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Opinion: Railroad merger plans should consider manufacturers and shippers

  

In the wake of a revamped trade agreement between the U.S., Mexico, and Canada (USMCA), the fight to control American rail traffic is reaching a fever pitch. At issue is whether the Surface Transportation Board (STB) should approve a $25 billion merger agreement between Kansas City Southern Railroad (KCS) and the Canadian Pacific Railroad (CP) or whether it should entertain the $35 billion offer by Canadian National Railroad (CN) to acquire KCS. Although the CN and CP are both Canadian companies, that’s where the similarities end.

Karan Pujji

Currently, KCS’s network doesn’t reach Chicago while CP’s network doesn’t reach the Gulf Coast. A merger creates a seamless, non-overlapping tie-in between these markets. CP extended an offer to KCS to link the two rail lines, resulting in a single rail route linking Mexico, the U.S., and Canada. This will have a tremendous impact on Missouri, considering that Canada and Mexico are the top two countries for this state’s exports. 

The CN merger plan does not come with benefits for consumers. CN’s route between the Midwest and the Gulf Coast parallels with KCS, and the two railroads are fiercely competitive with one another. If CN acquires KCS, competition will suffer. Additionally, at stake is the fate of the KCS headquarters, which is located in Kansas City, Missouri.

It is imperative the STB step in immediately to block the sale of KCS to CN. CN should not be allowed to acquire KCS for any price because of the significant damage to farmers, manufacturers, and shippers. I recommend the STB approve the merger between CP and KCS, which will improve efficiencies, increase competition, and stimulate job growth.