Calling this year’s merger between two Class I railroads ambitious would be a vast understatement. The move solidified a newfound powerhouse in the rail industry.
Through absorbing the now-defunct Kansas City Southern, Canadian Pacific Kansas City (CPKC) has unlocked more than 7,000 miles of track in the U.S. and Mexico. Coupled with an already extensive network in Canada, CPKC boasts the wherewithal to offer transcontinental rail services—on its own accord.
The lone railway’s awesome potential has prompted its competitors to also beef up cross-border offerings. Fellow Class I railroads UP and CN partnered and launched an intermodal service covering the U.S., Mexico, and Canada.
Coupled with Mexican trade booming due to nearshoring trends, the merger has kickstarted an “arms race” for the industry—which network can offer the best transcontinental and cross-border coverage?
CPKC, CSX request federal approval of short line acquisition
It’s apparent that a winner won’t be determined overnight. Little by little, the railroads are devising strategies to accomplish this bold venture.
The most recent instance of this finds an otherwise unassuming U.S. Southeast short line as a pawn on their chessboard.
Both CPKC and CSX railway have requested approval from the Surface Transportation Board (STB) to acquire portions of Meridian & Bigbee Railroad. This particular move can be seen as a bid to create more efficiency with freight movement between Mexico, Texas, and the U.S. Southeast.
The southeast region has also enjoyed growth over the past couple of years and houses bustling East Coast seaports, like Charleston, Savannah, and Jacksonville.
These acquisition aspirations for the short line aren’t out of competing interests between the two railroads. Rather, the filing with the STB suggests they each desire their own slice of the pie and, furthermore, intend to collaborate with one another.
That said, while the two railroads filed their requests separately, they did not step on the other’s toe. CSX is looking to acquire the portion of Meridian & Bigbee’s 94-mile line that runs in Alabama between Burkeville and Myrtlewood. Meanwhile, CPKC is requesting acquisition of the short line’s western portion—around 50 miles of track between Meridian (Mississippi) and Myrtlewood.
Both railroads say this arrangement would allow the railroads to implement a direct interchange at Myrtlewood, the meeting point of their proposed track acquisition. They argue this would eliminate the need for an intermediate carrier on overhead traffic, while also enabling them to avoid more congestion-prone and weather-sensitive interchanges, like New Orleans.
In other words, CPKC and CSX believe the Myrtlewood interchange will make them more competitive with regional carriers and alternative transportation modes. They also maintain this Class I to Class I connection will provide improvements and efficiency boosts to existing and future intermodal traffic between the U.S. Southeast and Mexico.
CPKC and CSX advised STB to consider these acquisitions as minor transactions.
A minor transaction means that STB typically won’t engage in an extensive review process of the filing. This label is granted to proposals in which anticompetitive concerns don’t appear to be an issue for shipper-customers.
Final Thoughts
CPKC noted that Meridian & Bigbee Railroad, which is a subsidiary of short line operator Genesee & Wyoming, would retain rights to the acquired portions of track to continue providing local services.
At this time, there hasn’t been an exact date for when STB will come to a ruling.
Please contact us if you have any questions regarding this topic or any others in domestic logistics. In addition, stay up to date with weekly headlines from both trucking and rail via our Road Map newsletter.
More blogs similar to this:
Recent Comments