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Canadian Pacific Kansas City

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Canadian Pacific Kansas City
Map showing the two subsidiary Class I railroads, CP and KCS, which make up CPKC
CPKC system map, showing CP tracks in red and KCS in black. Does not include trackage rights.
Overview
Locale
  • Canada
  • Mexico
  • United States
Dates of operationApril 14, 2023 (2023-04-14)–present
Technical
Track gauge1,435 mm (4 ft 8+1⁄2 in) standard gauge
Length32,000 km (20,000 mi)
Other
Websitecpkcr.com
Canadian Pacific Kansas City Limited
CPKC
Company typePublic
IndustryRail transport
Predecessors
FoundedApril 14, 2023; 20 months ago (2023-04-14)
Headquarters
Calgary
,
Canada
Areas served
  • Canada
  • Mexico
  • United States
Key people
Number of employees
20,000

Canadian Pacific Kansas City Limited, doing business as CPKC (known as Canadian Pacific Railway Limited until 2023), is a Canadian railway holding company. Through its primary operating railroad subsidiaries, Canadian Pacific Railway (CP) and Kansas City Southern Railway (KCS), it operates about 32,000 kilometres (20,000 mi) of rail in Canada, Mexico, and the United States, and is the only single-line rail corporation ever to connect the three countries. CPKC is headquartered in Calgary and led by President and CEO Keith Creel.

History

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Predecessors and formation

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See also: Canadian Pacific Railway and Kansas City Southern Railway
John A. Macdonald, founder of CP, and Arthur Stillwell founder of KCS, the two main railroads predecessors of today's CPKC.

Canadian Pacific Railway (CP) announced on March 21, 2021, that it was planning to purchase Kansas City Southern (KCS) for US$29 billion.

Thirty days later, Canadian National Railway (CN) issued a competing offer of $33.7 billion.[1] But in August, the US Surface Transportation Board (STB) blocked the CN deal, ruling that the company could not use a voting trust to assume control of KCS because it might reduce competition in the railroad industry.[2]

On September 12, 2021, KCS accepted a new $31 billion offer from CP and terminated its agreement with CN.[3] KCS's shareholders voted to approve the merger on December 10, 2021. The STB had already ruled that CP's plan to use a voting trust to take control of KCS would not hamper competition.[2] The voting trust allowed CP to become the beneficial owner of KCS in December 2021, but the two railroads operated independently until receiving approval for a merger of operations from the STB.[4][5] Keith Creel, President and CEO of CP and future CEO of the merged company, chose the name for the new company as a way to honor the long history of the two preceding companies.[6]

Union Pacific and BNSF Railway raised objections to the merger with the STB. Both companies were concerned about CPKC's projected increase in traffic because it would unduly congest UP owned tracks through the Houston area (Houston, West Belt, East Belt, Beaumont, Harrisburg and Glidden Subdivisions), where both UP and BNSF (the latter of which operates in the Houston area through a combination of owned tracks and trackage and haulage rights on UP tracks) operate a large amount of daily traffic. CPKC has trackage rights from Beaumont to Rosenberg.[7]

At the STB hearings, CP and KCS defended their merger proposal, arguing that Houston has sufficient capacity to support the projected increases in traffic. Creel argued that receiving and departure tracks at the west end of Englewood Yard, UP's main yard in Houston, could be lengthened to accommodate longer trains. UP responded that although they had a plan to expand the yard, they could not proceed until existing environmental problems, stemming from creosote contamination that has affected the area around Englewood, were resolved (Southern Pacific for decades operated a facility at Englewood to treat railroad ties with Creosote, and accidental spills of the substance caused severe contamination in the neighborhoods surrounding the yard; UP is currently working with the City of Houston and the Environmental Protection Agency (EPA) on a remediation plan for the existing contamination in the area). The Board suggested, to mediate between the disputing parties, the possibility that, pending merger approval or post-merger, KCS or eventually CPKC, apply to UP for trackage rights from Texarkana to Laredo via San Antonio and Austin to reroute part of the north-south traffic, bypassing Houston.[8]

The two companies demanded that CPKC perform construction work on new sidings on both the lines that meet in the Houston area and on Brownsville Subdivision between Placedo and Robstown, near Corpus Christi, where CPKC trains leave the UP tracks in South Texas.[9]

