Canadian Pacific’s Kansas City Southern merger does not solve railway’s decline
Greg Gormick is a transportation analyst and policy adviser based in Oshawa, Ont., and Studio City, Calif. His clients have included CP, CN, VIA and politicians of four parties.and Kansas City Southern have finished popping the corks on the champagne bottles following the U.S. Surface Transportation Board’s approval of their dream merger, they might ponder the hangover ahead.
The result is railway companies have become asset strippers, shedding employees, light-density lines, low-yield traffic and other once-viable components of their systems. Mergers since the 1960s have masked this disease instead of curing it. Fusing weak railways into larger ones has often produced new railways facing the same unresolved funding imbalances that weakened their components.
Because the industry’s basic problems aren’t even being discussed, it’s difficult to believe CP’s nebulous promise to. That boast is difficult to swallow when the merged system’s deficiencies are considered. Its keystone is KCS’s Midwest-Gulf Coast route, which is inferior to CN’s former Illinois Central line from Chicago to Louisiana and Texas. The strongest KCS card is its Mexican main line, acquired in the 1996 privatization of Mexico’s national system.
To the delight of investors and the anger of shippers and employees, Mr. Harrison brought along an oxymoronic operating plan he called precision scheduled railroading , which isn’t about running a precisely scheduled railway at all. Its hallmark is the operation of monstrously long trains to reduce “train starts,” meaning fewer locomotives and crews. It may temporarily delight investment advisers, but it wreaks long-term havoc by jettisoning valuable physical and human resources.
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