STB approves rail takeover; ag groups cautious
|The Surface Transportation Board last week approved the takeover of the Kansas City Southern Railway by the Canadian Pacific Railway, the Associated Press reported.The deal creates the first single-line rail network linking Canada, the United States and Mexico.|
|Mike Steenhoek, executive director of the Soy Transportation Coalition, said in an email to members, “Mergers and acquisitions are inspired by and result in the benefit of the shareholders, customers, or both. Some agricultural organizations and shippers have expressed disappointment in the approved acquisition.”|
“Moreover, some communities along the combined CPKC network will indeed experience additional frequency of trains and the inconvenience and noise they will provide,” Steenhoek said.
“Others have expressed optimism that the merger of the two networks will result in enhanced marketing opportunities. These shippers believe that the combined network will open up new geographic regions — particularly in Mexico and the south central United States — that they heretofore have not enjoyed.
“We will obviously wait and see if one perspective becomes reality in the months to come.
”U.S. Wheat Associates and the National Association of Wheat Growers said they are disappointed that the Surface Transportation Board has approved the merger.
In public comments submitted to the STB last year, USW said the market power held by the Class I railroads has serious implications for U.S. wheat’s competitiveness compared to other major exporters.
NAWG shared similar public comments which outlined how reliant wheat is on rail and how decreased rail-to-rail competition hurts shippers and growers alike, noting that the merger takes the U.S. rail system from seven to six Class 1 railroads.
|In a joint statement, USW and NAWG said the STB has given a green light to rail consolation “without regard for the consequences on agricultural shippers from lack of competition in the U.S. rail sector.”|
“NAWG is disappointed by today’s STB announcement and maintains our concerns that the merger of CP and KCS will impede competition in the rail market and increase rail rates,” said NAWG CEO Chandler Goule.
“With 50% of wheat being exported, wheat is heavily reliant on rail transportation to move across the United States,” Goule said.
“Since the merger was announced in 2021, NAWG has filed four public comments with the STB opposing the merger, citing a myriad of concerns on the impact to competition, unfair access to competing wheat producing countries, and changes to tariff provisions that could impact wheat farmers.”
|USW President Vince Peterson said, “U.S. rail industry consolidation has led to poorer, not improved, service for agricultural shippers.”|
“In addition, we see extreme disparity in rates for wheat shippers. Rail rates over the last decade have increased exponentially and rates for wheat are higher than rates for other commodities even with similar handling characteristics,” Peterson said,.
“Those higher rates make U.S. wheat less competitive in the global market at a time when higher prices already hurt our competitiveness.”
Ag & Politics