WASHINGTON — Canadian National is making a bold claim: It will take more trucks off the highway than what’s projected for the entire Canadian Pacific-Kansas City Southern merger if regulators force divestiture of the KCS line linking Springfield, Ill., and Kansas City.
CN told the Surface Transportation Board last month that it intended to file a so-called responsive application that would officially request divestiture of the KCS former Gateway Western trackage linking Springfield with Kansas City and East St. Louis, Ill.
If federal regulators make divestiture a condition of the CP-KCS merger, CN says it will spend $250 million to improve the trackage and tie it to its former Illinois Central Gilman Subdivision to create a new single-line route from Kansas City to Michigan and Eastern Canada.
“CN expects that the environmental review process will show that this single condition in CN’s responsive application would produce more truck-to-rail diversions than Applicants project for their entire merger,” CN said Friday in a regulatory filing.
CP and KCS say their proposed merger, which is currently under STB review, will divert 60,000 truck shipments to rail annually.
CN’s regulatory filing defended the railway’s request that the STB proceed with an environmental review of its divestiture proposal, which it will officially make on Feb. 28. CN also continued to claim that CP intends to downgrade the former Gateway Western trackage and questioned CP’s calculations of current and projected traffic volumes on the route.
“CN’s responsive application will present a full, detailed case supporting its request and demonstrate that divestiture of the Springfield Line is an appropriate remedy to mitigate harm that the merger would otherwise cause to competitive options and the adequacy of transportation,” CN said in its filing.
Two communities along the former Gateway Western — Lockport and Manteno, Ill. — have urged the STB to support divestiture of the route to CN.
CP says that CN’s proposal for divestiture of the line is “without merit.” There is no precedent for forcing a line sale as a condition of an end-to-end merger that does not cause any loss of competition, CP wrote in a Jan. 28 filing. And there’s no reason to include the potential divestiture in the environmental review of the CP-KCS merger, CP contends.
CP also says the former Gateway Western trackage will be an integral part of the combined CP-KCS network.
CSX entered the STL gateway from the east by three routes: ex-L&N from Evansville, ex-B&O (now IL Sub) from Cincinnati, and ex-NYC/PRR/Conrail (now STL Sub) from Indianapolis. The L&N line was abandoned in the late 1980s; the B&O line was “railbanked” in the 2010s The STL Sub is all they need.
If B&O hadn’t sold the Alton, CSX could have a KC line that bypasses Chicago and St Louis like NS does. And if they (B&O/Chessie/CSX) hadn’t abandoned their line to Springfield, IL, they would be in a position to go after they line also.
If ICG hadn’t sold this line, CN would already have it.
CSX is retreating. They wouldn’t be interested. Chicago and St Louis are their gateways now in this world. St Louis Sub serves them and they have the Illinois Sub on ice. They have been shedding agricultural lines in central Illinois like a dog in summer.
Historically, CN buying the former Gateway Western would be a bad deal. B&O bought the Alton (original owner of the Kansas City line) in 1929 from the Union Pacific, and created a route from Kansas City to the east coast that bypassed St Louis and Chicago. However, the Santa Fe, Rock Island, and Burlington wouldn’t short-haul themselves by turning over their east coast traffic to the B&O/Alton in Kansas City instead of taking it on to Chicago or St Louis. Also, the B&O became a direct competitor of the Wabash, controlled by the Pennsylvania Railroad. B&O gave up and returned the Alton to the control of the Federal courts in 1942.
JOHN BEAULIEU: I expect that Canadian Pacific Kansas City will be the name of the holding company. The locomotives will be lettered just Canadian Pacific.
JOHN LASZEK: What about the reporting marks?
This merger is being judged under the “old” standard of preserving competition. There is no competition lost by CP keeping this line since it doesn’t parallel any other CPKC lines. Therefore, the STB has no reason to force a sale.
If CN really wants the line, they can make CP an offer. CP doesn’t want to sell, but they may become interested if an offer is good enough. Better yet, offer a trackage rights swap. CN gets to KC-STL, KC-Springfield, and STL-Springfield. CPKC gets Springfield to the SE side of Chicagoland to access existing rights to Detroit and Buffalo. A lot shorter than going through Bensenville.
