Canadian Pacific Kansas City Limited (known as Canadian Pacific Railway Limited until 2023), doing business as CPKC, is a Canadian railway holding company headquartered in Calgary. Through its operating subsidiaries, including the Canadian Pacific Railway, Kansas City Southern Railway, and Kansas City Southern de Mexico, it operates about of rail in Canada, Mexico, and the United States.
History
Predecessors and formation
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. 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.
On September 12, 2021, KCS accepted a new $31 billion offer from CP and terminated its agreement with CN. 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. 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. CP President and CEO Keith Creel, who became CEO of the merged company, chose the name of the new company as a way to honor the long and rich history of the two main predecessor companies. Creel also announced that if the STB approved the merger of CP with KCS, it would be celebrated with a historic tour from Calgary to Mexico City led by the iconic steam locomotive CPR #2816, The Empress.
Union Pacific and BNSF Railway raised objections with the STB about the merger. Both companies were concerned about CPKC's projected traffic increases and warned that they could cause congestion on UP-owned tracks through the Houston area (Houston, West Belt, East Belt, Beaumont, Harrisburg and Glidden Subdivisions), where UP and BNSF operate a large amount of daily traffic. (BNSF operates in the Houston area through a combination of owned tracks and trackage and haulage rights on UP tracks.) CPKC relies on UP trackage rights between Beaumont and Rosenberg, and between Victoria and Robstown to move its trains from Beaumont to the Mexican border at Laredo;In 1996, Union Pacific and Southern Pacific agreed to grant trackage rights to KCS and its subsidiary Tex-Mex from Robstown to Beaumont via Victoria, Flatonia, and the Houston area. The trackage rights agreement with KCS was one of the conditions imposed by the STB for approval of the UP-SP merger. In 2009, with the reopening of KCS's Macaroni Line between Rosenberg and Victoria to traffic, the number of kilometers of trackage rights on UP was reduced. that includes crossing Houston, where KCS and CPKC trains have experienced significant delays due to the heavy traffic that UP and BNSF operate in the Terminal. Creel, who has maintained important working relationships with UP, stated that he would spend time in Houston to learn about operations throughout the area and collaborate with UP to come up with a solution to the recurring problem of traffic congestion.
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, for example, argued that the receiving and departure tracks located at the west end of Englewood Yard, UP's main yard in Houston, could be lengthened to accommodate longer trains. UP responded to CP's arguments, saying that although they have a proposal to expand the yard, they could not proceed until existing environmental issues were resolved, stemming from creosote contamination that has affected the area surrounding Englewood (Southern Pacific for decades operated a facility at Englewood to treat railroad ties with creosote, and accidental spills of this substance caused severe contamination of the soil beneath the neighborhoods around 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.) To mediate between the disputing parties, the Board suggested that (pending merger approval or post-merger) KCS or CPKC might 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.
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.
Metra also opposed the merger, arguing that the projected increase in traffic would delay its passenger trains. 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 said the merger would reduce quality of life and slow economic development in their communities.https://www.stopcpkc.com/
In STB hearings, Canadian National, which had already lost KCS to CP, presented a plan to acquire a 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. A few months later, CN ended its effort 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. The STB rejected CN's plans to operate on the Springfield Line.
Despite the objections, the merger between CP and KCS received final approval on March 15, 2023, and was completed on April 14, 2023.
The merger created the first and, only, railway corporation connecting Canada, the U.S., and Mexico without having to run trains on competing railroads' rails. It had about network of tracks. Fully integrating the two railroads was expected to take up to three years.
Post-merger history 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. The announcement was seen as backing up pre-merger projections that CPKC's service would enable it to compete in the Chicago–Mexico corridor that had been dominated by the Union Pacific and BNSF. 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.
On May 11, 2023, CPKC launched its "Mexico Midwest Express (MMX)" service, 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 times than those offered by the "Falcon Premium" service of UP, CN and Grupo México. 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.
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 between CSX in Montgomery, Alabama and Meridian, Mississippi, where it joins the Meridian Speedway westbound. Under the proposed agreement, CPKC would acquire the 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. 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. 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. 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, who served as KCS CEO and president from 1995 to 2015, was the driving force behind the company's expansion 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.
In October 2024, the STB approved CPKC's purchase of the M&B line between Meridian and Myrtlewood, and CSX's resumption of operations between Myrtlewood and Burkville. The agreement became effective on November 16, 2024. For the first five years, CPKC and CSX will interchange two trains per day in each direction.
A few days before CPKC and CSX 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.
CN and Amtrak unsuccessfully objected to the purchase of the M&B line, fearing that increased traffic on the Meridian Speedway would cause congestion in the line. CN required CPKC to 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 daily traffic on the line be adjusted to the length of the existing sidings along the route.Amtrak is working to launch new service between Meridian and Dallas-Fort Worth, an extension of the Crescent train from New York to New Orleans, which will run along the Speedway, and CN's Chicago to New Orleans line, former Illinois Central, crosses at-grade the Speedway in Jackson, Mississippi.
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.