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Nearly 260 entities lend support to proposed CP-KCS merger

Nearly 260 entities lend support to proposed CP-KCS merger

A photograph of a Kansas City Southern locomotive.

Vessel operators, industrial companies and agricultural interests are among those that are lending their support to Canadian Pacific’s (NYSE: CP) proposed acquisition of Kansas City Southern (NYSE: KSU).

Canadian Pacific (CP) submitted to the Surface Transportation Board (STB) on Wednesday a 531-page filing that included letters of support from 259 shippers, ports, local and state chambers of commerce and short line railroads.

CP’s proposed acquisition of Kansas City Southern (KCS) will be a multimonth process that requires regulatory approval from STB. Industry observers have questioned the board’s appetite for a merger while some shipper groups have said they would be watching the proceeding to ensure the merger would not decrease market competition. 

Many of the entities that provided letters of support were multinational companies or entities that have a vested interest in global trade, such as Louisiana Economic Development, the Port of St. John in New Brunswick and the Port of Port Arthur in Texas, Maersk, CMA CGM, Coca-Cola, Conagra, COSCO Shipping Lines, Evergreen Shipping, Hapag-Lloyd, Hyundai Glovis, Kraft Heinz, Nestle Canada and Nestle USA, Sterilite and Yang Ming (America), among others. 

Others that submitted letters included short line operators Genesee and Wyoming and Watco and shippers Boise Cascade, G3 Canada, North Dakota Grain Dealers Association, Purely Canada Foods and Viterra Canada. 

“Shippers and supporters across North American regions and industries … stated they expect the combination would, among other benefits, invigorate transportation competition, expand access to existing and growing markets, and provide new service offerings that would improve transit times and reliability,” CP said in a release.

While many of the letters contained boilerplate language supporting the merger, here are some selected quotes:

Boundary Trail Railway General Manager Travis G. Long

“We see nothing but exciting potential and further market access benefits for our shippers from a CP-Kansas City Southern combination. We can see fertilizer coming from new origins, potential new destinations for Manitoba-originated commodities and new transload opportunity for industrial products as a result of a single-line railroad that extends from the ‘heartland of Canada’ where we are located, throughout the U.S. and into Mexico. As a small short line player in a large industry, we are keen on opportunities that diversify and grow our business and provide significant benefit to our customers.” 

Central Midland Railway Director of Marketing Jordan Buck

“The advantage that comes with access by the CP to St. Louis will not only benefit Central Midland’s current customers but will prove to be tremendously helpful for industrial development efforts throughout the region. It solidifies St. Louis’ position as one of the premier inland logistics centers in the United States. No other region has direct access to more Class 1 carriers, is more centrally located on the inland waterway system and has better connections to the interstate highway system. This unparalleled access to producers and markets throughout all of North America via multiple modes as well as single rail-line access to every major port in North America makes the region extremely attractive as a site location for multinational manufacturers and distributors. The efficiencies generated from this exceptional transportation access will drive job growth in the heart of the country and strengthen our nation’s economy.” 

Andrew Glastetter of Great Western Railway, Fife Lake Railway and Great Western Commodities

“In the past, I have been known to be skeptical of large railroad mergers, especially where I felt that shippers may be left with less competitive options. I do not see that as an issue in this case. I see this transaction as a means to reduce barriers in what is often a challenging supply chain. Service and access will improve, which will drive a more seamless and efficient flow of traffic. I also expect there will be some shipping cost relief for many shippers. In our case we have experience with pricing shipments from our area through the ports on the U.S. Gulf. The rates were prohibitive due to the number of Class I carriers involved in the move. This transaction will provide access from Canada direct to the U.S. Gulf ports with one carrier, which will ease the shipping cost and make traffic management and tracking that much more simple, also without the often-delayed handover at the Class I interchange.” 

Genesee and Wyoming Chief Commercial Officer Michael Peters

“As the operator of short line last-mile operations, we know it is vitally important that the long-haul portion of any rail transportation move occur efficiently and effectively for the benefit of our customers. We expect the proposed transaction could improve service and competition in several ways:

• “A combined CP-KCS will provide an additional competitive route for agricultural products coming out of South Dakota on our Rapid City, Pierre & Eastern (RCPE) railroad destined for U.S. Gulf Coast ports and further export around the world.

• “A combined CP-KCS has the potential to create a more seamless supply chain for finished autos and auto parts to move to and from the U.S. Midwest, Mexico and Canada.

• “A combined CP-KCS will decrease transit times and improve railcar utilization for shippers and railroads alike.

• “A combined CP-KCS should reduce cross-border trucking and improve safety on our road infrastructure.” 

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Click here for more FreightWaves articles by Joanna Marsh.

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1 April 2021, 17:53