Saturday, January 30, 2016

More on the Proposed CP-Norfolk Southern Merger: CP Touts Benefits of By-Passing Chicago

Canadian Pacific hasn’t given up hope of merging with Norfolk Southern. In January it issued a white paper outlining the reasons why it still thinks it’s a good idea.

The white paper, titled "The Opportunity to Alleviate Congestion in Chicago," was sent to the U.S. Department of Justice.

In it the railway argues that its proposed merger with NS will alleviate congestion in the key rail hub of Chicago, "where gridlock in the winter of 2013-14 hobbled the industry for months and threatened to hinder the U.S. economic recovery."

According to the paper, a CP-NS merger would reduce congestion and create capacity in Chicago by providing options to shift traffic to alternative routings, which would also serve to relieve pressure across the network.

It would also make operational improvements by moving interchanges now in Chicago to underutilized hubs outside the city.

The paper notes that Chicago is the most critical freight hub within North America's rail system, with about 25 percent of all U.S. rail freight traffic travelling through the city.

“Today, this hub is a chokepoint for rail freight and passenger traffic as capacity in the region is constrained,” the paper states.

“On a good day, it takes a train on average 30 hours to get through Chicago, about the same amount of time it takes the same train to travel from Chicago to the East Coast."

With freight volumes expected to double by 2025, “this is a problem that must be addressed now. Otherwise, the next Chicago rail crisis is inevitable."

A CP-NS combination would “provide both the flexibility to avoid Chicago and the ability to improve operations in Chicago, which will be of enormous benefit to CP and NS customers,” the paper states, and also for customers of other railroads.

The result would be “a stronger and more resilient rail network better able to avoid and recover from future service disruptions.”

Read the full white paper here.

Click here for more on the proposed merger on this blog, including a Q & A.

Photo credit: Nick Suydam. Check out his website for more great Chicago and area photos.

1 comment:

  1. It's been reported that CP <==> NS interchange is only around 900 cars daily, a small drop in the overall Chicago bucket. (Sorry, not able to find the source where I read that right now). Two-thirds of that was/is unit trains and the remainder moves in one pair of direct trains and a small portions of trains already running to BRC Clearing yard.

    The white paper seems to focus more on specific solutions EHH might pursue if he were in charge and not so much on anything directly stemming from CP+NS being one company.

    Time will tell if this argument wins the day; I suspect the desires of Wall Street (e.g. large investors) will look past these nitty-gritty details.