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Home / News & Reviews / News Wire / Norfolk Southern says CPKC merger threatens Meridian Speedway intermodal business

Norfolk Southern says CPKC merger threatens Meridian Speedway intermodal business

By Bill Stephens | March 2, 2022

NS aims to protect intermodal traffic, while CSX asks regulators to end Speedway interchange restrictions

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Map of eastern U.S. highlighting route between Meridian, Miss., and Shreveport, La.
Map of eastern U.S. highlighting route between Meridian, Miss., and Shreveport, La.
The joint Kansas City Southern-Norfolk Southern Meridian Speedway (shown in green) is the focus of new regulatory filings from NS and CSX. (Kansas City Southern)

WASHINGTON — Norfolk Southern sees the Canadian Pacific-Kansas City Southern merger as a threat to its Meridian Speedway intermodal traffic.

NS announced its intention to protect its Meridian Speedway traffic in a pair of Monday regulatory filings posted to the Surface Transportation Board website on Tuesday. NS may exercise its option to purchase the KCS-served intermodal terminal outside Dallas, something it’s allowed to do as part of the railroads’ Meridian Speedway joint venture. (Those filings are available here and here.)

CSX Transportation, meanwhile, said in a regulatory filing that it is seeking to blow up a key part of the Meridian Speedway deal: NS’s exclusive right to interchange intermodal traffic with KCS at Meridian, Miss.

NS currently is the dominant user of the Wylie Intermodal Terminal near Dallas. NS intermodal trains link Atlanta and Wylie, offering connecting service to and from Croxton, N.J., Charlotte, N.C., Charleston, S.C., Savannah, Ga., and Jacksonville, Fla.

But Canadian Pacific Kansas City intends to launch new intermodal service between Dallas and Chicago and the Twin Cities, with connections to CP terminals across Canada and Detroit.

CPKC’s new service would add 105,120 lifts to the Wylie terminal, pushing it to 90% of available capacity. The terminal underwent a $9 million expansion in 2018 that doubled its annual capacity to 342,000 lifts. Last year it handled 209,380 lifts.

NS has a 30% stake in the Meridian Speedway, the joint venture covering KCS’s 320-mile main line from Meridian to Shreveport, La. As part of the partnership that dates to 2006, NS contributed $308 million for track and capacity improvements to the line, which links with KCS’s own main from Shreveport to Wylie.

“The Meridian-Wylie Route represents a significant component of NS’s commercial and operational offerings to intermodal customers,” the railroad said in its filing. “Preserving NS’s ability to meet its intermodal customers’ needs with competitive rates and services over that line is a primary focus for NS.”

NS contends that CPKC would lack an incentive to continue to provide NS with reliable intermodal service to and from Wylie as well as within the terminal itself. The Meridian Speedway also is an important route for NS-KCS intermodal traffic bound to and from Mexico, as well as Southeast-Southwest intermodal traffic interchanged with Union Pacific at Shreveport. Nearly 10% of all NS intermodal traffic moves over the Speedway.

“​​Applicants’ stated plan is to increase traffic significantly over certain segments of the Meridian-Wylie Route without investing in needed capacity, while at the same time stifling traffic growth elsewhere on the route,” NS wrote. “This change in the status quo — overloading some portions while choking growth on others — may result in less reliable service and, as a result, reduce competition for rail and drive more intermodal shipments to the highway.”

CPKC’s growth plans threaten to squeeze out NS customers, NS argues. NS traffic to and from Wylie increased 28% between 2019 and 2021 and represented 47% of all Meridian Speedway intermodal traffic. NS would be able to acquire the terminal in May 2024 under a clause in the joint venture agreement that allows NS to purchase Wylie if KCS is acquired by another company.

NS has asked the STB to condition approval of the CPKC merger on the granting of trackage rights on KCS between Shreveport and Wylie. The trackage rights only would be effective in the event of a major service failure on the part of CPKC and NS’s purchase of the Wylie terminal. This would be an extension of an identical trackage rights provision NS has with KCS that covers the Meridian Speedway. Currently KCS handles the NS trains under haulage rights from Meridian to Wylie.

NS also asked the board to impose conditions that would require CPKC to keep gateways open on commercially reasonable terms and to establish a five-year oversight period to monitor compliance with merger-related agreements.

CSX sees antitrust issues on Speedway

CSX contends that the Meridian Speedway joint venture restricts rail competition, which raises antitrust concerns. “NSR’s acquisition of exclusive control of overhead intermodal traffic on the Meridian Speedway appears to have resulted in significant foreclosure of competition for service to and from the east end of the Speedway,” CSX said in its filing.

As a result, other railroads wishing to move traffic between the Southeast and Southwest must use longer routes through less-efficient gateways, including Memphis and New Orleans, CSX says.

CSX has asked the STB to impose conditions on the CPKC merger that include lifting restrictions on what types of traffic can move over the Meridian Speedway.

CSX also wants the STB to bar NS from extending its Speedway rights and require CPKC to establish an interchange with CSX at Meridian. CSX does not directly reach Meridian, but has a haulage rights agreement with Genesee & Wyoming short line Meridian & Bigbee, which connects with CSX at Montgomery, Ala.

