Despite concerns of the Biden administration, federal regulators approved Canadian Pacific’s $31 billion acquisition of the Kansas City Southern Railway, whose tentacles extend into Oklahoma.
This was the first major railroad merger in more than two decades.
CP and KCS are the smallest among North America’s seven major railroads, but their coupling will create the only railroad that links Canada, Mexico and the United States.
Even after the merger, the new Canadian Pacific Kansas City railroad will be the smallest of the major freight railroads with approximately 19,800 miles of track.
Kansas City Southern, founded in 1887, has 7,299 miles of track in the U.S. and Mexico. A little over half of that track, 3,984 route miles, lay in 10 Midwestern and Southeastern states: Illinois, Missouri, Kansas, Oklahoma, Arkansas, Tennessee, Alabama, Mississippi, Louisiana and Texas.
According to the Oklahoma Department of Transportation, the KCS has 150 miles of track in Adair, Sequoyah and LeFlore counties in eastern Oklahoma.
Canadian Pacific has 12,500 miles of track across most of Canada, plus the Midwestern and Northeastern United States.
Approval by the U.S. Surface Transportation Board, which regulates freight companies, occurred March 15 after an arduous two-year review.
The STB said the merger will foster growth of rail traffic, support passenger operations, shift approximately 64,000 truckloads of freight from highways to rail and facilitate grain deliveries from the U.S. Midwest to the Gulf Coast and Mexico.
The biggest traffic increases are expected between Chicago and Laredo, Texas, with some of the rail lines across Iowa predicted to see more than 14 additional trains a day. The tracks between Kansas City, Missouri, and Beaumont, Texas, are likely to carry approximately 12 more trains a day.
The decision authorizes CP to exercise control of KCS as early as April 14, at or after which point CP and KCS would combine to create the new CPKC. Canadian Pacific is reviewing the full 212-page decision in detail and, in the coming days, will announce its plans for creation of CPKC.
The combined company will have about 20,000 employees, little to no track redundancy or overlapping routes, and is expected to add more than 800 new union jobs in the U.S., according to the STB.
CPKC will bring a new standard of safety to the North American rail landscape. CP has been the safest railroad in North America for 17 consecutive years, as measured by the Federal Railroad Administration train accident frequency ratio.
In 2022, Canadian Pacific had an all-time best frequency of 0.93 train accidents per million miles traveled, a rate nearly half what the company produced a decade ago and 69% lower than the Class 1 average. Also that year, CP recorded 1.01 personal injuries per 200,000 employee-hours, the FRA reported.
The Kansas City Southern Railway Co. is an American Class I railroad founded in 1887 and based in Kansas City, Missouri. The KCS has nearly 7,000 employees.
Canadian Pacific was incorporated in 1881, and its headquarters are in Calgary, Alberta, Canada. The company employed 12,754 people in 2022, according to its annual report.
The $31 billion merger was announced in 2021, when Kansas City Southern favored Canadian Pacific’s bid over the offer of rival Canadian National. The deal closed in December that year, but Kansas City Southern’s shares were transferred to a trust and the railroads have been operating independently pending the STB decision.