Metra also opposed the merger, along with a group of West suburban Chicago communities (DuPage County, Bartlett, Bensenville, Elgin, Itasca, Hanover Park, Roselle, Wood Dale and Schaumburg) on the Milwaukee District West Line, arguing that the projected increase in traffic would bring delays in the provision of Metra's passenger rail service, as well as a decrease in the quality of life and the negative consequences on economic development in the communities located along the line.[10][11]

In STB hearings, Canadian National, who had already lost KCS to CP, presented a plan to acquire the KCS line—the former Gateway Western, which linked Kansas City to Springfield, Illinois; St. Louis, Missouri; and East St. Louis, Illinois—tie it to its former Illinois Central Gilman Subdivision, and thus create via both Springfield and via St. Louis a new corridor between Kansas City, Michigan and eastern Canada. This would bypass Chicago, and, according to the plan presented by CN, divert 80,000 long-haul truck shipments to rail annually. The plan included the improvement of the corridor, valued at more than US$250 million.[12] A few months later, CN resigned its intentions to purchase the Springfield Line to try to obtain trackage rights on the line, always with the same intention of creating the corridor proposed in the original plan to purchase the line filed with the STB.[13] The STB would ultimately reject plans submitted by CN to operate on the Springfield Line.[14]

Despite all the objections raised at the hearings, the final approval of the merger came on March 15, 2023, and the merger was completed on April 14, 2023.[15][16][11]

KCSM #4567, a GE AC4400CW from CPKC that still retains the gray Transportadora Ferroviaria Mexicana (TFM) scheme with the KCS de Mexico logos and lettering painted over where the TFM logos used to be
Two CPKC unit trains, one grain and another crude oil, meet up at Siloam Springs, Arkansas - with locomotives from both two preceding railroads.

The merger created the first and only single-line railway connecting Canada, the U.S. and Mexico with an approximately 32,000-kilometre (20,000 mi) network.[17] Fully integrating the two railroads is expected to take up to three years.[17]

Post merger history

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Seven days after the merger, the company announced that it had landed its first major contract, handling Schneider National intermodal traffic between the U.S. and Mexico. On April 25, it signed a similar agreement with Knight-Swift.[18] The announcement was seen as backing up pre-merger projections that CPKC's single-line service would enable it to compete in the Chicago–Mexico corridor that had been dominated by the Union Pacific and BNSF.[19] In response, on April 24, Union Pacific responded by announcing a partnership with Canadian National Railway and Grupo México (owner of Ferromex and Ferrosur) to work together to accelerate the exchange of intermodal traffic between Mexico and Chicago or further north into Canada.[20]

CPKC Train I181 (Northbound) at Gentry, Arkansas

On May 11, 2023, CPKC launched its new service "Mexico Midwest Express (MMX)", numbered I180 and I181, which is mainly oriented to intermodal and automobile transportation, and also provides an approximate travel time of 98 hours between Chicago and Kansas City to Monterrey and San Luis Potosi, shorter travel times than those offered by the "Falcon Premium" service of UP, CN and Grupo México.[21] Previously, and as part of preparatory moves for the day after the merger, CP and KCS launched a series of test interline services between the Lázaro Cárdenas Port in the Michoacán Mexican state, and the Bensenville Yard in Chicago.[22]

On June 28, 2023, CPKC announced the intent to jointly acquire with CSX Transportation the Meridian and Bigbee Railroad (MNBR). The MNBR creates a connection 168 miles (270 km) between CSX in Montgomery, Alabama and Meridian, Mississippi, where it joins the Meridian Speedway westbound. Under the proposed agreement, CPKC would acquire the 50.4 miles (81.1 km) segment of the line between Meridian and Myrtlewood, Alabama, so-called Western Line, while CSX, in a nearly separate transaction, will resume operations on the so-called Eastern Line, between Myrtlewood and Montgomery, terminating the lease currently in place with MNBR. MNBR will cease operating between Myrtlewood and Montgomery, although it may continue to operate between Meridian and Myrtlewood and serve existing customers on that segment of the line.[23] If the STB approves the transaction, this will provide a new direct connection between the two companies' networks (CSX and CPKC already have connections New Orleans and in St. Louis, Missouri). In compensation, MNBR owner Genesee & Wyoming would receive CPKC properties in Alberta along with rights on CPKC lines.[24] The connection through the MNBR line will allow CSX traffic destined for Mexico to be delivered directly to CPKC, eliminating the need for a third intermediary railroad to move such traffic. Currently, CSX traffic bound for Mexico is exchanged with the Union Pacific in New Orleans, who then takes it to the cross-border gateway in Laredo, Texas, where it is delivered to CPKC.[25] MNBR's Western Line, once acquired by CPKC, will be renamed Haverty Subdivision, in honor of former KCS CEO and President Mike Haverty, the original driver of the idea to acquire MNBR more than two decades ago, to tie the KCS and CSX rail networks.

