Kansas City Southern ES44AC No. 4753 leads train MVNKC (Manifest Venice-Kansas City) through Roodhouse, Ill., where the KCS line from Springfield, Ill., splits to go to Kansas City or St. Louis, on Sept. 17, 2021. Power for the Roodhouse local sits to the left. Steve Smedley
WASHINGTON — Canadian National has asked federal regulators to condition the approval of the Canadian Pacific-Kansas City Southern merger on the granting of trackage rights over the KCS line linking Springfield, Ill., with Kansas City and St. Louis.
CN has sought to own the Springfield Line outright, arguing that the Surface Transportation Board should order CP and KCS to divest the route.
But in a final brief filed with regulators on Oct. 21, CN says it would be willing to accept trackage rights on the Springfield Line, which it would upgrade and connect with its former Illinois Central to create a new single-line route connecting Kansas City with Chicago, Detroit, and Eastern Canada. CN says it would be able to divert 80,000 trucks per year to intermodal service over the line once $250 million is spent on improvements.
“Divestiture of the Line to CN is the best remedy to address CP’s anticompetitive acquisition of the parallel Springfield Line …. But at the public hearing, the Board asked CN if it would consider trackage rights as an alternative remedy,” CN wrote in its fling. “After careful consideration, CN believes that, while not optimal, the type of trackage rights remedy raised by the Board could sufficiently preserve the Springfield Line as a viable competitive alternative, but only if those rights are accompanied by provisions that would protect CN’s investment and impose service commitments.”
As part of the Conrail carve-up in 1999, the STB granted CP trackage rights down the east side of the Hudson River from the Albany, N.Y., area to New York City. CN says its request in the CP-KCS merger is similar and would unlock the Springfield Line’s potential.
CN contends that because CP and KCS don’t plan to invest in the Springfield Line it would be relegated to “branch line status,” which it says is anticompetitive and therefore requires a remedy in the form of divestiture or trackage rights.
CN also argues that regulators have imposed conditions for losses of potential competition between railroads, citing build-out conditions imposed on the CN-IC, Union Pacific-Southern Pacific, and CN-Duluth, Missabe & Iron Range mergers.
In addition to the trackage rights, CN seeks the right to invest in the Springfield Line and terminals, along with “safeguards to ensure adequate maintenance, efficient service, and non-discriminatory dispatching.”
Additional trackage rights through Kansas City and an ownership interest in the Kansas City Terminal would be required to link the Springfield Line with the KCS International Freight Gateway intermodal terminal, CN says.
CN also says its control of the Springfield Line would allow traffic to bypass Chicago and reduce the impact of CP-KCS merger-related traffic increases in Chicago’s western suburbs.
CP and KCS have called the request for divestiture of the Springfield Line a dramatic overreach that would harm competition, as well as shippers on the route who currently enjoy single-line service to Mexico. There’s no regulatory basis for the STB to award CN the line, the railways said.
CP and KCS doubted there were 80,000 trucks that could be diverted to CN service between Kansas City and Chicago or Detroit, noting that they would already be using intermodal service offered by Norfolk Southern, BNSF Railway, and Union Pacific.
In its final brief filed with the STB, CP said CN’s requests amounted to sour grapes.
“CN’s entire litigation strategy in this proceeding has been aimed at delay or dismemberment of the new CPKC network, which will match CN’s single-line route to the Gulf (created by the CN/IC transaction) and compete directly against CN in many markets,” CP wrote in its filing. “CN’s request for a Board order requiring a forced sale of KCS’s lines east of Kansas City is only the most blatant of CN’s efforts to achieve through Board action what it could not achieve in the marketplace. On the facts here, the Board lacks authority to grant the relief CN requests.”
CP told the board that it would be willing to talk with CN regarding a joint venture involving investment and use of the Springfield Line to compete for truck traffic that’s not currently moving over existing rail routes between Kansas City and Chicago.
(Updated at 10:26 a.m. CT with comment from CP.)
