News & Reviews News Wire CPKC says Union Pacific aims to stifle competition for Gulf Coast grain

CPKC says Union Pacific aims to stifle competition for Gulf Coast grain

By Bill Stephens | August 21, 2023

STB is right forum for trackage rights dispute, CPKC says

Email Newsletter

Get the newest photos, videos, stories, and more from brands. Sign-up for email today!

red, yellow and other colors on a locomotive
A Kansas City Southern grain train rolls south through Dequincy, La., in 2008. Chris Guss

WASHINGTON — Union Pacific’s contention that Kansas City Southern can’t haul grain from the Upper Midwest to the Gulf Coast using trackage rights south of Beaumont, Texas, is “revisionist history,” Canadian Pacific Kansas City has told federal regulators.

Earlier this month CPKC asked the Surface Transportation Board to enforce the trackage rights that KCS gained as part of UP’s 1988 acquisition of the Missouri-Kansas-Texas Railroad.

But UP, in a filing last week, said the South End trackage rights giving KCS access to Houston and Galveston are limited to a handful of so-called North End originations in Kansas, Nebraska, and Iowa. UP also contends the board lacks jurisdiction in what amounts to a contract dispute that should be settled in court or in arbitration.

CPKC says the issue revolves around what UP and Kansas City Southern negotiated and what the Interstate Commerce Commission intended when it made the trackage rights a condition of its approval of UP’s acquisition of the Missouri-Kansas-Texas in 1988.

Union Pacific, CPKC says in a sharply worded rebuttal, “attempts to ignore the plain language of what UP and KCSR negotiated, what UP asked the ICC to impose to satisfy a condition the ICC imposed on the UP-MKT merger, and what the ICC in fact imposed. UP’s revisionist history should be given no weight, and the Board should enforce the plain language of the terms imposed by its predecessor to protect competition.”

UP also argued that since KCS took UP to court in a 1997 dispute over the trackage rights, it’s clear that even CPKC should realize the STB lacks jurisdiction.

CPKC disagrees.

“The 1997 complaint demonstrates that UP’s position in this proceeding reflects a troubling pattern: when KCSR engages in a transaction that offers shippers better competitive options and thereby threatens UP’s market position, UP responds by seeking to take away KCSR’s rights. It did so in 1997 after KCSR acquired an interest in the Mexican Concession, and it is trying to do so again now after KCSR became part of the larger CPKC network.”

KCS only sporadically used the rights over the past 35 years. After obtaining the concession to operate in Mexico in 1996, KCS concentrated on cross-border grain movements it could originate and that maximized the railway’s length of haul.

The CP-KCS merger has prompted shipper interest in using CPKC’s single-line service from the Upper Midwest to reach export markets via Houston and Galveston, CPKC says.

UP contends CPKC cannot use its South End trackage rights for grain traffic unless the shipments move through Kansas City from Lincoln, Topeka, Atchison, and Omaha/Council Bluffs.

3 thoughts on “CPKC says Union Pacific aims to stifle competition for Gulf Coast grain

  1. The combined CPKC network creates new competition and new capacity in the North American rail industry, expanding options for shippers by connecting agriculture products with new ports and new markets. Fierce rivalry with UP is an inevitable natural consequence.

    Dr. Güntürk Üstün

    1. Really? Really? There’s some observers who have been wondering if the merger was a mistake.

      The route from Detroit (thus, Eastern Canada) to KCMO is via the back side of the moon. The route from Chicago to the Gulf of Mexico runs around the Rings of Saturn, and is slow and hilly.

      Fairly or otherwise, trackage rights on UPRR through Houston and south of that city, adds about a week and a half to the schedule. You can blame Uncle Pete all you like but it won’t change reality on the ground.

      Go back a couple of generations, one could compete against NYC and PRR from the Northeast to the Midwest by stringing together a bunch of secondary lines and loser railroads. Fairness has nothing to do with it.

    2. Yeah,, all true Charles, but the big error here is as you said. This a merger built on a house of cards. UP has been in this business and owned this franchise for a long time. They understand the contract terms of the “South End” rights that KCS received and then barely used. IF CPkc wants to go to arbitration to get their comeuppance then so be it . An arbitrator by rule must base his/her decision based on the facts of the original ruling, not what CPkc would “like” to see. They know they will lose in arbitration so they are crying to the STB hoping for them to overturn a bad decision on their part.

      This is America, Mr Creel. You can’t have your cake and eat it too! If you want unfettered access to Houston and Galveston, build you own line to those points or as Cartman of South Park would say, “Quit yer bitchin…”

You must login to submit a comment