The Surface Transportation Board (STB) has given the nod to hear the application for Canadian Pacific's (CP) acquisition of Kansas City Southern (KCS) railroad after objections from other Class 1 railroads were rejected. The STB now considers the submission ready for review.
The $31 billion deal was held up when Union Pacific argued that the merger application was incomplete and did not include how shipments could be affected. The STB determined that the information wasn't germane to the planned hearings, yet. The federal agency also ruled that arguments from BNSF, CSX and Canadian National were not valid in the proceedings.
It's been several decades since two Class 1 railroads have sought government approval to merge and has stirred up concerns from other Class 1's as the new CPKC, as it would be named, would sprawl from Canada through the U.S. heartland into Mexico.
The deal is far from over and the federal regulators schedule for the review is planned to run into the middle of 2022 and possibly further.
Forecasted growth at CPKC is expected to come at the expense of the other competing railroads but would be expected to take more trucks off the highway on longer haul trips between the three countries. Projected increase in rail traffic on the north-south spine in the U.S. heartland could mean a doubling or more of rail traffic that residents of trackside towns and cities will see from the KCS line in Texas from Laredo all the way up the coast to Beaumont and northward.