Heck, if CP bought Wheeling & Lake Erie next they would just about have an Alphabet Route with the trackage rights to Lima on CFE. Get out the checkbook! Yeah, right.
VerMontanan Y We'll see how the CP does with the long haul of the bitumen from Alberta, which costs a lot of money to extract. Shippers determine the routing and CP's railroad from River Jct. (La Crescent, MN) to Kansas City doesn't have a lot of capacity,
Y
We'll see how the CP does with the long haul of the bitumen from Alberta, which costs a lot of money to extract. Shippers determine the routing and CP's railroad from River Jct. (La Crescent, MN) to Kansas City doesn't have a lot of capacity,
Once we get new sidings put in at Brownsville, MN and (most likely) near Bellevue, IA along with CTC installed, the Marquette Sub mainline will have good capacity. It typically sees anywhere from 8-15 trains on a given day anyway right now.
LARGuy, that is a lot of traffic for that line. It is not nearly the high speed line of the BNSF on the other riverbank, as you know. This should prove interesting!
Back in the day when DME purchased IMRL, they put some significant resources towards upgrading the former MILW from Owatonna, MN down to Austin, MN. That gave them a through route all the way to Chicago.
Once finished, DME routed the bulk of their traffic down that line to connect with the former MILW Iowa line at Nora Springs, IA, rendering the former CNW through Rochester, MN almost an afterthought.
If one drives north to Minneapolis from Owatonna on I-35 you can see the former MILW roadbed intact from Owatonna to Faribault. I believe CP still has trackage rights on the UP Spine Line from Northfield to St Paul.
It is almost too bad the gap exists between Owatonna and Northfield on the former MILW.
Business news: CN has offered a higher per share price for KCS/KSU @ $33.7B vs CP's offer of $26B...
from the Far East of the Sunset Route
(In the shadow of the Huey P Long bridge)
I wonder if Berkshire could make a bid.
Will CP counter offer?
Never too old to have a happy childhood!
azrail I wonder if Berkshire could make a bid.
To much overlap.
An "expensive model collector"
CP does not presently operate in Louisiana, while both CN & KCS do, with rail yards near each other in New Orleans & Baton Rouge. Several railway shippers have access to both KCS & CN, which might lead to some reduction in competition, at least in SE LA.
I would expect either CSX or NS or both would want to step in to the shoes of KCS or CN in the Baton Rouge-New Orleans corridor to ensure a second carrier in that area.
My thoughts with the larger CN offer is to file a comment with the STB against CN getting a voting trust, and then wait to see what if anything the STB requires of CN as a merger condition. CP should have required KCS to pay them a significant sum of money to allow them to walk away from the deal. IF CP didn't put such a requirement into the purchase agreement then they are idiots.
This is getting interesting. CN can clearly offer more direct routes and faster service from KCS to major markets. However, it is also true that CN already reaches the gulf coast and is much larger than CP. If CN-KCS forces CP to look for another partner, it will be very destabilizing.
I would suggest that KCS stockholders require an immediate cash-only sale with a voting trust if they accept CN's offer. This would put the risk of rejection on CN as KCS shareholders would already have their money. I would expect the rest of the industry to line up against a CN-KCS merger.
Could CN & CP come to an agreement? If the STB uses the new rules, competition will need to be increased by the merger, not merely preserved. Is there a way to divide KCS so that both railroads could offer single line service to Mexico? It would take a lot of trackage rights or jointly owned track.
Trackage rights are a poor way of preserving competition. D&H received trackage rights into the NEC in the Conrail merger but provided almost no real competition to Conrail.
Would give CSX a route to Mexico and to KC
kgbw49 I would expect either CSX or NS or both would want to step in to the shoes of KCS or CN in the Baton Rouge-New Orleans corridor to ensure a second carrier in that area.
NS should throw a bid out for KCS. NS would be the next best suitor for such a combination. NS would also allow greater Midwest/Mexico destinations with traffic origin/terminating points such as; Detroit, Toledo, Columbus, Indianapolis, Ft Wayne, Louisville.
