STB approves CP-KCS merger, creating first single-line US-Mexico-Canada railroad
Federal regulators approved Canadian Pacific's acquisition of Kansas City Southern in March 2023, with conditions and a seven-year oversight period.
In March 2023, the Surface Transportation Board approved Canadian Pacific's acquisition of Kansas City Southern. The decision, announced March 15, created CPKC, the first single-line railroad linking Canada, the U.S. and Mexico.
The board attached conditions and set an oversight period of seven years, which it called unprecedented: a three-year implementation phase followed by four more years. The decision took effect April 14, 2023.
The review
The railroads filed their application on Oct. 29, 2021. The board received nearly 2,000 comments and held a seven-day public hearing. Its environmental staff held seven public meetings, and the final environmental impact statement ran to more than 5,000 pages.
The board noted that the combined railroad would still be the smallest Class I carrier. The two networks are end-to-end and connect only in Kansas City. More than 450 letters of support were filed.
Conditions for shippers
To protect gateways, the board said shippers would have a right to a written justification if CPKC raised rates to an affected gateway by more than inflation. Disputes could go to the board or to arbitration. CPKC also may not end reciprocal switching where it already exists.
Other conditions addressed communities and passenger rail. The board projected that average train length would fall from about 9,551 feet to about 7,726 feet, and required that trains not block crossings for more than 10 minutes. It set conditions benefiting Amtrak, including new service between New Orleans and Baton Rouge and through the Detroit River Tunnel, and for commuter railroad Metra. CPKC must also have community liaisons in Chicago and Houston.
On labor, the board said the merger would create 800 new union operating jobs in the U.S., and it imposed standard New York Dock protections for affected employees.
What it meant for carriers
The board said the merger was expected to shift about 64,000 truckloads a year from highways to rail, and estimated a cut of 127,113 tons of carbon dioxide emissions a year. It also cited Bureau of Transportation Statistics data showing trucks accounted for 94% of hazardous materials incidents in 2022.
For trucking companies, that meant a new single-line rail competitor for freight moving among Canada, the U.S. and Mexico, with the board expecting some truckloads to shift to rail. Board Chairman Martin Oberman discussed the decision at a press conference. Petitions for reconsideration were due by April 4, and requests for a stay by March 27.