WASHINGTON – The U.S. Surface Transportation Board has announced its approval Wednesday of a proposed merger between Canadian Pacific (CP) and Kansas City Southern Railway (KCS).
“Today’s decision will expand market access for North Dakota producers, unlock opportunities for commerce in Mexico, and make existing routes across North America more efficient. I appreciate the STB’s thorough process and final approval,” Sen. Kevin Cramer, R-ND, said.
Currently, shippers in North Dakota have direct access to ports in the Pacific Northwest, and thus much of Asia, through rail transportation provided by both Canadian Pacific and BNSF, North Dakota’s congressional delegation had written in a letter of support for the merger to the board. A KCS/CP merger would create the first Class I railroad with track in Canada, Mexico, and the United States, opening access to new markets for North Dakota’s producers in Mexico, while also providing a more direct route to markets in the southern United States, they wrote.
CP and KCS filed an application with the board in October 2021 seeking authorization for CP to acquire KCS. Information from CP Rail indicates minimal traffic impact in North Dakota due to the change. An increase is expected from Enderlin to Kenmare of less than a train a day.
The board’s decision authorizes CP to exercise control of KCS as early as April 14, 2023, at or after which point CP and KCS would combine to create the new CPKC, according to information from CP. CP officials stated they are reviewing the full 212-page decision in detail and in the coming days will announce its plans with respect to the creation of CPKC.
“This decision clearly recognizes the many benefits of this historic combination,” said CP President and CEO Keith Creel. “As the STB found, it will stimulate new competition, create jobs, lead to new investment in our rail network and drive economic growth.
“These benefits are unparalleled for our employees, rail customers, communities and the North American economy at a time when the supply chains of these three great nations have never needed it more,” Creel added. “A combined CPKC will connect North America through a unique rail network able to enhance competition, provide improved reliable rail service, take trucks off public roads and improve rail safety by expanding CP’s industry-leading safety practices.”
“This important milestone is the catalyst for realizing the benefits of a North American railroad for all of our stakeholders,” said KCS President and CEO Patrick J. Ottensmeyer. “The KCS Board of Directors and management team are very proud of the many contributions and achievements of the people who have made KCS what it is today and we are excited for the boundless possibilities as we move forward into the next chapter as CPKC.”
The transaction is expected to drive employment growth across the CPKC system, adding over 800 new union-represented operating positions in the United States, the transportation board stated. “Of additional importance, the merger will foster new National Railroad Passenger Corporation (Amtrak) passenger rail opportunities, as applicants have committed to support Amtrak’s existing plans for expanded service on the new railroad’s lines.”
CP completed its $31 billion acquisition of KCS on Dec. 14, 2021. However, KCS operated independently of CP during the regulatory review process and will continue to do so until the official merger.
Headquartered in Calgary, Alta., Canada, CPKC would be the first railway connecting North America. While remaining the smallest of six U.S. Class 1 railroads by revenue, the combined company will have a much larger and more competitive network, operating about 20,000 miles of rail and employing close to 20,000 people. Once combined, full integration of CP and KCS is expected to happen over the next three years, CP reported.