, and, again, KCSM "owns it".

Now what "countermeasures" will our "two Uncles" attempt? "Pete" already serves Mexico with his substantial ownership interest in the Ferromex lines, which are largely comprised of the one time Southern Pacific-Mexico system, and through Mexicali, can interchange to his UP system.

But what will "Warren" do? He appears now to be shut out of X-border traffic. Yes, he has very tenuous trackage rights into Laredo over MP/UP (the "Mop-up" ) and does make rates with KCSM there, but will he be even more disadvantaged than he presently is?

I would not put it past Uncle Warren to seek trackage rights (his own trains) into the Monterrey industrial area.

All told for me, personally, is to note that the "hulk of a railroad" to which claimed eleven years of my life, will now become a player in providing transportation through the Midwest (100 car Container trains through Stillman Valley, Davis Jct, and Kirkland? who would ever dream that). So far as the Chicago area communities that claim to be adversely affected by the prospect of increased freight traffic, "sorry 'bout that". The railroads were there first; the communities built up lineside.

All told, this KCS-CP combination will benefit the railroad industry.

disclaimer: author held position KSU; sold out much too early.

Mr. Norman, I have been wondering what the response would be too.

The most I can see UP doing is increasing their 27% share of Ferromex. I can't see any outright acquisition of Mexican trackage since UP would be required to divest in Ferromex. I don't see UP outright buying Grupo Mexico's rail assets either since the majority of the Mexican rail network would come under the control of foreign companies. UP has also threatened to ditch the joint UP-KCS-NS EMP Intermodal Program if the CPKC merger goes through. The EMP Intermodal Program allows the three railroads to pool containers and better coordinate interline movements over the Speedway.

I think you may be mistaken, BNSF does not have trackage rights to Laredo, but rather Brownsville and Eagle Pass.

BNSF previously requested trackage rights over CPKC from Robstown to Laredo. BNSF stated that they were going to seek a concession from the Mexican government to operate in the country and that these trackage rights would allow them to connect said concession with the rest of their network. (This was in the STB filing. I can dig it up if requested.) Now, BNSF later withdrew, seeking price protections for CPKC-BNSF interline shipments through Laredo. Either BNSF has given up on the possibility of "BNSF de Mexico" or they are seeking to find an alternative route into Mexico via one of their existing border crossings.

Remember: Ferromex, Ferrosur, KSCM, all have exclusive rights to operate over their concessions until 2027. That is when the Mexican government can modify or outright change the concessions.

I have ideas of what a possible BNSF concession would look like that I can elaborate on further.

- Shortline

Thank you, Mr. Shortline, for your insightful comments.

Lest we forget, Uncle Warren does not think "short term" and even if he is not around (likely same for myself) to see the '27 expiration of the Mexican concession, he is grooming successors to further enhance BH-BNSF interests.

Looking at a map, the Brownsville-Matamoras gateway provides the same utility to access the Monterey industrial area. Should the day come when security concerns can be lessened, two roads making rates at Lazaro Cardenas, Mich (caught you Mr. Google; I was addressing the Mexican state of Michoacan, and not the US state of Michigan ) will only enhance the Port with the maritime companies. These companies are rather accustomed to having two roads accessing the ports at which they call (my concerns regarding Miami - including my observation a week ago of all cranes skyward- are noted at FEC topics).

So as you apparently hold, Mr. Shortline, the consummation of KCS-CP is likely not the end of the story with regards to Inter-American railroad transportation.

Shortline614 wrote: ↑Sun Jan 29, 2023 11:23 am

. UP has also threatened to ditch the joint UP-KCS-NS EMP Intermodal Program if the CPKC merger goes through. The EMP Intermodal Program allows the three railroads to pool containers and better coordinate interline movements over the Speedway.

- Shortline

Union Pacific kicked CP out of the EMP container pool back in September 2022, and replaced them with CN. CP owned some of the EMP pool containers so you now can see green EMP containers relettered for CP.
https://www.joc.com/article/ousts-cp-sh ... 20916.html

Likely behind a paywall.

John Beaulieu

JayBee wrote: Union Pacific kicked CP out of the EMP container pool back in September 2022 and replaced them with CN.

I stand corrected on this one. I knew that UP threatened to do it back during the STB hearings but didn't know they had actually gone ahead and done it!"

Gilbert B Norman wrote: So as you apparently hold, Mr. Shortline, the consummation of KCS-CP is likely not the end of the story with regards to Inter-American railroad transportation.

Not at all, Mr. Norman. In fact, I think the CPKC merger is the first move in "phase 2" of United States-Mexico rail integration. BNSF de Mexico is a possibility, but there is another that is far more immediate and mostly unknown.

Groupo Mexico has been quietly building a backdoor entry into the United States for Ferromex/Ferrosur by rebuilding the burnt-down bridge across the Rio Grande at Ojinaga/Presidio and upgrading the Texas Pacifico. (Texas Pacifico is Grupo Mexico's "other" mostly unknown United States subsidiary.) The project is supposed to be completed in late 2024. Grupo Mexico has also signed a haulage rights agreement with the Fort Worth & Western for direct access to the Dallas/Fort Worth area. (If I were Grupo Mexico the FWWR would be my next acquisition target.) Hopefully, by the end of the decade, we should have three cross-border railroads!

