News & Reviews News Wire BNSF and CN raise issues over CP-KCS merger

BNSF and CN raise issues over CP-KCS merger

By Bill Stephens | November 12, 2021

| Last updated on April 3, 2024

BNSF seeks more time regarding Mexico traffic; CN claims merger application filed too early

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Train of auto racks meets locomotives
A train of auto racks with BNSF power meets Kansas City Southern locomotives at Robstown, Texas. BNSF is asking the Surface Transportation Board for more time to consider the impact of the CP-KCS merger on U.S.-Mexico rail traffic. Bill Stephens

WASHINGTON — BNSF Railway and Canadian National have raised issues with federal regulators’ timeline for review of the proposed Canadian Pacific-Kansas City Southern merger.

BNSF, in a filing posted today on the Surface Transportation Board’s website, said the 90-day comment period was insufficient given the ramifications of how the merger would affect traffic moving between the U.S. and Mexico.

The CP-KCS combination will create the first railroad to link Canada, the U.S., and Mexico. KCS is an important interchange partner for BNSF traffic moving over the Laredo, Texas, gateway, the busiest rail border crossing in North America.

“Notwithstanding the central importance of Mexico to the proposed transaction, the Application contains virtually no analysis of market conditions in Mexico, competition in Mexico involving cross-border movements, commercial and regulatory factors governing rate-setting for the Mexican portion of these cross-border movements, or future regulatory conditions that will affect access to Mexico,” BNSF wrote. “Based on the information in the Application about competitive conditions in Mexico, it is impossible to assess potential harm to U.S. shippers that compete with Canadian shippers for movements into and out of Mexico, or to assess the impact of the proposed transaction on shippers located on different U.S. rail lines. As far as the Application is concerned, conditions in Mexico are in a black box.”

BNSF asked the board to extend the comment period by 60 days, with a 60-day extension of all following deadlines on the merger review schedule.

The additional time would allow BNSF, other parties, and the STB to fully evaluate the merger’s cross-border impact and help regulators determine whether conditions should be imposed to ensure that three KCS Texas interchange locations — Laredo, Robstown, and Brownsville — will remain open on “reasonable rate and service terms.”

“Absent such conditions, shippers may be forced to use less efficient and more costly routes, and BNSF’s ability to provide fully competitive service over those gateways to and from points in Mexico pursuant to the UP/SP merger conditions will be at risk,” BNSF wrote.

CN claims CP and KCS filed their merger application too early in an attempt to “short circuit the public interest review process.” Under STB guidelines, CP and KCS should have to wait until between Dec. 15 of this year and Feb. 15, 2022 to file their merger application, CN argues.

“Applicants’ rush to file an application in violation of the rules also has serious implications for the Board’s public interest review in this merger proceeding. For example, the Application projects that the proposed transaction would generate increased train volumes that exceed the Board’s environmental review thresholds over wide ranges of Applicants’ networks stretching from Laredo to Chicago,” CN wrote in its filing. “Yet the Application fails to address the potential consequences of such traffic shifts for affected communities or identify any planned mitigation.”

The board has since ordered CP and KCS to prepare an environmental impact study for their merger.

11 thoughts on “BNSF and CN raise issues over CP-KCS merger

  1. This sounds more like a tantrum from BNSF/CN. CN had two mergers denied, first when they tried merging with BNSF, and again this year when they tried to beat CP for this merger. BNSF was complaining with UP and SP merging gaining most of the access to the ports and border crossing. Kind of reminds me of the sour loser.

  2. As if. They didn’t give any thought or consideration about any of this stuff prior to the day the application was submitted? They’ve had MONTHS (years?) to think about all this stuff while everything else was going on. What else does corporate railroad executives have to do except think about the long term and the world view of everything?

    1. What we’re seeing is the process. The railroads were analyzing this with a view toward interchange, loss of traffic, operations, etc. from the day it was announced. CP-KCS submitted their filing with the STB and now the other railroads are submitting their concerns for review.

    2. I submit long before it was announced. Railfans have been considering all the combinations of Class 1’s mergers for years and years…railroad executives have not? What good are they if they can’t expect the expected and expect the unexpected? They are being paid, in part, to be ready for anything. This is kinda a big deal.

    3. A railroad exec, years ago when there were still dozens of Class 1s, talked about how they kept maps and up-to-date data on hand of all the other railroads examining potential merger partners or the potential challenges of other railroad mergers. Railroads are always analyzing the competition but have to wait until a merger plan is officially filed before they can officially file a comment about a pending merger with the STB.

  3. The comment we are all waiting for from Omaha is Uncle Pete asking, ‘You think you’re going to run how many trains through Houston?’

  4. The UP should have no worries of the Sunset operating daily. With Flynn and Gardner at the helm of Amtrak, the Sunset is more likely to be discontinued than it is to ever operate daily.

  5. You’d think that Union Pacific would have competitive/interchange issues at the border similar to those of BNSF. And, I wonder what U.P. thinks about CPKC doubling the number of freight trains on their U.P. trackage rights in Texas? U.P. sure doesn’t like the idea of Amtrak running a daily “Sunset Limited” over the Beaumont-Houston segment.

  6. My cat Burlington would be able to comment and say whatever needs to be said within the 90 day period, without an extension.

    Oh, lawyers lawyers lawyers.

  7. Poor CN….didn’t get their way, so they cry like a little child…Wasn’t it CN who had to try to buy their way over CP in the beginnings. As for BNSF, seems to me that they may have waited to long to respond. Or were they cattle prodded by CN to object.

  8. More BS from both the BNSF and CN, 90 days was plenty of time for review and comments, as for Mexico, it’s not under the jurisdiction of the STB therefore anything to do with Mexico rail traffic and rates is irrelevant to the application. The only relevant parts are the border crossings and the lines within the U.S. border, the STB is not the North American transportation board, it’s only the Surface Transportation Board as it pertains to the U.S.. I’d tell both railroads to stuff if, comment time is over with, it’s time businesses stop running the government.

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