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Rail News Home Canadian Pacific

2/26/2016



Rail News: Canadian Pacific

CP cites growing shipper support for NS merger deal, while UPS and TTD voice objections


Canadian Pacific has received more than 80 letters from shippers in support of its proposed takeover of Norfolk Southern Corp., CP announced yesterday.

Sixty-two of the letters have been posted on the Surface Transportation Board (STB) website. The total number of letters to shippers in support of the proposed merger is now more than three for every one shipper letter in opposition, CP officials said in a prepared statement.

CP, which has made three offers to acquire NS, argues the merger would produce options for rerouting traffic around Chicago and other areas of congestion, create new and more efficient routes for rail shipments and allow the merged company to provide end-to-end service to shippers of all sizes across North America. NS has rejected all the offers.

"Change is necessary to support continued economic growth, and continued growth in the U.S. economy is dependent on North American rail service meeting current and future demand," said CP President and Chief Operating Officer Keith Creel in the statement. "Without the ability to add infrastructure or build more track, options to increase capacity are becoming limited." 

While many shippers have indicated support for CP's proposal, UPS — the Class Is' largest intermodal shipper — told the STB in a Feb. 9 letter that it does not believe a CP takeover of NS would benefit intermodal shippers.

"UPS is concerned that this combination would lead to diminished rail intermodal service levels and increased costs for all segments of rail customers," the UPS letter states. "In addition, UPS is concerned about potential industry consolidation as a reaction to an NS-CP merger, which would only further negatively impact freight-rail shippers."

Meanwhile, another major party recently weighed in on the merger plan: the Transportation Trades Department (TTD) of the AFL-CIO. In a policy statement posted Feb. 21 on the TTD website, the labor group expressed "grave concerns" about the "final round of consolidation" the merger would have on the industry by "further reducing jobs, safety and service."

Having lived through the "mega-mergers during the 1980s and 1990s that have left this country with only seven Class I freight railroads, transportation labor understands ... the devastating impact these transactions can have on jobs, freight service and safety," the statement reads.

TTD called on STB, regulators and legislators "to use their review and oversight authorities to carefully monitor CP's actions and reject merger schemes that harm the economy and the public interest."



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