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Shippers Wary Of CN-KCS

Rail shipper groups and unions have raised concerns about the merger of Canadian National and Kansas City Southern railroads.

They made it clear to the Surface Transportation Board that they opposed the creation of a voting trust in which KCS shareholders would receive cash and shares from CN, but KCS would be placed in an independent trust and CN would not be allowed to exert management control over it.

The National Industrial Transportation League, Amtrak and a major rail labor union filed objections to approval of the voting trust by the board.

NITL told the STB that it was generally opposed to further consolidation in the rail industry due to concerns about service and competition.

The American Chemistry Council and the Fertilizer Institute told the board the voting trust should not be approved, but both have not taken a position pro or con regarding the eventual merger.

The SMART union said it fears that if the CN voting trust and proposed merger are approved, it will result significant job losses on CN and KCS because the transaction would require either a sale or abandonment of duplicative rail lines.

Line abandonment also is a concern for Amtrak. In particular, it took note of CN’s plans to sell the KCS line linking Baton Rouge and New Orleans, which closely parallels a route operated by CN, which has been targeted by Amtrak for expansion of its passenger service.

Amtrak asked the STB to order CN to sell the KCS Baton Rouge line to the government or a government-owned entity. It would then rely on an independent operator to provide freight service while permitting Amtrak’s proposed operations over the route.

And, of course, Canadian Pacific, which had sought to acquire KCS before CN intervened with a higher bid totaling $33.6 billion in stock and cash, filed a 67-page objection to the voting trust proposal.

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