USDA Grain Transportation Report (3/16): STB Approves First Class I Rail Merger in Over 20 Years—With Conditions

According to today's USDA Grain Transportation Report, on March 15, 2023, the Surface Transportation Board (STB) approved the proposed Class I railroad merger between Canadian Pacific Railway (CP) and Kansas City Southern Railway (KCS). Canadian Pacific Kansas City (CPKC) will provide the first-ever single-line service spanning Canada, the United States, and Mexico.

STB anticipates two benefits of note to grain shippers: the merger is expected to facilitate the flow of grain from the Midwest to the Gulf Coast and Mexico and to enhance competition for traffic with other Class I railroads. However, to mitigate concerns over potential negative effects on competition, STB placed conditions on its approval of the merger.

The conditions include keeping gateways to other Class I railroads open on commercially reasonable terms, submitting certain service data to assist STB in monitoring the merger, and submitting “Service Action Plans” to STB to address specific service issues if they arise.

Requests for stay (i.e., to stop some aspect of the merger) and petitions for reconsideration must be filed with STB by March 27 and April 4, respectively. STB’s decision becomes effective on April 14, 2023.