From the Farm: Railroad mergers

The Morning Show

(WCIA) — The smaller of two major Canadian railways and the smallest of the seven Class 1 U.S. railways are planning to merge and combine their rail networks.

That could be good or bad for farmers.

Grain transportation executives in central Illinois are studying the proposal to merge the Canadian Pacific Railway with the Kansas City Southern. The proposal, which needs federal approval, would create a 20-thousand-mile rail network through Canada, the northern Corn Belt, and down to Gulf states with connections to Mexico City.

It’s being called a rail network for the U.S.-Mexico-Canada Agreement, which is an updated version of the North American Free Trade Agreement.

But what is the impact on rail transportation of Illinois grain, and particularly the grain basis?

“I don’t think it will affect transportation and the basis in Central Illinois much, it will certainly impact the northern Cornbelt areas, northern Iowa, southern Minnesota, eastern South Dakota as they will now have direct access to the Texas Gulf and to Mexico and to the poultry industry in Eastern Texas,” answers retired Decatur grain transportation specialist Don Wenneker.

WCIA: We don’t see any Canadian Pacific or Kansas City Southern lines coming through this area.

“No, the Kansas City Southern has one origin in Illinois,” he says. “The Canadian Pacific goes into Chicago and periodically can get to Decatur by two-line haul, but no very, very little impact.”

“There’s also little service overlap between the rail companies, which means this proposed merger may result in increased service options,” says Soy Transportation Coalition Executive Director Mike Steenhoek. “It’s beneficial for the northern Corn Belt — allowing corn and beans to flow to the Gulf, not just the Pacific Northwest.”

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