Haverty, KCS CEO and President from 1995 to 2015, was the driving force behind the company's expansion into to Mexico during his tenure, acquiring Tex-Mex in 1995, and then, that same year, win along with Transportadora Maritima Mexicana (TMM) the concession of the Mexican Northeast Railroad under the name Transportadora Ferroviaria Mexicana (TFM), which would ultimately become the catalyst for CP to acquire KCS and CPKC to be formed.[26]

In October 2024, the STB approved CPKC's purchase of the M&B line between Meridian and Myrtlewood, along with CSX's resumption of operations between Myrtlewood and Burkville. The agreement became effective 16 November, 2024. Both CPKC and CSX will initially interchange across the line two trains per day in each direction, at least for the first five years.

A few days before CPKC and CSX officially took over the former M&B line, Schneider National, CPKC's main intermodal partner and one of CSX's major partners, announced that a new interline service connecting the Southeast (Florida and Georgia) with the Texas and Mexico markets via the route between Montgomery and Meridian will be launched beginning in December.[27]

CN and Amtrak unsuccessfully raised objections to the purchase of the M&B line, fearing that increased traffic on the Meridian Speedway would cause congestion. CN required CPKC report the daily number of trains running through the Speedway to know if there will indeed be congestion on the line. Amtrak, for its part, requested that the length of trains running daily on the line be adjusted to the length of the existing sidings along the route.[28][29]

The CN and Amtrak requests were rejected by the STB, on the grounds that the two daily train pairs that CPKC and CSX plan to interchange across the M&B line will not cause congestion on the Speedway.[29][30]

CP 9375 is displayed as part of the 2816 'Final Spike tour' event at Kansas City Union Station. The 9375 is the first locomotive to receive the CPKC corporate paint scheme.

In August 2023, UP and CPKC butted heads again, this time over the trackage and haulage rights that KCS once held between the "south end" in Kansas City and Council Bluffs, Iowa, over UP tracks. CPKC informed the STB that UP was blocking the trackage and haulage rights originally granted to KCS, which dated back to the merger between the Missouri-Kansas-Texas Railroad (MKT), better known as "The Katy", and UP in 1988. CPKC inherited those rights from KCS. UP quickly came out to question the presentation made by CPKC to the Board, saying that the trackage rights in question were much more narrow in scope. When UP acquired the Katy, the Interstate Commerce Commission (ICC) required UP, as a condition of merger approval, to grant other railroads (including KCS) trackage and haulage rights to operate in the "Omaha/Council Bluffs-Kansas City corridor, with a further ability to move the grain traffic originating in this area to the Gulf." UP informed the STB that it was complying with the condition originally imposed by the ICC for the merger with Katy, "by granting KCS 'North End' rights — that is, rights to operate in the Omaha/Council Bluffs-Kansas City corridor — with ancillary 'South End' rights 'between Beaumont and Houston/Galveston' that KCS needed 'in order to provide a fully competitive service on north-end grain shipments.'"[31][32]

On April 24, 2024, as part of the company's first anniversary celebrations, the Steam locomotive CPR #2816 known as "The Empress" was launched on a historic transnational tour that will travel most of CPKC's network from Calgary, ending June 7 in Mexico City.[33][34][35][36]

2816 during its Final Spike Steam Tour, July 10, 2024, in Gleichen, Alberta

Due to a failure to reach an agreement with the Teamsters Canada Rail Conference, CPKC's Canadian operations, along with those of Canadian National, shut down from August 22, 2024, as the companies engaged in a lockout.[37]

In Mexico, CPKC has invested more than $75 million for the construction of new sidings, double track sections, by-pass tracks, new yard leads, and faster turnouts - were not initially envisioned as part of the CP-KCS merger. And it is currently working and enhancing traffic to and from the Lázaro Cárdenas Port, also promoting it as an alternative to the recurring congestion that exists in the West Coast ports, mainly at Long Beach and Los Angeles, for shipments to and from Texas and other points served by CPKC.[38] In addition, the second crossborder bridge in Laredo is expected to open in early 2025, which will definitively eliminate the bottleneck generated by the current border single track bridge.[38]

Operations

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CPKC fast-growing international corridor from Laredo to Beaumont: own routes are marked in green, while sectors where trains running under Union Pacific trackage rights between Beaumont and Rosenberg (including the Houston area), and between Victoria and Robstown are marked in red. In the case of traffic through Houston, the usual routes (Houston Subdivision to West Junction, where it joins the Glidden Sub, and the West Belt Sub between the CP-Control Point Maury Street near Tower 26 and Belt Jct, where trains, generally eastbound, enter the Beaumont Sub) are marked in red, and in orange, the detours used in case of congestion on the usual route.

