Opposed to Further Rail Consolidation, NFU Pleased by Withdrawal of Canadian Pacific Railway Merger

The National Farmers Union (NFU) was pleased to hear today’s announcement that Canadian Pacific Railway Ltd. (Canadian Pacific) was terminating its efforts to merge with Norfolk Southern Corp. (Norfolk Southern).

NFU has been very concerned over the prospects of additional concentration in the freight rail sector. The takeover of Norfolk Southern by Canadian Pacific would have consolidated two of the remaining seven Class I railway companies.

“Family farmers and ranchers depend on rail transportation to move their commodities to market in order to compete in the global agriculture industry,” said NFU president Roger Johnson. “It’s good news for rural America that Canadian Pacific withdrew its plans to merge with Norfolk Southern because further consolidation would likely have stifled competition.”

Since the Staggers Rail Act of 1980 deregulated the railroad industry, more than 40 Class I transport rail companies consolidated to form the seven companies that exist today. NFU was concerned the Canadian Pacific merger “would trigger additional Class I railroads to merge as well,” Johnson explained.

“Farmers and ranchers have experienced increasing freight rates and service problems, most notably, the 2014 backlog in North Dakota and Minnesota that had widespread economic ramifications for whole sections of the value chain,” he added. “Further consolidation is clearly not the right approach to rail transport.”

In addition to the proposed merger, Canadian Pacific filed a petition with the Surface Transportation Board (STB) for an expedited declaration concerning a “potential” and “hypothetical” voting trust arrangement with Norfolk Southern. NFU supported a statement filed by the National Grain and Feed Association on Friday, asking for the STB to deny the petition on the grounds there was no merger application pending before the Board and no formal request for approval of a voting trust arrangement.

Source: NFU