WASHINGTON – Federal regulators have ordered Canadian Pacific to resubmit specific traffic density data that will be used as part of its Kansas City Southern merger application.
The Surface Transportation Board’s decision, issued on Wednesday, keeps review of the first Class I railroad merger in two decades on hold. CP must submit new baseline traffic density data by May 27.
Once the new data is submitted, railroads and other parties will have 20 days to comment or file so-called responsive applications. And once those responses are filed, the board will establish a new timeline for review of the merger.
The board’s Office of Environmental Analysis will continue its work while the overall merger review is paused, however.
In March the STB put review of the CP-KCS merger on hold until discrepancies in train density data could be sorted out [see “Traffic density data issue snags regulatory review …,” Trains News Wire, March 16, 2022].
The railroads provided one set of traffic density data for the merger application itself and another set for the STB’s environmental analysis. The railways have explained that they calculate gross ton miles differently, with CP breaking down tonnage in far more detail for each line segment, and have clarified the data in a filing with the STB.
Canadian National pointed out the apparent inconsistency in the data as part of its request that the STB force CP to divest the KCS Springfield Line, the former Gateway Western route linking Springfield, Ill., with Kansas City and St. Louis. CN has since raised additional train count inconsistencies, saying that CP’s deal with Amtrak to expand service between Chicago and the Twin Cities raises train counts enough to trigger the STB’s environmental review requirements on two line segments [see “CN raises new train count data issues …,” News Wire, April 19, 2022].
CP CEO Keith Creel this month told the North East Association of Rail Shippers that he doesn’t expect the traffic density data issue to delay the overall timeline for regulatory review of the merger.
The board is likely to hold hearings on the merger in October or November, then issue a final decision in early 2023.
All these issues with presenting operational data to the STB……all are having problems getting their data straight.
Maybe instead of buying back stock, take a few million and invest in an adequate analytics system for goodness sake. Sometimes I think these Class 1’s are in the dark ages of IT.
UP’s PSR being driven by a biz analyst spreadsheet in Excel….CSX saying no data exists in dispatching in Mobile, NS saying they didn’t have data about certain characteristics of their hiring program.
Either these guys are playing possum or this kind of IT deficiency in these high net worth companies is very concerning. If I was an institutional investor I would be bringing this up in the next earnings call with the CFO.
If you look in their datacenters would you find a bunch of abacus’ or some IBM System 3x or DEC PDP from 1982?
The CP-KCS data is irrelevant to all of your other points, it’s two different railroads that calculate data differently, just as the Canadian carriers have done for decades. This is essentially a competitor acting out like a spoiled child that didn’t get their way(CN), the smartest for the STB to have done with this request is to tell CN to go back home and shut up while they conduct their review…same with all the other carriers. The fact that CP provided more detailed data for the review process vs what was provided for the environmental process tells me all I need to know… Besides the fact that the Environmental review will continue while they wait for the new data, even though it’s the discrepancy between that data and the other causing the problem. Either there’s a problem with the data or not, you can’t have it both ways. All this does is waste time for a merger that should be approved sans conditions…let the other carriers sweat it out for once that they’ll actually have to compete for business.
The STB imposed delays do not portend a prompt resolution of the merger review.