CPKC operates about 32,000 kilometres (20,000 mi) of rail across Canada, Mexico and the United States.[17] As of April 2023, CPKC has around 20,000 employees.[17] CPKC has its global headquarters in Calgary, Alberta, Canada with its U.S. headquarters in Kansas City, Missouri, and its Mexico headquarters in Mexico City and Monterrey.[39]

Company executives said that merging CP and KCS would be "straightforward" because the railroads only touch at Kansas City, and interchange volumes were relatively low, with about four trains per day as of September 2021. They also cited that the two companies largely used the same back-office information technology systems.[6]

The railroad maintains its own police force, the Canadian Pacific Kansas City Police.

Sponsorships

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CPKC inherited and renewed CP's existing sponsorship of the Canadian Women's Open golf tournament in July 2023, extending it through 2026.[40]

In October 2023, CPKC and the Kansas City Current of the National Women's Soccer League announced a 10-year naming rights deal for the Current's new stadium in Kansas City, Missouri, the first stadium ever constructed specifically for a professional women's sports team.[41][42]

References

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  1. ^ "CN steps up with $33B offer for Kansas City Southern, besting CP's $25B bid". CBC News. April 20, 2021.
  2. ^ a b "Kansas City Southern picks Canadian Pacific's $31 billion bid for railroad". CNBC. September 12, 2021. Retrieved September 13, 2021.
  3. ^ Atkins, Eric (September 15, 2021). "Kansas City Southern formally scraps CN takeover agreement, backs rival CP offer". The Globe and Mail. Retrieved September 24, 2021.
  4. ^ Kaberline, Brian (March 16, 2021). "Regulator orders pause in consideration of Canadian Pacific-KC Southern merger". Kansas City Business Journal. Retrieved July 4, 2022.
  5. ^ The great train takeover. Financial Tribune (Video). May 2, 2022. Retrieved July 4, 2022.
  6. ^ a b Stephens, Bill (September 20, 2021). "CP CEO Keith Creel talks historic KCS merger, CPKC name, operations". Trains. Retrieved March 31, 2024.
  7. ^ Stephens, Bill (October 25, 2022). "CP and KCS defend merger, rebut claims of critics including other Class I lines and Metra". Trains. Retrieved September 7, 2023.
  8. ^ Stephens, Bill (October 25, 2022). "Union Pacific: Video of KCS train misled federal regulators about Houston terminal". Trains. Retrieved August 8, 2023.
  9. ^ Stephens, Bill (July 14, 2022). "BNSF claims CP-KCS merger will throw Houston terminal into gridlock". Trains. Retrieved December 28, 2023.
  10. ^ https://www.stopcpkc.com/
  11. ^ a b "Metra opposes CP-KCS merger in regulatory filing". March 20, 2022.
  12. ^ Stephens, Bill (February 23, 2022). "Canadian National details KCS Springfield Line improvement plans, traffic projections". Trains. Retrieved June 3, 2024.
  13. ^ Stephens, Bill (October 24, 2022). "CN would accept trackage rights as alternative to divestiture of KCS Springfield Line (updated)". Trains. Retrieved June 3, 2024.
  14. ^ Luczak, Marybeth (March 24, 2023). "STB Rejects CN's Springfield Line Bid". Railway Age. Retrieved June 3, 2024.
  15. ^ Reynolds, Christopher (April 14, 2023). "CP Rail, Kansas City Southern merger clears path for more cargo, but hitches remain". CBC News. Retrieved April 18, 2023.
  16. ^ Chokshi, Niraj; Walker, Mark (March 15, 2023). "U.S. Approves $31 Billion Merger of Two Big Railroads". The New York Times. ISSN 0362-4331. Retrieved April 21, 2023.
  17. ^ a b c d "CPKC Drives Ceremonial Final Spike, Joining Three Nations". Railway Age. April 17, 2023. Retrieved April 21, 2023.
  18. ^ Luczak, Marybeth (April 25, 2023). "CPKC, Knight-Swift Team on Truckload Intermodal Service". Railway Age. Retrieved April 27, 2023.
