WASHINGTON — The chairman of the House Committee on Transportation and Infrastruture has voiced his opposition to a voting trust while regulators consider the proposed merger of Canadian National and Kansas City Southern.
Rep. Peter DeFazio (D-Ore.) said in a Monday letter to the Surface Transportation Board that the trust would “reduce competition and prejudice the outcome of the Surface Transportation Board’s merger proceeding.” Saying that approximately 300 current customers overlap between the two rail networks, DeFazio contends “a single holding company responsible for this traffic would likely change rail traffic patterns in the significant areas of parallel service overlap” and that the merger “will exacerbate U.S. job losses from cross-border trade agreements that prioritize profits over people and inflict harm on worker’s rights, consumer safety, and the environment.”
In his role as committee chairman, DeFazio had previously been critical of the efforts by both CN and Canadian Pacific to acquire KCS. In an April statement, DeFazio said the railroads’ pursuit of KCS “should set off alarm bells about a potential new wave of railroad mergers that stifle competition and trigger industry-wide consolidation.
CP, which is continuing to pursue its efforts to acquire KCS in the event the CN-KCS deal is turned down, quickly sent out its own press release quoting DeFazio’s letter in full, and contending its merger with KCS would enhance competition and “raise none of the anti-competitive concerns by hundreds of shippers and other stakeholders.”
How this plays out? The trucks and other competitors eat the rail industry’s lunch. To use a line from TRAINS back in 1973, “the smart money wants out of the stable”. Niche markets are what future remains for railroading. Wall Street “greed”? The takeover of Wisconsin Central by CN was driven by pension funds and other such largely union-influenced institutions–that’s Wall Street. So retire the cliches–the businss IS disappearing. Three lumber yards near me served by the B&M in 1980–all out of business by the end of the 1980’s. Since 1995 there has been no on-line business on the B&A between Springfield and Pittsfield MA; I recently set about figuring if there is any business between Pittsfield and Selkirk yard. Niverville maybe. Back to the B&M; in 1977 I was told that the Brown Company plant in Berlin NH was the B&M’s largest single customer. A paper mill at the very end of a long branch–with access to a competitor too! That live is gone now–a hiking trail I rode a train on in 1982. Back to CSX and competitors: next week I’m going out to the Buffalo area (3 guesses why) and will spend time looking at NYC&HRRR haunts among others–another area with the business changing/disappearing. Next for the rail industry: the passenger operations gold-mine start to peter out. Oh, and don’t forget that Staggers also eliminated protection from anti-trust charges regarding the rate bureaus–that was another BIG cause of the merger movement. Surprised when the BN grabbed the SLSF–now one railroad from Seattle to Pensacola! I could go on but gotta go!
So anyone want to take a stab on how this plays out for KCS? STB finally approves the merger and investors walkaway happy. Or does, STB deny so KCS has to go back to CP and investors still get a good deal and a lot of cash in the pocket no matter how you look at from us common folk.
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On one hand I absolutely agree that deregulation & govt getting out of the way saved the railroads from collapse by allowing mergers & divesting of the overlap. On the other hand, I wonder if STB is the only real option left from Wall Street greed destroying the future of rail for the sake of quarterly gains.