Canadian Pacific Railway was granted final approval for its $31 billion acquisition of Kansas City Southern (KCS) by the Surface Transportation Board (STB) on March 15. The approval was granted despite concerns from grain industry associations that the merger could lead to less competition and higher prices. 

Included in the STB decision is what the Board considers an “unprecedented” seven-year oversight period to ensure competition is preserved, protect railroaders and promote efficient passenger rail service. The board also stated that it anticipates the merger will lead to improved safety, though no details were given to support that assertion.

CP and KCS filed their merger application with the STB on Oct. 29, 2021. Since then, the STB said it has taken over 2,000 comments and other filings, held a seven-day comment period and conducted a rigorous environmental review of the proposed merger.

The newly formed Canadian Pacific Kansas City (CPKC) will remain the smallest Class I railroad in North America. However, the route it will traverse is a strategic one, which is likely why we heard the BNSF and other Class 1’s were opposed to the merger.  The CPKC will be the first to provide service spanning Canada, the United States and Mexico.  Its network will be a few thousand route miles shorter than the next smallest Class I and less than half the size of the BNSF.

Of import to our members on the KCS is that the STB decision authorizes CP to exercise control of KCS as early as April 14.  Once combined, full integration of CP and KCS is expected to happen over the next three years.  Whether or not this will ultimately require an implementing agreement be reached with the BRS will likely be determined at some point within that period.