The US Surface Transportation Board approved a joint merger application between Canadian Pacific and Kansas City Southern in a major step towards the first single-line railway connecting the US, Mexico and Canada..The decision made on March 15, 2023 authorizes CP to exercise control of KCS as early as April 14, 2023 in a US$27 billion deal. Combining the two railways — the first of its kind in two decades — will lead to the creation of Canadian Pacific Kansas City..Calgary-based CP said it would be reviewing the 212-page decision before announcing further details on the merger within the coming days. Nevertheless, the company already confirmed that CPKC will remain headquartered in the city..While remaining the smallest of six US Class 1 railroads by revenue, the combined company will have a much larger and more competitive network, operating approximately 20,000 miles of rail (32,000km) and employing almost 20,000 people..Once combined, full integration of CP and KCS is expected to happen over the next three years, unlocking the benefits of the combination..In reaching its decision, the STB said the deal “should ultimately enhance safety and benefit the environment,” with approximately 64,000 truckloads annually shifted from roads to rail..“The transaction is also expected to drive employment growth across the CPKC system, adding more than 800 new union-represented operating positions in the United States,” the board continued..“This transaction is ‘end-to-end’, meaning that there are little to no track redundancies or overlapping routes.”.“If consummated, it will reduce travel time for traffic moving over the single line service, it should result in increased incentives for investment, and it will eliminate the need for the two now-separate CP and KCS systems to interchange traffic moving from one system to the other. This will enhance efficiency, which in turn will enable the new CPKC system to better compete for traffic with the other larger Class 1 carriers.”.The board concluded: “The transaction will make possible improved single-line service for many shippers and will result in merger synergies that are likely to allow CPKC to be a vigorous competitor to other Class 1s by providing improved service at lower cost.”.CP president and CEO Keith Creel said the decision “clearly recognizes the many benefits of this historic combination”..“As the STB found, it will stimulate new competition, create jobs, lead to new investment in our rail network, and drive economic growth,” Creel added..“These benefits are unparalleled for our employees, rail customers, communities and the North American economy at a time when the supply chains of these three great nations have never needed it more.”.“A combined CPKC will connect North America through a unique rail network able to enhance competition, provide improved reliable rail service, take trucks off public roads and improve rail safety by expanding CP's industry-leading safety practices.”
