KCS accepts CN's merger offer...What does this mean for Amtrak?

[Anthony V]

According to Trains Magazine, the Kansas City Southern Railroad has accepted Canadian National's offer for merger. The Surface Transportation Board still has to approve the merger, and Canadian Pacific has 5 days to counter-offer the proposal, or KCS will terminate their merger agreement with CP, using money offered by CN to "sweeten" their merger offer with KCS.

My question is, what does this mean long-term for Amtrak routes that use Canadian National rails, like the City of New Orleans, the two state-supported round trips to Carbondale, and the Blue Water in Michigan?

 

[MisterUptempo]

According to Trains Magazine, the Kansas City Southern Railroad has accepted Canadian National's offer for merger. The Surface Transportation Board still has to approve the merger, and Canadian Pacific has 5 days to counter-offer the proposal, or KCS will terminate their merger agreement with CP, using money offered by CN to "sweeten" their merger offer with KCS.

My question is, what does this mean long-term for Amtrak routes that use Canadian National rails, like the City of New Orleans, the two state-supported round trips to Carbondale, and the Blue Water in Michigan?

Here is a map of the combined CN and KCS, which was pulled from an investor presentation. Notice how CN highlights a new "Kansas City Speedway", connecting KC, Chicago, and Detroit. That likely means increased traffic on the former IC main between Chicago and Gilman, and on the Blue Water route, from Chicago to Flint.

Here is a link to a larger image of the map.

 

[Seaboard92]

Amtrak only uses small portions of KCS namely I think it is directional running on the Sunset Limited in East Texas. Honestly I think this would be bad for the industry as a whole and really bad for the Canadian.

 

[Steve4031]

There was speculation in the article that this merger might result in freight traffic being routed onto the CONL line.

 

[jiml]

There has been talk that CN will have to divest one of the parallel North-South lines, which wasn't a problem for CP. (AU's own @railiner alluded to this even before the "talking heads" got onto it.) Obviously the CONO and regional trains on that route would be affected if the easterly track was dropped, but a lot of experts think the prize in this whole "game" is the line between Meridian and Shreveport/Dallas which conveniently crosses CN's existing tracks. Hopefully someone can connect all the dots.

 

[jiml]

Here's an additional map which can be downloaded and enlarged a little further than the one above:

 

[jiml]

There was speculation in the article that this merger might result in freight traffic being routed onto the CONL line.

Another interesting wrinkle and the last thing passenger service needs.

 

[Eric S]

Is there any precedent for one of the conditions for a merger approval to be better handling of Amtrak trains?

 

[jiml]

As posted in the original merger thread, CP may not be done yet.

https://www.amtraktrains.com/threads/canadian-pacific-buying-kansas-city-southern.78549/post-895553

 

[frequentflyer]

Is there any precedent for one of the conditions for a merger approval to be better handling of Amtrak trains?

NO!

However, management do not like getting phone calls or emails from State politicians or congressmen. So if these states that subsidize Amtrak routes cared about the ROI on their dollar ( and they don't except California), expect the delays to continue.

 

[Cal]

Anyone else getting this ad here?

 

[dlagrua]

I do not see this merger being helpful at all. It moves the railroad industry one step closer to a corporate monopoly. As for the Amtrak boards obsession with creating a whole new bunch of corridor routes, I say good luck convincing the freight railroads to give Amtrak new rail access.

 

[SubwayNut]

Anyone else getting this ad here?
View attachment 22339

Yes

 

[NSC1109]

I do not see this merger being helpful at all. It moves the railroad industry one step closer to a corporate monopoly. As for the Amtrak boards obsession with creating a whole new bunch of corridor routes, I say good luck convincing the freight railroads to give Amtrak new rail access.

I don’t believe they need to be convinced. My understanding is that Amtrak can force them to comply with starting new service.

 

[zephyr17]

I don’t believe they need to be convinced. My understanding is that Amtrak can force them to comply with starting new service.

In theory, they can on any route that hosted passenger service in 1970.

In practice, railroads can put up any number of roadblocks. The main tool is that Amtrak must pay any "avoidable cost" which gives the railroads a huge loophole. Such as UP deciding that taking the Sunset daily would require a capacity increase requiring double tracking the Sunset route at a cost of $8B.

If the railroads are inclined to fight, they have legal and regulatory tools to do so. For years if not decades.

UP subsequently double tracked much of it anyway for their own purposes, btw.

 

[NSC1109]

In theory, they can on any route that hosted passenger service in 1970.

In practice, railroads can put up any number of roadblocks. The main tool is that Amtrak must pay any "avoidable cost" which gives the railroads a huge loophole. Such as UP deciding that taking the Sunset daily would require a capacity increase requiring double tracking the Sunset route at a cost of $8B.

If the railroads are inclined to fight, they have legal and regulatory tools to do so. For years if not decades.

UP subsequently double tracked much of it anyway for their own purposes, btw.

Oh I don’t disagree that the freight companies can and will fight it every way they can. For years NS tried screwing over the Wolverine and Blue Water by failing to maintain the eastern end of the Michigan Line between Kalamazoo and Dearborn. At one point I think the section between Kalamazoo and Battle Creek had a 25mph slow order.

What I was getting at is that I don’t believe freight companies can just flat out say “no”.

 

[zephyr17]

What I was getting at is that I don’t believe freight companies can just flat out say “no”.

True, but they can most definitely say "I have a headache."

 

[cirdan]

Maybe if CN / KCS move more trains onto the CONL route , this would mean upgrading capacity , which would also benefit Amtrak?

 

[neroden]

Merger is DOA as proposed; DOJ has advised STB to reject the voting trust for CN, and the STB most certainly will reject it.

 

[railiner]

Merger is DOA as proposed; DOJ has advised STB to reject the voting trust for CN, and the STB most certainly will reject it.

I kind of thought so...I think some or all of the other Class I's might have lobbied hard against it happening...

 

[jiml]

Merger is DOA as proposed; DOJ has advised STB to reject the voting trust for CN, and the STB most certainly will reject it.

This was a predictable outcome.

 

[Cal]

Merger is DOA as proposed; DOJ has advised STB to reject the voting trust for CN, and the STB most certainly will reject it.

Sorry for my ignorance, but what does this mean?

 

[toddinde]

Not to mention that it’s bad news for Amtrak and the public, but it’s anti-competitive and terrible for freight shippers. The STB should not approve this merger.

 

[jiml]

Sorry for my ignorance, but what does this mean?

Dead On Arrival
Department Of Justice
Surface Transportation Board

The latter has to approve the merger, taking into consideration various factors (which can be Googled).

The DOJ has picked up on something they don't like - likely competition-related and has strongly suggested that the STB not approve. Most expect the STB to follow this "advice".

Dead On Arrival is pretty much explanatory. In a simplified nutshell though, the STB has granted the basic go-ahead for the original CP-KCS proposal subject to the usual procedurial stuff and CN was seeking a similar exemption. It's unlikely they'll get it and without it nothing more can happen without substantial changes. The question is whether KCS' shareholders will pivot back to CP - especially if the cash is slightly sweetened (a bird in the hand), look elsewhere (US Class 1) or abandon the whole idea. It's important to note the original deal was negotiated between two willing partners - CP and KCS, whereas the CN offer while not "hostile" was "unsolicited".

 

[jiml]

Mods may want to consider merging this thread with the primary discussion of the KCS situation under Freight Railroads? There's a lot of common ground. Suggested title: KCS Merger Discussion and Possible Implications for Amtrak?