This merger, for all intents and purposes, was foreordained by the STB; none of the other railroads’ requests will be granted and some local townships’ will see some conditions met to preserve the illusion of due diligence.
Nevertheless, the railroads have shown their hand; many opportunities for future bargaining here.
All this talk of investment by CN but they do not say what they would pay for this piece of track. What is it worth? Name a price and let the bidding begin.
Would CN settle for trackage rights? From what I have read, this line does not see much use.
It would seem that if all else failed in CN’s bid to own, that gaining trackage rights over what you say is a lightly trafficked line would be the way to go. And for the through traffic to/from eastern Canada CN, unlike CPKC, can by-pass Chicago congestion via the connections they built at Matteson, IL with the former EJ&E.
I read both the Lockport and Manteno letters. Essentially cheerleading for CN.
Just a reminder to everyone that KCS *has* been investing in this line to Springfield, specifically the branch that goes to East St Louis. They are a partner with Jersey County in Jerseyville, Illinois for the building of a rail logistics hub south of town. KCS sees it as a major auto parts (from Mexico) hub was well as for agricultural logistics.
UP has been borrowing this line to Springfield for traffic that is being diverted from KC due to the work on the St Louis, MacArthur Bridge, Missouri approach.
If this line was in such dire straits as CN is saying, why would UP want to use it to connect to their sub at Springfield? Why would KCS invest millions in a logistics hub?
Someone speak with forked tongue.
Have to agree with both Steven and Clarence on this one. CN came in with the big bucks and got denied by STB. Probably a bad analogy but almost like getting two offers on your house and the city saying it you can’t take the higher offer. So I would be a sore loser for a while as well.
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At same time agree, CN taking over the line and committing $250 million would truly add some competition into the mix from say Gulf Coast to Eastern Canada via a UP/CN or BNSF/CN routing versus CPKS. Where as this will be nothing more then a secondary branch that CPKS will probably lease out to a shortline operator sooner the later. So I say, STB should make it a condition as well. What comes around goes around.
I should not the UP/CN or BNSF/CN routing would probably gain some efficiencies with hand off in KC versus a routing via Chicago and the associated mess of interchanging railcars there.
Yes but it would mean less profit for BNSF and UP. I expect that CN would offer favorable rates for its customer for movement to Kansas City and points west, but I don’t expect BNSF and UP to make rates that will encourage the use of the Kansas City gateway, they don’t for CP now, why would they for CN in the future. The majority of CP merchandise traffic moving to Kansas City currently is bound for KCS. BNSF only interchange traffic to CP at KC that they have to do so.
No body is mentioning that the main spans over the Missouri and Mississippi Rivers are all at or approaching 120 years old. The Missouri River bridge is at a high level and doesn’t require a draw or lift span, reducing the difficulty replacing them. Nevertheless there are still five sizeable through truss spans that can’t have that many years left in them. Then there is the Mississippi River bridge. From the Missouri side there is a descending grade followed by a diamond crossing of the BNSF Hannibal Subdivision, followed by a speed limiting curve to lineup for the bridge. The pivoting drawspan was built in 1898, and amongst the 8 other through truss spans that comprise the bridge only two have a build date after 1905 and three have a build date of 1897.
If the CN is really going to speed big bucks on this route I would be inclined to let them have it. It looks like this route would have a much higher priority on CN than on CPKCS. And really guys, Canadian Pacific Kansas City Soithern ? Really rolls off the tongue doesn’t it? Surely you could put just a little though into something more imaginative. Rail Northamerica?
How about Can-Kan Pacific? At least it would fit on the sides of the locomotives.
I like Canadian Pacific, Kansas & Southern. Of course, that wouldn’t fit on a locomotive hood either. How about Canada & Southwestern. Or they could poke Boston in the eye for something the state’s highway-centric establishment refused to build when they had the chance and call it North South Rail Link. That fits on a locomotive hood in two layers.
How about Bangor, Aroostook & Western?
I expect that Canadian Pacific Kansas City will be the name of the holding company. The locomotives will be lettered just Canadian Pacific.
CN…still playing that sore loser game!
Lockport and Manteno are along the former GW? Since when?
Since never. Lockport isn’t even on any portion of the route.