Updated July 29, 2022 - TRA Newswire -

Several Class 1 railroads are raising concerns over freight rail congestion in the Houston region and access to international rail gateways at the Texas-Mexico border in Surface Transportation Board (STB) hearings on the pending merger of Canadian Pacific and Kansas City Southern Railway (CPKC).

In testimony to the STB, BNSF Railway pointed out its concern over access through Laredo on cross-border rail traffic, worried that unless the railway board puts conditional language in place, BNSF would lose a competitive advantage on rates and access. The international rail bridge is owned and operated by Kansas City Southern.

BNSF's filing stated "the commenting parties all agree that a general open gateway commitment is insufficient, too vague and toothless, to protect against competitive harms."

BNSF stated its concern that the CP-KCS marriage would "produce debilitating congestion" in the Houston market. An additional eight trains a day through Houston are projected, without any new capacity additions. A study, from HNTB Corporation for BNSF, pointed out that the CPKC operating plan would result in gridlock without any additional infrastructure improvements. CP denies the claim.

Norfolk Southern Railway, worried about its rights to run trains along what is called the KCS 'Meridian Speedway' from Meridian, Mississippi to Wylie, outside of Dallas, wants the STB to preserve the status quo arrangement the railroad has with KCS. Norfolk Southern wants trackage rights extended so it can effectively serve markets in Texas and to the West Coast. In a counter-filing to the STB, competitor CSX said that the partnership between Norfolk Southern and KCS on the Meridian Speedway is not legal because it shuts out competition to other carriers.

Canadian Pacific filed over 4,300 pages of testimony to the STB last week that addressed negative comments to the merger from railroads and other entities. "Their opposition, and the self-serving conditions they seek, are not motivated by any need to protect the public interest from harm but by desire to protect themselves from change," according to the filing.

The CPKC merger does have some fans in shippers and passenger rail advocates. In January, Amtrak announced that it supported the CPKC merger and Canadian Pacific, in turn, formalized support for Amtrak's 2035 Vision Plan to expand service. The support includes a discussion of passenger rail service on the Meridian Speedway corridor from Dallas-Fort Worth to Meridian, Mississippi where a future leg would join the current Amtrak Crescent service between New Orleans, Atlanta and the East Coast .  

CP does not expect there would be any capacity shortfalls in their operating plan and anticipates it can handle more trains from its Class 1 competitors with trackage and haulage rights. 

On the financial side, CP posted their second quarter earnings this week with a strong 7% increase over the same period last year. Operating income was $868 million (Canadian) up from CA$820 million a year ago. The company's Q2 operating ratio was 60.6% up from 60.1%. In a press release Canadian Pacific President and CEO Keith Creel said "after a challenging first quarter of the year, I'm proud of the resiliency and discipline the CP team demonstrated to deliver these results."



Updated July 29, 2022 - TRA Newswire -

Several Class 1 railroads are raising concerns over freight rail congestion in the Houston region and access to international rail gateways at the Texas-Mexico border in Surface Transportation Board (STB) hearings on the pending merger of Canadian Pacific and Kansas City Southern Railway (CPKC).

In testimony to the STB, BNSF Railway pointed out its concern over access through Laredo on cross-border rail traffic, worried that unless the railway board puts conditional language in place, BNSF would lose a competitive advantage on rates and access. The international rail bridge is owned and operated by Kansas City Southern.

BNSF's filing stated "the commenting parties all agree that a general open gateway commitment is insufficient, too vague and toothless, to protect against competitive harms."

BNSF stated its concern that the CP-KCS marriage would "produce debilitating congestion" in the Houston market. An additional eight trains a day through Houston are projected, without any new capacity additions. A study, from HNTB Corporation for BNSF, pointed out that the CPKC operating plan would result in gridlock without any additional infrastructure improvements. CP denies the claim.

Norfolk Southern Railway, worried about its rights to run trains along what is called the KCS 'Meridian Speedway' from Meridian, Mississippi to Wylie, outside of Dallas, wants the STB to preserve the status quo arrangement the railroad has with KCS. Norfolk Southern wants trackage rights extended so it can effectively serve markets in Texas and to the West Coast. In a counter-filing to the STB, competitor CSX said that the partnership between Norfolk Southern and KCS on the Meridian Speedway is not legal because it shuts out competition to other carriers.

Canadian Pacific filed over 4,300 pages of testimony to the STB last week that addressed negative comments to the merger from railroads and other entities. "Their opposition, and the self-serving conditions they seek, are not motivated by any need to protect the public interest from harm but by desire to protect themselves from change," according to the filing.

The CPKC merger does have some fans in shippers and passenger rail advocates. In January, Amtrak announced that it supported the CPKC merger and Canadian Pacific, in turn, formalized support for Amtrak's 2035 Vision Plan to expand service. The support includes a discussion of passenger rail service on the Meridian Speedway corridor from Dallas-Fort Worth to Meridian, Mississippi where a future leg would join the current Amtrak Crescent service between New Orleans, Atlanta and the East Coast .  

CP does not expect there would be any capacity shortfalls in their operating plan and anticipates it can handle more trains from its Class 1 competitors with trackage and haulage rights. 

On the financial side, CP posted their second quarter earnings this week with a strong 7% increase over the same period last year. Operating income was $868 million (Canadian) up from CA$820 million a year ago. The company's Q2 operating ratio was 60.6% up from 60.1%. In a press release Canadian Pacific President and CEO Keith Creel said "after a challenging first quarter of the year, I'm proud of the resiliency and discipline the CP team demonstrated to deliver these results."