First major US railroad merger in 2 decades will go forward

The way has been cleared for the first major railroad merger in more than two decades after federal regulators approved Canadian Pacific’s $31 billion acquisition of Kansas City Southern.

The two railroads are the nation’s two smallest, but the approval Wednesday by the U.S. Surface Transportation Board comes after a lengthy and arduous review because their coupling will create the only railroad linking Canada, Mexico and the United States.

The Transportation Board said that the new direct service “will facilitate the flow of grain from the Midwest to the Gulf Coast and Mexico, the movement of intermodal goods between Dallas and Chicago and the trade in automotive parts, finished vehicles, and other containerized mixed goods between the United States and Mexico.”

The board said the transaction, which will have little to no track redundancies or overlapping routes, is also expected to add more than 800 new union jobs in the U.S.

Regulators said in a report earlier this year that the only major impact of the deal would be more noise in places where train traffic is expected to increase significantly. The Surface Transportation Board essentially rejected concerns that the deal would create problems in towns along the tracks by blocking crossings for extended periods of time or clogging the already busy rail network around Chicago and create problems for commuter trains.

The biggest traffic increases are expected between Chicago and Laredo, Texas, with some of the rail lines across Iowa predicted to see more than 14 additional trains a day and the tracks between Kansas City, Missouri, and Beaumont, Texas, likely to see about 12 more trains a day.

Officials in small towns along the railroad like Camanche, Iowa, on the upper Mississippi River told regulators that first responders could be delayed in getting to a fire or urgent health problem because long trains can block every crossing in town at once.

“I believe this merger would compromise the critical effectiveness of our paramedics, EMTs and firefighters, and the health and livelihood of those who need timely response,” Camanche Fire Chief Dave Schutte wrote in a letter to regulators.

Several suburban Chicago cities also opposed the merger because of concerns about more traffic potentially causing some commuters to abandon the Metra rail network and drive instead.

But the Surface Transportation Board determined that the expected increase in train traffic across the new railroad’s network will only add seconds to the average delay when the time a crossing is blocked is averaged out over all the vehicles that pass through a crossing every day, including all the ones that are never stopped.

The Canadian Pacific Kansas City railroad would still be the smallest of the major freight railroads with about 20,000 miles of track, but it would be the only one linking Canada, the United States and Mexico.