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Canadian Pacific Kansas City

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Canadian Pacific Kansas City
Map showing two former Class I railroads combined, CP and KCS, which is now CPKC
CPKC system map, showing CP tracks in red and KCS in black. Does not include trackage rights.
Overview
Parent companyCanadian Pacific Kansas City Limited
LocaleCanada, Mexico and United States
Dates of operationApril 14, 2023; 16 months ago (2023-04-14)–present
Predecessor
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; 16 months ago (2023-04-14)
Headquarters
Calgary, Alberta
,
Canada
Areas served
  • Canada
  • United States
  • Mexico
Key people
Number of employees
20,000

Canadian Pacific Kansas City Limited, doing business as CPKC, is a Canadian railway holding company that resulted from the merger of Canadian Pacific Railway (CP) and Kansas City Southern (KCS) on April 14, 2023. It operates about 32,000 kilometres (20,000 mi) of rail in Canada, Mexico, and the United States, and is the only single-line railway ever to connect the three countries. CPKC is headquartered in Calgary and led by President and CEO Keith Creel.

History

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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 companies.[6]

CPKC fast-growing international corridor from Laredo to Beaumont: own routes are marked in dark blue and light blue while sectors where trains running under Union Pacific trackage rights (Brownsville, Cuero, Glidden, Harrisburg, East Belt, West Belt, Houston and Beaumont Subdivisions) are marked in green

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, it could not proceed until environmental cleanup around Englewood was completed. (Decades ago, Southern Pacific operated a facility in Englewood for the creosote treatment of railroad ties, and accidental spills of the substance caused severe contamination in the neighborhoods surrounding the yard.) The STB suggested, to mediate between the disputing parties, the possibility that, pending approval of the merger, KCS apply to UP for trackage rights from Texarkana to Laredo, via San Antonio and Austin to reroute some of its north-south traffic through there, 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 which retains the Transportadora Ferroviaria Mexicana (TFM) gray scheme, with the KCS de Mexico logos
Two CPKC unit trains, one grain and another crude oil, meet up at Siloam Springs, Arkansas

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]

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]

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.

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 25 in Mexico City.[27][28]

Operations

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CPKC operates approximately 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.[29]

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.[30]

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.[31][32]

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. ^ "CPKC Announces Schedule For 2816 'Final Spike' Tour". www.railfan.com. February 10, 2024. Retrieved February 10, 2024.
  28. ^ "Final Spike Anniversary Steam Tour". www.railfan.com. April 26, 2024. Retrieved April 26, 2024.
  29. ^ Hyatt, Kim (March 21, 2021). "Minneapolis no longer Canadian Pacific's U.S. headquarters in $25B deal". Star Tribune. Retrieved April 21, 2023.
  30. ^ "Canadian Pacific Kansas City extends sponsorship of LPGA's Canadian Women's Open". Sportsnet.ca. Retrieved March 18, 2024.
  31. ^ "Kansas City Current and CPKC Announce Historic Stadium Naming Rights Agreement - Kansas City Current". www.kansascitycurrent.com. October 19, 2023. Retrieved October 19, 2023.
  32. ^ "Kansas City Current and CPKC Announce Historic Stadium Naming Rights Agreement". Yahoo Finance. October 19, 2023. Retrieved October 19, 2023.
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