The combination will be known as Canadian Pacific Kansas City—or CPKC, and will link the United States, Canada, and Mexico. In the first railroad merger of this magnitude in two decades, Canadian Pacific’s $30 billion acquisition of Kansas City Southern was approved on March 15, and involves the combination of the two smallest major railroads operating in the United States. CPKC will remain the smallest of all the major freight routes, with an estimated 20,000 miles of track.
An unprecedented seven-year oversight period will be implemented for the new combination, alongside multiple stipulations which include mitigating environmental impacts, preserving competition, protecting railroad workers, and promoting efficient passenger rail travel.
The STB forecast stated that it expected service, employment, and oversight to improve with the merger.
“CPKC will be the first railroad with single-line service through Canada, the United States, and Mexico,” according to the STB statement. “Shipping of grain, automotive parts and vehicles, and intermodal goods will improve with new single-line options, and shippers will have opportunities to expand their market reach.” The STB maintained that the conditions imposed will ensure competition, and that shippers’ options will not be not reduced.
Overall, the Board says, it anticipates that the merger and conditions will benefit the public.
CPKC will continue to be the smallest Class I railroad, at around half the size of the Western railroads. With the two companies’ rail networks only connection being in Kansas City—a so-called end-to-end merger—there will be little to no track redundancies or overlapping routes between the two railroads.
The STB said that travel time over the single-line service will be greatly reduced, which in turn is expected to provide added incentives for investment and lead to greater internal efficiencies.
“Consistent with the Board’s policy to protect competition and not competitors, the Board is denying those requests while also ensuring that existing competitive gateway options are preserved,” the STB wrote.
Implementing Safeguards
The STB added that numerous conditions will be imposed to mitigate risks for competitors.“The Board is imposing numerous conditions to preserve existing rail service options at affected ‘gateways’—interchange points between CPKC and other railroads—on commercially reasonable terms, which should ensure competitive options are not reduced for shippers served by CP or KCS,” according to the STB statement. “The decision also restricts CPKC from terminating reciprocal switching access for shipper facilities served by CP or KCS that have such access today.”
The STB claimed that the merger would be a safer and more efficient option environmentally, in that it will reduce the number of trucks on American roads, thus achieving significant reductions in congestion and emissions.
The Board also commented on safety concerns in the wake of the recent derailment in East Palestine, Ohio.
“As always, the Board has carefully analyzed the proposed merger from a safety perspective. It is important to underscore that rail is by far the safest means of transporting any freight, including hazardous materials,” it wrote in its statement.
Following community concerns about train lengths, the STB wrote that the projected average train length is expected to decrease on most CPKC line segments as a result of the merger. In addition, the General Code of Operating Rules state that trains must avoid blocking public crossings for longer than ten minutes.
The Board said that the expected increase in train traffic will not add a significant amount of delay.
One of the remaining concerns, however, is the increased level of noise, and particularly in areas where rail traffic is expected to increase significantly.
Increases in traffic are predicted to be highest between Chicago and Laredo, Texas. Across Iowa, some rail lines could see more than 14 additional trains per day. The route between Kansas City, Missouri and Beaumont, Texas is also likely to see an increase of around a dozen trains per day.