CSX and CPKC buying the Meridian & Bigbee

Per Seeking Alpha:
Canadian Pacific Kansas City and CSX have worked out a deal to acquire the Meridian & Bigbee railroad from G&W to create a direct CPKC interchange in Alabama. Genessee & Wyoming will receive "certain CP lines in Alberta" plus other considerations. The Alabama combination will improve CSX access from the southeastern US to Mexico.

I'll cross-post to G&W, CPKC, and we will end up in Class I. I guess the M&B will be the "new Pan Am Southern".

Jeff Smith wrote: ↑Wed Jun 28, 2023 11:40 am I'll cross-post to G&W, CPKC, and we will end up in Class I. I guess the M&B will be the "new Pan Am Southern".

Actually CPKC will acquire the Meridian and Bigbee RR. And will compensate G&W. CSX will terminate M&B's lease of CSX trackage from Myrtlewood, AL to near Montgomery, AL and will resume operating to an new Interchange with CPKC
at Myrtlewood.

I wonder if this is an attempt to do an end run around NS's "exclusive" rights on the Meridian Speedway? If the traffic gets turned over to CPKC a few miles east of there (instead of in Meridian), it will already be CPKC traffic, and not CSX traffic (which isn't allowed to use that gateway)...

@jamoldover I’m wondering about that as well. I remember reading somewhere that KCS, NS, and CSX had some sort of disagreement about the speedway 1-2 years ago. I don’t remember about what specifically.

Perhaps this is the workaround?

Bracdude181 wrote: ↑Fri Jun 30, 2023 7:15 pm @jamoldover I’m wondering about that as well. I remember reading somewhere that KCS, NS, and CSX had some sort of disagreement about the speedway 1-2 years ago. I don’t remember about what specifically.

Perhaps this is the workaround?

The disagreement occurred during the CPKC merger hearings, CSX did not want NS getting the Meridian Speedway and direct access to Dallas and also wanted the NS exclusivity agreement voided. Neither CSX nor NS got what they wanted. The NS agreement with KCS as part of the Meridian Speedway deal means that NS gets all the Intermodal traffic out of Dallas. What it does not cover is any traffic out of Mexico. With lots of Auto parts out of Mexico for the new plants opening in the Southeast US CPKC does not want to be locked in to just NS. CP is planning a new Auto unloading facility and a new Lumber transload facility at Wylie (Dallas).

That's a great point on the auto and manufacturing in the SE. This creates some competition and also gives a much better interchange point than St. Louis or New Orleans.

I wonder if this could lead to more Schneider business like the old Marion, OH to STL/KC dedicated trains.

This deal has Pan Am levels of complexity.

To make things "simple:"
- The Meridian & Bigbee is split into an eastern half and a western half. The eastern half from Burkville to Myrtlewood is leased from CSX. The western half from Myrtlewood to Meridian is owned outright by the Meridian & Bigbee.
- The eastern half will be returned to CSX. The western half will be purchased by CPKC, but the Meridian & Bigbee will retain trackage rights over the western half to serve local customers. (They won't have trackage rights over the eastern half.)
- The Meridian & Bigbee is owned by Genesee & Wyoming which also owns the neighboring Alabama Gulf Coast. The Alabama Gulf Coast will be receiving trackage rights over CSX to maintain an interchange with CPKC and the Meridian & Bigbee at Myrtlewood.
- In addition, Genesee & Wyoming will be receiving CPKC's Hoadley Sub between Jackson and Homeglen, Alberta, and trackage in the Scotford, Alberta area.

Link to the STB docs: plenty of great details concerning upgrades, traffic count, etc...
CSX App: https://dcms-external.s3.amazonaws.com/ ... 307262.pdf
CPKC App: https://dcms-external.s3.amazonaws.com/ ... 307274.pdf
There are also a few notices of exemptions concerning the more minor parts of the transaction.

My first two initial thoughts are:
1. To what degree will this impact the current CSX-CPKC interchange routes via St. Louis and New Orleans? From my current understanding, the ex-Gateway Western/Springfield Line is mostly CSX-interchange traffic nowadays, while the Gulf Coast Route has been continually downgraded ever since Katrina. If CPKC and CSX get this line up to 40 (or even 60?), could we see large-scale traffic diversions from these routes?
2. Could this style of acquisition be exported to other railroads? My first thought is the Quebec Gatineau Railroad in Quebec. Imagine, CPKC buying the track for intermodal trains, but the Quebec Gatineau retaining local freight rights?

https://dcms-external.s3.amazonaws.com/ ... 307355.pdf

Norfolk Southern has sent a letter to the STB opposing the joint CSX-CPKC purchase of the Meridian & Bigbee. They don't actually object to the applications, just that it's technically two different applications. Norfolk Southern wants them consolidated into one.

Norfolk Southern is concerned that the single new intermodal train that will result from the acquisition won't be able to fit into sidings. (Considering CPKC themselves have limited trains to below 8,500 feet I think this is a non-issue. Norfolk Southern is probably using this as a way to get CPKC to pay for siding expansions.) Norfolk Southern also wants the STB to review any potential impacts on Amtrak. I think they're reaching at straws here.

CSX and CPKC have replied saying this is just an attempt to delay the new route from coming online.

Amtrak seems to be on CPKC's side: https://dcms-external.s3.amazonaws.com/ ... 307385.pdf

Re: Docket No. FD 36732
Canadian Pacific Kansas City Limited and the Kansas City Southern Railway
Company, D/B/A CPKC – Acquisition and Operation – Certain Rail Line of
Meridian & Bigbee Railroad, L.L.C., in Lauderdale County, Mississippi and
Choctaw and Marengo Counties, Alabama
Dear Chairman Oberman:
The National Railroad Passenger Corporation (Amtrak) is aware of CPKC’s proposed
acquisition of a portion of the Meridian & Bigbee Railroad, and plan to use that route to establish
a more efficient direct connection with CSXT’s network via Myrtlewood, Alabama. Freight
trains using that connection would cross the path of Amtrak’s Crescent service at Meridian,
Mississippi, and operate across the Meridian Speedway, where Amtrak plans in the future to
operate service between Meridian and Dallas/Fort Worth, Texas.
Amtrak supports the Board’s consideration of this transaction without delay. Although Amtrak
takes no position on the merits at this time, based upon the current record, Amtrak sees no issue
raised by the proposal that could not readily be considered by the Board consistent with the
expedited treatment afforded to Minor transactions. Amtrak strongly agrees with the Class I
railroads who have submitted comments in this proceeding that, regardless of whether a
transaction that requires the Board’s approval under 49 U.S.C. § 11323 is deemed Significant or
Minor, the Board must ensure that approval of the transaction would not adversely impact
Amtrak’s existing or planned future operations. Amtrak looks forward to obtaining additional
information as the Board’s review continues, and Amtrak may offer further comment at a future
stage of the proceeding if appropriate.
Sincerely,
Eleanor D. Acheson
Executive Vice President, Chief Legal Officer,
General Counsel and Corporate Secretary