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CSAFE Global

 

FSA

CN 1CN (TSX: CNR, NYSE: CNI) recently submitted a notice of intent to file a responsive application on February 28, 2022, with the Surface Transportation Board (“STB”) in accordance with the STB’s procedural schedule for review of the pending Canadian Pacific (“CP”) and Kansas City Southern (“KCS”) merger (collectively “CP-KCS”).

CN’s responsive application will ask the STB to condition any approval of a CP-KCS merger on the divestiture of KCS lines from Kansas City, Missouri to Springfield and East St. Louis, Illinois (the “Springfield Line”) to CN, pursuant to the STB’s statutory authority to order “the divestiture of parallel tracks” as a merger condition.

The Springfield Line is a direct competitive alternative to CP’s route from Kansas City to Chicago, and beyond to Detroit and eastern Canada. CP and KCS have made it clear in their merger application that they plan no investment on the Springfield Line, and instead will de-emphasize it in favor of CP’s existing parallel line.

Putting the Springfield Line under CN’s control represents a major opportunity to improve transportation options, promote rail-to-rail competition, and take many of thousands of long-haul trucks off the road annually through increased rail-to-truck competition. CN’s plan for the line will benefit all stakeholders and will advance CN’s continual efforts to ensure competition and choice in our industry, while also creating new jobs and economic opportunities in the region.

Specifically, with the Springfield Line, CN will: Make investments of at least US$250 million in the Kansas City, Missouri to Springfield and East St. Louis, Illinois line, including terminal upgrades; Take many thousands of trucks off the road, reducing congestion and emissions; Promote competitive options for customers, including automotive and intermodal traffic, which will lead to increased economic prosperity for the Midwest in line with the goals of President Biden’s executive order on competition; Open new international markets to customers, including safely and reliably linking Illinois, Indiana and Michigan manufacturers and farmers to the world; and, Preserve all existing competitive options by providing KCS access to customers on the line.

Under CN’s proposal, CN would make necessary capital investments to improve operating speed and terminals, yield environmental benefits, and provide additional pro-competitive options and access for auto and intermodal customers.

CSAFE Global

 

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