Inside Logistics

Rail unions speak out against CN-KCS merger

SMART-Transportation Division, Transportation Communications Union/IAM, and others have written to the U.S. Surface Transportation Board expressing their opposition


June 16, 2021
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Several of the labour unions that serve the railway industry have spoken out against the proposed merger between CN and Kansas City Southern (KCS) railways.

SMART-Transportation Division (SMART-TD), North America’s largest railroad operating union, has submitted a letter urging the Surface Transportation Board (STB) to reject CN’s proposed use of a voting trust.

SMART-TD joins a growing list of shippers, communities, labour unions and other stakeholders who have voiced opposition to CN’s voting trust as part of its proposal to combine with KCS.

In a letter to the STB, SMART-TD President Jeremy Ferguson writes: “The approval of the CN voting trust by the STB would be risky for the railway industry and quite possibly will negatively impact our involved SMART-TD members. Approval of the CN voting trust proposal would harm employees of both KCS and CN due to the amount of debt CN will carry and the real possibility that the CN transaction would fail the regulatory test in the end.

“The CN/KCS transaction is the opposite of an end-to-end merger and would be anti-competitive due to the overlap of existing rail lines and affected customers. The CN already has a high capacity mainline route from Chicago, IL straight to New Orleans, LA, therefore with CN acquiring KCS there would be no need for parallel routes such as the KCS line from Kansas City through to New Orleans.

“If the CN voting trust and proposed merger were granted approval, we fully expect significant job losses on either CN or KCS because ultimately the transaction would require either a sale or abandonment of duplicative rail lines. The consequences for SMART-TD members would be uncertain, adverse, and certainly contrary to the public interest.”

In contrast, the SMART-TD letter says of Canadian Pacific’s proposed combination with KCS: “We anticipate growth in both rail businesses and jobs for SMART-TD members.”

Additional union concerns

The Transportation Communications Union/IAM (TCU) separately noted in a recent letter to the STB that the CN/KCS transaction is not end-to-end and could have long-lasting impacts. “Railroad workers lose with CN’s proposed voting trust. The consequences for TCU’s members and Union Brothers and Sisters will likely be adverse and contrary to the public interest,” TCU said in its letter.

District Lodge 19 of the International Association of Machinists and Aerospace Workers, AFL-CIO, and the Teamsters Canada Rail Conference have also filed letters with the STB opposing the CN/KCS voting trust. Those labour organizations join more than 130 shippers, communities and other stakeholders writing directly to the STB in opposition to CN’s voting trust proposal.

CP maintains that a CP-KCS combination is the only viable Class 1 merger that serves the best interests of customers and stakeholders, but also the continent’s rail network to enable a new corridor of investment and capacity for the North American economy to grow.