<article><p class="lead">Shippers are holding judgment regarding Canadian Pacific's (CP) planned acquisition of US railroad Kansas City Southern (KCS), saying they need more time to analyze how the deal would affect rail service.</p><p>Some shippers are concerned that combining operations across three countries may disrupt rail service. The Union Pacific-Southern Pacific merger in 1996 caused widespread delivery delays. The CSX and Norfolk Southern split of Conrail in 1998 resulted in similar difficulties.</p><p>CP said on 21 March it plans to purchase KCS in a $29bn deal combining CP's operations in Canada, the US midcontinent and the US northeast with KCS' operations in the south-central US and Mexico, including Kansas City Southern de Mexico.</p><p>CP's purchase of KCS will provide shippers with improved service and lower transit times by creating single-line rail service, CP chief executive Keith Creel said on 21 March.</p><p>The US Surface Transportation Board (STB) needs to "carefully consider whether this merger could negatively impact access to service and competitive options for freight rail customers," American Chemistry Council said. The transaction is pending regulatory approval.</p><p>And the rail networks operated by CP and KCS are distinct, meaning few if any shippers face competitive access issues. But shipper groups remain wary. </p><p>Canadian grain shippers "await further details in order to understand how the new company will meet service demands from grain shippers," according to Wade Sobkowich, executive director of the Western Grain Elevator Association.</p><p>Energy products, grain and food products, chemicals and intermodal traffic will likely dominate the new Canadian Pacific Kansas City (CPKC), according to an <i>Argus</i> analysis of the railroads' 2020 volume. Last year, intermodal traffic made up about 20pc of volume of both railroads.</p><p>Chemicals shipments represented 11pc of traffic, while coal made up 8pc, grain and food products represented 11pc, and petroleum and petroleum products traffic made up 8pc.</p><p class="bylines"><i>By Abby Caplan</i></p></article>
