Railroads Combine to Form First “USMCA Rail Network”

Canadian Pacific Railway and Kansas City Southern have come together in a merger agreement worth approximately $29 billion. The transaction has the unanimous support of both boards of directors. Following final approval from the U.S. Surface Transportation Board, the transaction will form two railroads that create the first rail network connecting the U.S., Mexico, and Canada. The two railroad systems come together in Kansas City and will connect customers via single-network transportation offerings between points on CP’s system in Canada, the U.S. Midwest, and the U.S. Northeast, as well as points on the KCS system through Mexico and the Southern U.S. The two companies say their combined network’s new single-line offerings will deliver dramatically wider market reach for customers served by CP and KCS, provide new competitive transportation service options, and support North American economic growth. Additionally, the expected efficiency and service improvements should achieve meaningful environmental benefits. Mike Steenhoek, Executive Director of the Soy Transportation Coalition, says it’s normal to have concerns about a merger like this. “It’s healthy to be concerned, given how past mergers and acquisitions resulted in a reduction of rail service access rates or increased rates among agricultural shippers,” he says. “However, there’s also little service overlap between the rail companies, which means this proposed merger may result in increased service options.”

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