My idea for BNSF de Mexico is quite similar to yours Mr. Norman. It would consist of trackage rights from Brownsville down through Monterrey, San Luis Potosi, Mexico City, to Veracruz. A secondary trackage rights route would run from San Luis Potosi to Guadalajara and down to the Port of Manzanillo. BNSF de Mexico would be able to serve all major industries along these lines and would get partial ownership of the Mexico City Terminal Railroad. BNSF de Mexico would have access to most of the country's manufacturing and it's largest Atlantic and Pacific ports.

Shortline614 wrote: ↑Thu Feb 02, 2023 10:11 pm My idea for BNSF de Mexico is quite similar to yours Mr. Norman. It would consist of trackage rights from Brownsville down through Monterrey, San Luis Potosi, Mexico City, to Veracruz.

Veracruz, Veracruz de Ignacio de la Llave?

To what extent is the maritime port there any kind, real or potential, of a "player"?

Secondly, looking through some past TRAINS, the ride to Veracruz could easily be considered one of North America's "scenic gems". I doubt if any present-day enthusiast could either affirm or refute that claim, but spectacular scenery usually means spectacular grades and curves - and a Container's lading is not too concerned about looking out at such!!

There is of course no "Mextrak"; both KCS and UP conditioned their opening the checkbook on that point. Even if there were, I must wonder how comfortable anyone would feel riding about in a "lawless state".

STB should rule on the merger tomorrow...

My prediction for the CPKC merger decision:

The merger will be approved with some conditions:

- New York Dock Labor Agreement. (This is a standard labor condition tacked onto all mergers. Protections for employees negatively impacted by the merger.)
- New Amtrak passenger train routes. (CP and KCS have already agreed to this concession.)
- Various environmental impact mitigation projects. (Some of which have been agreed upon by CP, KCS, and various on-line communities.)
- Various concessions to Metra and the Coalition to Stop CPKC.

I could also see these conditions tacked on but they are less likely:

- CN could get trackage rights over the Springfield Line/Gateway Western between Springfield, Illinois, and Kansas City, Missouri. This includes KCS's interest in the Kansas City Terminal Railway. CN would get the right to invest in the line and serve all customers. CN previously asked for the line to be sold to them; however, the STB was far more receptive to trackage rights.
- CPKC could be ordered to work with UP on a Houston bypass. CPKC would get trackage rights over UP between Texarkana, Arkansas, and Laredo, Texas via Austin, Texas. In the hearings, CP said they would be willing to work with UP on a bypass. The STB was also receptive.

How about "wait and see". Someone posted that approval was imminent so you shouldn't have long to wait.

I think you are "on mark", Mr. Lurker.

New York Dock implementing agreement is simply "part and parcel" for any Agreement affected employee and simply notes that if such employee's position (or seniority) is being "reloed" for Carrier's convenience, he will be paid necessary and reasonable moving expenses. I doubt if either road ever thought they have a leg to stand upon obviating such payments. I think they know they had best extend same to their non-Agreement workforce as well.

New passenger train routes such as the so-called Meridian Speedway; someone just threw some "slop in the trough" for the consultants to feed upon.

Even if CN gets trackage rights over KCS Springfield to KC over former GM&O, have they really got a competitive routing with their "music clef" route to handle auto parts manufactured in the Detroit area to assembly plants near KC?. They will still be confronted with the bridge over Ol' Man River at Louisiana, MO over which a train of tonnage likely must be "doubled", thence maybe FRA Class 2 X-Missouri. They'd be up against Topper with his "straight shot Wabash Cannon Ball" routing (just got a one second glance at it from the 57 near Tolono yesterday) and his Conrail Shared Assets access to any facility in the Detroit area. Auto assembly plants all rely upon "just in time" deliveries. Lest we also note that CP has CRSA access.

So far as METRA concessions, the MILW always blocked freights during the rush hours, but I guess such practices went by the wayside. Something will be done, but doubt if more than "lip service".

signed: "Anxious"

re: Metra concessions -- in practice, freights are generally embargoed from 0500 to 1200 and 1400-1900 on the various lines. There's a small window in the afternoon where the headways are >60 minutes on at least two of the lines.

Supposedly the final decision comes out Monday the 6th.

Shortline614 wrote: ↑Mon Feb 27, 2023 11:57 am My prediction for the CPKC merger decision:

The merger will be approved with some conditions:


- CPKC could be ordered to work with UP on a Houston bypass. CPKC would get trackage rights over UP between Texarkana, Arkansas, and Laredo, Texas via Austin, Texas. In the hearings, CP said they would be willing to work with UP on a bypass. The STB was also receptive.

This is possible but would destroy CPKC's operating plan.

CPKC planned to block swap both manifest and Intermodal at Shreveport, would they move the traffic to Texarkana and thence down to Shreveport for Dallas Jackson and Meridian? Would they double the train miles to operate two smaller trains and then reblock at Texarkana? Better would be if they could somehow get into Shreveport off UP rather than Texarkana. Awkward.

A decision by the STB on the CP - KCS merger is to be announced today at 11am EDT. It will be livestreamed on the STB YouTube channel. https://www.youtube.com/@surfacetransportationboard8768