Freight merger impacts must be studied, former official says

JJ Ruest, CN CEO, is seen here with the different locomotives welcomed in CN’s ranks over the years to propel its service farther than any other North American railway, similar to how the IPO propelled CN to new heights. Locomotives from left to right: BC Rail, Grand Trunk Western, CN, Illinois Central Railroad, the Wisconsin Central Railroad, and the Elgin, Joliet & Eastern Railway. (Globe Newswire)

(The Center Square) – The largest merger of two railroad companies in two decades will mean more freight train traffic throughout Illinois. A former transportation official wants a thorough review done on how it will affect communities.

Canadian Pacific rail company is buying Kansas City Southern. The federal Surface Transportation Board last month gave initial approval to the merger.

“Under the Board’s statutes and regulations, this proposed transaction would be classified as ‘Major’ and would be the first major transaction to seek Board approval in more than two decades,” said STB Chairman Martin J. Oberman in a statement about the “notice of intent” back in March.

Canadian Pacific announced Monday support from labor groups for the company’s voting trust before a midnight deadline for STB review.

“These letters underscore the significant benefits for organized labor from a CN-KCS combination,” said a statement from Canadian Pacific.

The sale isn’t necessarily a negative, said former Illinois Department of Transportation Secretary Randy Blankenhorn, but its impacts need to be studied outside of major metropolitan areas.

“To look at Springfield, to look at metropolitan Chicago, to look at our rural areas in Illinois and say ‘how much more traffic is there going to be, what does that mean for getting through town’,” Blankenhorn told WMAY. “You’re not going to build an overpass over every community, and so we have to make sure that the mitigation includes scheduling issues so that you don’t have trains backed up so that you’re not having one after another going through your town.”

The possible congestion could also impact passenger rail.

“Most people agree that Amtrak works really well when it’s on time, and when it’s not on time it’s usually not their fault, it’s because it’s backed up by freight traffic because it can’t get through,” Blankenhorn said.

The Surface Transportation Board is the federal agency Blankenhorn wants to review the pending merger to ensure increased freight traffic is properly mitigated.

Blankenhorn also said competition could also be at stake in the merger, impacting businesses in parts of the state.

“One of the things that they’re looking at is avoiding much of the routes that they use on the western sides of the state right now and running through Springfield and up through Gilman and to Chicago,” Blankenhorn said. “Well, what happens to those communities in western Illinois and those businesses in western Illinois?”

In a statement, CN and KCS said the company is taking steps to create jobs “up and down the line” and to “reinforce the pro-competitive nature of their combination.”

“CN and KCS have also agreed to preserve existing route options by keeping gateways open on commercially reasonable terms,” the company said. “The proposed CN-KCS combination represents a pro-competitive solution that offers unparalleled opportunities for customers, employees, shareholders, the environment and the North American economy.”

The STB chairman said he’s “fully confident in my fellow Board members and our staff to adjudicate these matters and reach the appropriate outcome on the merits.”

“The freight railroad system is a crucial component of our Nation’s infrastructure,” Oberman said. “It is both a key engine of economic growth and essential to maintaining our national security. It is important for us to make sure that the U.S. maintains a robust, efficient, competitive, and economically viable surface transportation network that meets the needs of its users.”

— Greg Bishop, The Center Square

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