A railroad merger that will link the U.S., Canada, and Mexico was approved by regulators earlier this week—marking the first U.S. railroad merger of two Class I railroads in more than 20 years.
- Canadian Pacific acquired Kansas City Southern for $31 billion, combining the smallest of sixth and seventh largest railroads in North America, Business Insider reports.
- With the new merger, the rail line will reach from Vancouver to Nova Scotia and south to Veracruz, a port located on the Gulf of Mexico.
- Critics have pointed out that rail industry mergers in the past have led to troubles in the industry, including more accidents and tension between railroads and unions, Business Insider reports.
- The Canadian Pacific and Kansas City Southern are considered the safest major railroads, according to Federal Railroad Administration reports.
Why it’s news
The decision comes after two years of review from the U.S. Surface Transportation Board (STB).
In recent months, the rail industry has suffered several disasters, including a train derailment in East Palestine, Ohio, that released hazardous material into the area. Just before, the White House intervened to resolve contract disputes between the railroad and union representatives and prevent a rail strike.
Since then, several derailments in Michigan, Arizona, and more in Ohio have called rail safety into question. There are around three train derailments daily in the U.S., though these incidents typically are not major disasters, NPR reports.
Increased attention on derailments has focused national attention on rail safety. Oberman has argued that the approved merge would increase transportation safety by removing around 64,000 truckloads off highways. He added that this would result in fewer hazardous spills and would remove 120,000 tons of CO2 emissions. Around 94% of hazardous spills come from trucks rather than trains, Business Insider reports.
Oberman also noted that 450 shippers have voiced support for the merger. A single-line network from Canada to Mexico will save shippers money as they will no longer have to switch rail cars from one line to another.
The deal “will enhance trade, enhance productivity, enhance shipper opportunities to expand their own businesses,” Oberman says.
STB chair Marty Oberman combatted these claims saying, “If there is a problem in this country about the safe transportation of hazardous materials on rail it is a problem nationwide. It is not a problem caused or the result of this merger.”