CPKC, Shipper Urge STB to Resolve Texas Trackage Rights Dispute

Canadian Pacific Kansas City says it has shippers lined up to export grain through the ports of Houston and Galveston, but they’re awaiting a regulatory decision regarding whether unit trains can move over Union Pacific trackage rights south of Beaumont, Texas.

CPKC told the Surface Transportation Board last week that it has four customers in CP’s Soo Line territory who would like to ship grain to the Gulf Coast via Kansas City.

“CPKC has had at least four concrete requests, including being notified this week that a customer that needs to move grain to Houston is delaying the shipment in hopes that a resolution by the Board will confirm the availability of the KCSR-direct route,” CPKC told the board.

“Unfortunately, UP continues to object to KCSR providing that competition, preferring that CPKC interchange traffic to UP at Kansas City so that UP can charge its tariff rates south of Kansas City.”

CPKC sought to route grain trains from the Upper Midwest to Houston and Galveston last summer. But UP says grain from the Upper Midwest is not eligible to use the trackage or haulage rights south of Beaumont.

UP says the trackage rights, which are related to UP’s 1988 acquisition of the Missouri-Kansas-Texas Railroad, were never intended for grain shipments originating outside of the Omaha/Council Bluffs-Kansas City corridor.

“As KCS’s letter recognizes, Union Pacific stands ready and willing to cooperate with CPKC to serve shippers seeking to move grain via Kansas City to Houston and Galveston, so no shipper is being deprived of service to any destination served by Union Pacific,” the railroad told the STB. “Further, and as relevant to the parties’ dispute, CPKC-served shippers continue to have access to essentially the same routing options that existed before the ICC approved the Union Pacific-MKT merger in 1988, consistent with the ICC’s goal of preserving—not expanding—the pre-merger level of competition.”

UP last year sought to have a federal court rule on what it considered to be a contract dispute. But in February the court dismissed the case and sent it back to the STB.

Ceres Global Ag, a grain shipper based in Golden Valley, Minn., that wants to use a CPKC route to Houston/Galveston, wrote to the board last month. “A timely decision confirming KCSR’s rights would improve the competitive rail environment and benefit our company and other market participants by creating efficient, single-line transportation options that are not yet available,” Carlos Paz, the company’s CEO, wrote.

The letter was made public in an STB filing last week.

By Bill Stephens