Federal Maritime Commission members object to CP-KCS merger

Federal Maritime Commissioners Carl Bentzel, Louis Sola and Max Vekich have asked the Surface Transportation Board to reject the proposed merger of Canadian Pacific and Kansas City Southern.

In a June 22 filing with the STB, the commissioners explain that their opposition to the merger stems from their own views as commissioners and does "not constitute an official position of the Federal Maritime Commission."

"In our view, the proposed consolidation does not ensure that 'the anticompetitive effects of the transaction outweigh the public interest in meeting significant needs,'" the three stated in the document.

"Specifically, the proposed merger will adversely impact U.S. ports and the primarily U.S.-based intermodal railway systems that serve our ports, and would disproportionately benefit Canadian ports and the primarily Canadian-based intermodal railway systems that service Canadian ports for transportation of U.S.-bound cargo," Bentzel, Sola and Vekich wrote. 

Canadian policies that support Canadian port use per capita are "financially much more significant than similar policies in the United States, contributing to erosion of U.S. port and railroad market share for U.S.-bound cargo," they added.

Although the merger could result in economic benefits for some shippers and certain parts of the United States, overall it will negatively impact employment and long-term investment affecting intermodal shipments through U.S. ports, the three wrote.

"Finally, the macro-economic loss of intermodal market share of U.S.-bound containerized cargo shipments from U.S. ports would adversely harm U.S. longshore and rail labor, port trucking companies, U.S.-based intermodal railways servicing U.S. ports, warehousing and distribution centers servicing U.S. ports and other entities that handle cargo bound through U.S. ports," the filing states. "Such economic losses will be far greater than any economic gain that might ensue as a result of a consolidation of the railroad systems of CP and KCS."

To read the entire filing, click here. The STB continues to accept comments on the merger proposal. The Class Is' combination cannot move ahead without the board's stamp of approval.