CSX also asked the board to ensure that CPKC maintains efficient and open gateways at New Orleans and East St. Louis, Ill., and protects shippers who route traffic to and from Mexico via the Laredo, Texas, gateway that’s controlled by KCS and KCS de Mexico.

15 thoughts on “Norfolk Southern says CPKC merger threatens Meridian Speedway intermodal business

  1. Don,t forget also that CSX is also taking over Pan Am Railways that run from Rotterdam Jct. NY. to Massachusetts, New Hampshire and Main, so CSX is going to be the dominant in the Northeast beside Canadian Pacific, and an agreement for trackage rights so Norfolk Southern can run double stack containers trains on the CSX mainline making a connection at Voorheesville NY. to Mass. and eliminating going thru the Hoosac Tunnel where double stack container trains won’t fit.

  2. John, “This isn’t the NFL where the STB exists to make all (large and small .ed.mrw) railroads equal.” Amen!
    Notice Charles mentioned “the big bullies”. Note also all the shipper representative groups mentioned in related article 3-3-22 (Shippers back merger). They are all for what is good for them, whereas the “big bullies” want their way and could care less except for BOTTOM line and R/I.
    STB =?= happy medium. Hopefully the STB can be a fair moderator of what is best for the country, i.e. RR/industries/people(Amtrak)
    Reminds me of when fiber optics FIRST came into existence. Large cities would be
    “wired” with fiber then expect Ma Bell to interconnect all the cities. God Bless all the short lines that do what the big bullies used to do. This is the reverse of the fiber optics example. endmrw0303221034

  3. Because all these bigger roads worked with a weaker one to get access to the Laredo Gateway on their terms. Now CP comes along and puts their hand around the gateway and everyone cries foul. They will still have access to the gateway per the terms, but they fear CPKC will steal all the traffic away going north and east without changing any terms at all.

    As for the Meridian Speedway, I say bah. It’s the same stupid argument CN is making about being handed the Springfield Sub.

    As I said earlier. This isn’t the NFL where the STB exists to make all railroads equal. If they want superior access into a Mexican Gateway, then open your wallets and make it happen.

    CPKC has other weaknesses they will need to overcome. By creating artificial operational barriers here, you simply make it harder down the road.

    In a nice world all rail traffic would be safe, predictable and risk free. Now we get 110 decibels of whine because someone upset their apple cart. Well welcome to the world, get your PSR spreadsheets back out and “refactor” yourselves. You deserve it.

  4. Its fun watching the dogs fight for the food. As Confucius is alleged to have said, “May you live in INTERESTING TIMES”

  5. Walter, sounds like BNSF, CN, CSX, NS & UP are like vultures circling over CPKCs long range plans laid bare before the STB looking for some low hanging fruit. Whatever happened to making money the old fashioned way, “earning it” fairly?

  6. The CSX line from Montgomery to Meridian. Did that route ever have a thru passenger train? Cannot remember but the WA (Western railway of Alabama) only had slow mixed passenger traffic to Selma. Non signaled service? L&N from there toward Meridian again slow and curves with no signals? Meridian and Bigbee now has part. Suspect CSX service would be length limited?

  7. CP and KCS are currently the two smallest railroads within the big seven….maybe they just want to be like their bigger brothers….I don’t see a problem here. In the end, after all the whining, and moaning, and begging, and pleading, at a great expense to everyone, CP will get their way. Now, the STB has already said, “this is the “last picture show” for big railroad mergers…Down the road, all this b####ing will come back to bite someone in need of a partner.

  8. If CSX purchases the Wylie terminal, does that mean current KCS employees would become NS employees? I can only guess those crewman have been wondering if they’d be a CN or CP employee once the dust settles. No thought given to becoming NS.

  9. Walter it is more serious than antique equipment. News reports soldiers are puncturing fuel tanks. Some are defecting instead of fighting their Ukraine brothers. Putin, I think, has “lost it” in more ways than winning this invasion endmrw0302221237

  10. Charles the only reason this situation exists is because the Ukrainians are not putting up w/being overtaken. Kinda sorta like the Revolutionary War here. USA patriots defeated the humongous British military.

    To the point of the news item: The STB should/will? stand for what is best for the USA. It matters not if RR ROW is private property.
    reference December 28, 2021 at 3:18 pm You told me:……….”A PUBLICLY OWNED corporation means it’s PRIVATE. Not pubic.”(sic)…………

    Regardless of ownership (public/private) the STB represent, or at least SHOULD represent the public good and not “the big bullies” endmrw0302221233

  11. Boy KCS being the smallest of the class ones has sure scared the crap out of all the big boys. With all the crying going on there going to also have to watch out for flooding.

    1. Yes, UPRR, CSX, CNR, and NS are the big bullies on the block. So is the Red Army. It’s stalled miles from Kiev, can’t fight its way out of a paper bag.

    2. Charles I like your comparison. But I think the red army better call AAA they could use some fuel an a bunch of mechanics from the look of some of the antiques there driving.

    3. Charles, regarding your last two sentences, would that it remains that way. I fear the worst.

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