What if all class I RRs divided KCS. Who would get what?
Not to mention Birmingham, Atlanta and Charlotte as well as Jacksonville.
Say CN gets KCS. There may be some small concessions to NS or CSX or both to ensure no loss of two shippers for those who have them.
CP then combines end to end with CSX or NS. CP only really overlaps either one of those between Chicago and Detroit and even then only by trackage rights.
I am not sure how that changes things significantly. How much more traffic would go from Western Canada to the Eastern US compared to what already does, or from Eastern Canada to the Eastern US for that matter?
Would that really trigger a final consolidation?
When all is said and done there will be two railraods in the USA
CN & CP
In the unlikely event that CN wins the bid to take over the KCS CP will be left as the smallest class 1 by far and the odd man out.
Perhaps a Conrail type split is in order....
CP takes Kansas City south
CN takes the Meridian Racetrack, regaining their old property (IC Shreveport line). Spin off the KCS branch line ops in Mississippi to a regional operator.
Joint operation into Mexico.
No one is a big winner, but both gain Mexico access. Let the competition begin.
ed
So if CN wins KCS then some say would combine with NS or CSX.
How does that change the dynamic? How much more wheat and grain ends up in the Eastern US compared to what already does? How much ethanol and oil end up in the Eastern US compated to what already does? How much intermodal from Vancouver ends up in the Eastern US compared to what already does? Would CP combining with CSX or NS really change the overall dynamic that much?
I am just asking these questions for the sake of discussion and to hear what others are thinking.
kgbw49 Not to mention Birmingham, Atlanta and Charlotte as well as Jacksonville.
I didn't mention those points due to the fact NS and KCS have been interchanging freight from Mexico via Meridian, MS. for sometime now.
The greater market penetration will be in the Midwest-Mexico corridor.
MP173 Perhaps a Conrail type split is in order.... CP takes Kansas City south CN takes the Meridian Racetrack, regaining their old property (IC Shreveport line). Spin off the KCS branch line ops in Mississippi to a regional operator. Joint operation into Mexico. No one is a big winner, but both gain Mexico access. Let the competition begin. ed
SDMAC9500, makes sense! The Wabash would be "Wabashing" again!
https://www.trains.com/ctr/railroads/locomotives/wabash-railway-steam-locomotives-in-the-20th-century/
kgbw49 So if CN wins KCS then some say CP would combine with NS or CSX.
So if CN wins KCS then some say CP would combine with NS or CSX.
I don't think CP would combine with CSX or NS. I think that CP would just announce that their railroad is for sale to the highest bidder. The Canadian Government would have to buy CP or let one of the big four US railroads get the company. If the winner is any of the four big US Class One railroads the whole North American railroad system will be destabilized. I don't think any hedge fund would be interested as I don't see how they would profit. Canada wouldn't let them split CP up. And who besides one of the US Class Ones could figure out a way to make money. It's Catch-22.
UP is already concerned about losing traffic to CP/KCS or CN/KCS. The latter might be more problematic for UP since the CN/KCS route north from Mexico would be shorter. Meanwhile CN/KCS is a major problem for CP. I suspect the response might be a CP/UP merger. The only overlap is in the upper midwest and could be mitigated with concessions.
Personally, I prefer to see CP get KCS but keep existing gateways with other RRs open, allowing shippers to choose single-line CP/KCS service or a more direct route where traffic is interchanged to CN or UP.
I don't foresee CN/KCS making it past the STB. CP/KCS is likely to make it.
News coming out that KCS will go with the CN deal. What does CP do now? just a few years ago the STB turned down both NS & CSX merger with them. I dont see the KCS/CN passing the STB though. The shareholders will be the ultimate losers when it doesnt pass not getting any money or shares and letting the CP deal go along with the $700 million break up fee. Ouch
Our community is FREE to join. To participate you must either login or register for an account.