United States: UP and CN Sign Binding MOUs on Merger Access and Track Rights
Union Pacific Railroad and CN announced on 22 July from Omaha, Nebraska, and Montreal, Canada, that they signed two binding memoranda of understanding. One covers competitive access tied to Union Pacific’s proposed merger with Norfolk Southern. The other expands operating rights around Chicago and opens new Canada–Mexico service paths.
Under the settlement memorandum of understanding, which Union Pacific said is contingent on Surface Transportation Board approval and closing of the Union Pacific–Norfolk Southern merger, CN gains access to shipper facilities where Class I railroad options would be reduced from 2-to-1 or 3-to-2, where commercially and operationally feasible. CN also acquires Norfolk Southern’s ownership interests in the Kansas City Terminal Railway Company (KCT) and the Terminal Railroad Association of St. Louis (TRRA).
The settlement further gives CN new Midwest access through overhead rights between Tuscola, Illinois, and East St. Louis, Illinois, and rights to serve customers between St. Louis, Missouri, and Kansas City, Missouri. Union Pacific said that for the first time CN will have a footprint in the heart of Kansas City, with usage of Union Pacific’s Neff Yard. Under the agreement, CN will not oppose the Union Pacific–Norfolk Southern merger. Both parties will collaborate through the STB process to ensure the agreement takes effect.
Separately, the connectivity memorandum of understanding provides Union Pacific with expanded operating rights over CN’s Elgin, Joliet & Eastern Railway (EJ&E) corridor through Chicago. It grants CN new rights over Union Pacific’s network between Memphis, Tennessee, and Eagle Pass, Texas, to support freight movements between Canada and Mexico.
Union Pacific CEO Jim Vena said: “From day one, we’ve said our merger with Norfolk Southern will preserve and enhance competitive options and create a stronger railroad industry that delivers better service for customers. This settlement agreement reinforces those commitments by giving expanded access and operating rights to a tough competitor.” On the connectivity agreement, Vena said: “I’ve seen the benefits first-hand of what the EJ&E route around Chicago can do for a railroad, and we look forward to having access to the quickest way around Chicago.”
CN President and CEO Tracy Robinson said: “As the rail industry considers significant structural change, it is essential that customers continue to benefit from meaningful competition and choice. This framework would preserve competitive access to key markets, including Kansas City, while positioning CN to continue providing reliable and efficient options for customers across North America.” On Mexico access, Robinson said: “We are thrilled to have an agreement with Union Pacific to expand CN’s access to Mexico. This is a natural extension of our north-south franchise and will open new routes for customers, provide greater choice and strengthen connections between Canada and Mexico.”