Canadian Pacific Kansas City (CPKC) and CSX Corp. have struck a deal to buy additional rail assets, creating a direct CPKC-CSX interchange connection in Alabama and establishing a corridor linking Mexico, Texas, and the U.S. Southeast.
Creating a unified network of international rail lines spanning North America has been a core strategy for Canadian Pacific ever since its $31 billion deal to acquire Kansas City Southern was finalized in April. At that time, the new company said its merger would create “the first and only single-line railway connecting Canada, the U.S. and Mexico.”
As part of the latest series of proposed transactions, CPKC and CSX would each acquire or operate portions of Meridian & Bigbee Railroad LLC (MNBR), a Mississippi and Alabama regional railroad that is owned by Genesee & Wyoming Inc. (G&W).
“This strategic acquisition will bring more shipping options to intermodal, automotive, and other customers by providing a new, efficient corridor connecting expanding markets in Mexico, Texas and the U.S. Southeast,” Keith Creel, CPKC President and CEO, said in a release. “With this new east-west connection taking advantage of each railway's routes and service, we can extend our reach converting more freight traffic to rail and off our highways.”
Terms of the deal were not disclosed. But the partners said that CPKC would acquire and operate the segment of the MNBR between Meridian and Myrtlewood, Alabama, and CSX would operate the lines currently leased by MNBR east of Myrtlewood. As a result, CPKC and CSX would establish a direct CPKC-CSX interchange at or near Myrtlewood, Alabama. In exchange, G&W would acquire certain Canadian properties owned by CPKC and other rights. MNBR would receive rights to continue to provide local service to existing customers on former MNBR-owned lines and connect with other railroads without interchange restrictions.
“We are pleased to have entered into agreements with CSX and CPKC that will enable MNBR to continue providing customers with outstanding short line service from Linden, Alabama, to Meridian, Mississippi, while enabling our Class I partners to create a new connection into the Southeast U.S.,” Jack Hellmann, G&W CEO, said in a release. “At the same time, we have enhanced several agreements related to other G&W short line railroads and are collaborating on the expansion of our service to Alberta and the Alberta Industrial Heartland in conjunction with CPKC.”
Gartner, Inc.