The Surface Transportation Board (STB) has approved the first major U.S. railroad merger in more than 20 years, allowing Canadian Pacific Railway to acquire Kansas City Southern for $31 billion.
The approval comes after a year-long review by the STB and is expected to benefit shippers and consumers by increasing competition and efficiency in the rail industry. According to the companies, the merger will create a more efficient and reliable rail network, with improved service and reduced customer transit times. The companies also claim that the merger will create new jobs and further stimulate economic growth in the communities they serve.
However, the merger has faced opposition from some stakeholders, including other railroads and labor unions. In light of the recent derailment in East Palestine, OH, regulators argue that the merger will reduce competition and may, in fact, exacerbate any current safety issues at play. Some also raise concerns about job losses, the potential for reduced service in certain areas, and an increase in noise in other areas.
The STB approval includes several conditions aimed at addressing these concerns. Canadian Pacific's safety record with transferring hazardous or toxic materials is one of the best in the industry and exceeds any other trucking or railroad company.
"Any rail traffic diverted to the Canadian Pacific-Kansas City Southern system from other railroads will mean traffic likely moving to a railroad with a better safety record," The United States Surface Transportation Board said in a statement.
Additionally, the two companies are being upheld the standards of their current service levels and continue to honor existing collective bargaining agreements with their employees.
The merger is anticipated to close in the coming months, pending approval from the Mexican government. If approved, it will create the first railroad that spans the United States, Canada, and Mexico, connecting key markets and creating new opportunities for trade and commerce.