Canadian Pacific Kansas City and CSX Transportation will create a direct interchange in Alabama by acquiring Genesee & Wyoming short line Meridian & Bigbee Railroad, which reaches CPKC at Meridian, Miss., and CSX just outside of Montgomery, Ala.
The deal, announced today, will create a new through route linking Texas and Mexico with the Southeast and vastly improve CSX’s access to Mexico via CPKC.
As part of the series of proposed transactions, CPKC and CSX would each acquire or operate portions of the 168-mile Meridian & Bigbee. G&W operates the Meridian & Bigbee under a combination of ownership and operating agreements.
CPKC would acquire and operate the segment of the railroad between Meridian and Myrtlewood, Ala., while CSX would operate the lines currently leased by the Meridian & Bigbee east of Myrtlewood. As a result, CPKC and CSX would establish a direct CPKC-CSX interchange at or near Myrtlewood, Ala.
“This strategic acquisition will bring more shipping options to intermodal, automotive, and other customers by providing a new, efficient corridor connecting expanding markets in Mexico, Texas and the U.S. Southeast,” CPKC CEO Keith Creel said in a statement. “With this new east-west connection taking advantage of each railway’s routes and service, we can extend our reach converting more freight traffic to rail and off our highways.”
CSX CEO Joe Hinrichs said his railroad “is excited to establish this new interchange connection with CPKC which provides shippers with a compelling transportation option with access to markets in Texas and Mexico as well as into the heart of the thriving and dynamic U.S. Southeast. This new service is a demonstration of our commitment to creating product offerings for shippers that help them leverage the efficiency and sustainability advantages of rail to drive growth.”
The Meridian & Bigbee would receive rights to continue to provide local service to existing customers on former MNBR-owned lines and connect with other railroads without interchange restrictions.
“We are pleased to have entered into agreements with CSX and CPKC that will enable MNBR to continue providing customers with outstanding short line service from Linden, Ala., to Meridian, Miss., while enabling our Class I partners to create a new connection into the Southeast U.S.,” G&W CEO Jack Hellmann said in a statement. “At the same time, we have enhanced several agreements related to other G&W short line railroads and are collaborating on the expansion of our service to Alberta and the Alberta Industrial Heartland in conjunction with CPKC.”
Terms of the transactions were not disclosed and will be addressed in definitive agreements that the parties have agreed to negotiate. Certain portions of the transactions are subject to regulatory review and approval from, or exemption by, the U.S. Surface Transportation Board.
CPKC’s line between Meridian and Shreveport, La., is part of the Meridian Speedway, a joint venture with Norfolk Southern. The Meridian Speedway agreement between NS and CPKC predecessor Kansas City Southern grants NS exclusive intermodal access to the joint venture via interchange at Meridian, but only for certain types of intermodal traffic. NS has a lock on transcontinental intermodal traffic interchanged with western railroads (currently Union Pacific at Shreveport) as well as on intermodal traffic between the Southeast and Dallas.
“NS traffic as defined in the Meridian Speedway agreement between CPKC and NS does not include the traffic that will be served by CPKC and CSXT under the proposal, which represents an exciting new competitive option for shippers,” CPKC spokesman Patrick Waldron says. “NS exclusivity applies only to the right to move certain transcontinental and Southeast-Southwest intermodal container traffic over the Meridian Speedway. CPKC will continue to serve NS traffic in accordance with the agreement.”
CPKC and CSX are free to route intermodal traffic over the Speedway that links the Southeast with Laredo, Texas, and points in Mexico. As part of the CPKC merger review, CSX unsuccessfully sought to have regulators strike the exclusivity agreement.
“We did not agree to this or have a role in it,” an NS spokesman says.
“CPKC and CSX are confident that the initiative announced today will evolve to the benefit of our customers,” a CSX spokeswoman says.
Creel, speaking at the railway’s investor day today in Kansas City, said CPKC is interested in growing with both Norfolk Southern and CSX via the Meridian Speedway. Four new auto plants on CSX in the Southeast will open between 2024 and 2026, he says, creating an opportunity for CPKC and CSX to tap auto-related supply chains linking parts and assembly plants in the U.S. and Mexico.
Intermodal customer Schneider partners with CPKC for its cross-border Mexico traffic and is one of CSX’s intermodal partners in the East, Creel notes.
Creel says CPKC and CSX will beef up the Meridian & Bigbee’s track to Federal Railroad Administration Class III standards, which will allow 40 mph operation, up from the current combination of 10 mph and 25 mph track speeds. In a decade, Creel says, it’s possible that due to traffic growth the line could have centralized traffic control and be good for 60 mph operation.
Note: Updated at 3:54 p.m. CDT on June 28 with detail on Norfolk Southern’s exclusivity arrangements for intermodal traffic on the Meridian Speedway and at 5 a.m. CDT on June 29 with additional comment from CPKC.
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