  19. ^ Stephens, Bill (April 21, 2023). "CPKC to handle Schneider's cross-border intermodal shipments between the Midwest and Mexico". Trains. Retrieved April 21, 2023.
  20. ^ Funk, Josh (April 24, 2023). "3 railroads join up to compete with CPKC to serve Mexico". ABC News. Associated Press. Retrieved April 27, 2023.
  21. ^ https://www.railwayage.com/intermodal/cpkc-launches-mexico-midwest-express-intermodal-service
  22. ^ https://www.railwayage.com/intermodal/cp-first-lazaro-cardenas-chicago-interline-service-trip/
  23. ^ "STB sets schedules to consider CPKC, CSX plan to acquire G&W short line". Progressive Railroading. December 20, 2023. Retrieved December 20, 2023.
  24. ^ Stephens, Bill (June 28, 2023). "CPKC and CSX to create direct interchange via G&W short line in Alabama". Trains. Retrieved August 7, 2023.
  25. ^ Stephens, Bill (July 10, 2023). "CPKC-CSX deal over Meridian & Bigbee shortcut finally realizes Mike Haverty's vision: Analysis". Trains. Retrieved August 7, 2023.
  26. ^ Stephens, Bill (May 24, 2024). "CPKC to name new subdivision after former KCS CEO Michael Haverty". Trains. Retrieved July 11, 2024.
  27. ^ Cannon, Jason (November 11, 2024). "Schneider launches 'transformational' cross border intermodal service". CCJ Digital. Retrieved November 18, 2024.
  28. ^ Amtrak is working to launch new service between Meridian and Fort Worth, which will run at the Speedway, and CN's Chicago to New Orleans line, former Illinois Central, crosses at-grade the Speedway in Jackson, Mississippi.
  29. ^ a b Lassen, David (October 17, 2024). "Regulators approve CPKC, CSX acquisition of Meridian & Bigbee". Trains. Retrieved November 7, 2024.
  30. ^ Luczak, Marybeth (October 17, 2024). "STB Signs Off on CPKC, CSXT Acquisition of Meridian & Bigbee Lines". Railway Age. Retrieved November 11, 2024.
  31. ^ Stephens, Bill (August 3, 2023). "CPKC asks regulators to force Union Pacific to honor trackage rights agreement covering grain shipments to Houston and Galveston". Trains. Retrieved September 17, 2024.
  32. ^ Stephens, Bill (August 15, 2023). "Union Pacific asks regulators to reject CPKC trackage rights complaint". Trains. Retrieved September 17, 2024.
  33. ^ "CPKC Announces Schedule For 2816 'Final Spike' Tour". www.railfan.com. February 10, 2024. Retrieved February 10, 2024.
  34. ^ "Final Spike Anniversary Steam Tour". www.railfan.com. April 26, 2024. Retrieved April 26, 2024.
  35. ^ Franz, Justin (June 10, 2024). "CP 2816 Heads North After Historic Visit to Mexico". Railfan & Railroad. White River Productions. Retrieved June 10, 2024.
  36. ^ "CPR No. 2816 returns to the U.S. after completing CPKC's Final Spike steam tour in Mexico". Trains. Kalmbach Media. June 12, 2024. Retrieved June 22, 2024.
  37. ^ Austen, Ian (August 21, 2024). "Labor Dispute Halts Rail Freight in Canada, Raising Supply Chain Concerns". The New York Times. Archived from the original on August 22, 2024. Retrieved August 21, 2024.
  38. ^ a b Stephens, Bill (September 11, 2024). "CPKC expects a long-term boost from anticipated U.S. East Coast port labor disruption". Trains. Retrieved December 13, 2024.
  39. ^ Hyatt, Kim (March 21, 2021). "Minneapolis no longer Canadian Pacific's U.S. headquarters in $25B deal". Star Tribune. Retrieved April 21, 2023.
  40. ^ "Canadian Pacific Kansas City extends sponsorship of LPGA's Canadian Women's Open". Sportsnet.ca. Retrieved March 18, 2024.
  41. ^ "Kansas City Current and CPKC Announce Historic Stadium Naming Rights Agreement - Kansas City Current". www.kansascitycurrent.com. October 19, 2023. Retrieved October 19, 2023.
  42. ^ "Kansas City Current and CPKC Announce Historic Stadium Naming Rights Agreement". Yahoo Finance. October 19, 2023. Retrieved October 19, 2023.
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