Perhaps there’s a quid pro quo trackage rights negotiation opportunity – are there any segments of CN that CP would find useful if it were granted trackage rights? For example, CN’s ex-EJ&E route around Chicago or access to the double stack cleared CN tunnel/route at Port Huron/Sarnia or access to the Ports of Halifax or Prince Rupert, etc?
Sure. How about CP and CN both operate all the way between Chicago and Kansas City? CN gives up rights to Chicago on the south so CP can also reach their connections east of Chicago from that direction. Give eastern Canadian shippers true competition all the way into Kansas City.
I think this is a great idea. This would give CPKC a better route to their eastern markets. CN would get access to Kansas City. Frankly, I think that CPKC is making light of the traffic that will go east from Bensenville yard. I also think that CN is trying to pull a fast one. The two railroads would be better off if they work this out in private.
And a shorter single shipper route to Mexico for those eastern Canadian shippers as well.
STB said CN would have to prove that there were 80,000 trucks to remove through the route. I didn’t see any proof. Just talk.
CN swallowing some hard crow and washing it down with sour grapes.
I agree with CPKC, lets work on a deal, deal, to use the route effectively that benefits everyone.
However, KCS is no angel. That line *is* practically at branch status today as they do their interchange down at Godfrey, Illinois with CN. This way KCS kept the line to reach a single customer west of Springfield. Ask KCS why they force CN to interchange at Godfrey instead of 138 miles closer in Springfield. Saving money on ROW for little interchange is the most likely. With few online customers on what are essentially 2 very long branch lines (Jacksonville & Springfield), there just isn’t a real capex reason to invest in it.
Call it the Springfield Speedway, call it whatever, but I am sure some kind of horse trade can be made if CN is willing to give up something somewhere else instead of demanding “free”.
The line to Jacksonville was already updated and signaled, KCS has poured a lot of money into it. Bartlett Grain in Jacksonville is a major customer and the reason for all of the line upgrades. CN would need to update the line from the Cockrell to Murrayville which is 27.6 miles; not a lot of Capex needed for that.
At one point they were interchanging 4 days a week at Cockrell but I heard it was causing issues with ADM loading trains and got killed.
No one is addressing the major issue here NS and UP are going to kill any attempt for racks and stacks to be crossing them at Hazel Dell creating a competitor.
The line to St. Louis is ex-GM&O. Prior to formation of ICG, the I.C. had its own line Springfield-St. Louis. I don’t know if the I.C. line was still intact when CN acquired ICG or not. If it was still active, that gave CN not one but two routes between Springfield and St. Louis.
It wasn’t. ICG tore it up not long after the GM&O merger. Long gone by the CN acquisition.
I think it is a fair deal and in this case, the govt can legitimately facilitate competition by four class I gaining direct access to Chicago from KC if not mistaken (CP/KCS, BNSF transcon, UP via St Louis and CN). In addition and if not mistaken you have at three class I gaining direct access from KC to upper midwest/northeastern Canada as well (CP/KCS, Norfolk Southern via St. Louis and CN). So why not? Everyone always state that business do a better job and competition lowers prices. Here is a chance for some serious competition through Chicago gateway as well as a $250 million investment to divert traffic around Chicago at same time. I really don’t see how STB loses by granting this request.
Give CN haulage rights. Works well on CSX tracks for BNSF going BHM – ATL. Is NS meridian – Dallas haulage or track rights on KCS?
CN wants, wants, wants… so hilarious it’s getting old.
The galling thing about this is that IC used to own this line. Now they cry they have to have it back after letting it die on the vine long ago. Perhaps they could have forked over some of that $250 million long before now to try to entice KCS to make something of it, but no, they want government fiat to hand it back to them. This has a fragrance to it that is not pleasant.
What CN is asking for is “not” a bad idea. But CN acquired IC in 1998 and KCS bought Gateway Western in 1997. They’ve had over 20 years to make a deal. Now it is unpropitious.