Canadian National sells its interest in Detroit River Tunnel

by Canadian Shipper

Canadian National has concluded an agreement to sell its one-half interest in the shares and assets of the Detroit River Tunnel Company (DRT) to Borealis Transportation Infrastructure Trust. Terms of the agreement are confidential. The sale of the DRT, a 1.6-mile, rail only tunnel crossing the Canada-United States border between Detroit and Windsor, Ont., is still subject to approval by the U.S. Surface Transportation Board.

The Ontario Municipal Employees Retirement System, with assets of C$36 billion, controls Borealis Transportation Infrastructure Trust. Canadian Pacific Railway will continue to hold a 50-percent interest in DRT and will replace CN as the operator of the DRT. CN and CPR, along with CSX Transportation and Norfolk Southern Railway, will all continue to hold trackage rights permitting them to operate trains through the tunnel.

“During the course of approval of the merger of CN and Illinois Central Railroad, CN committed to the Surface Transportation Board that it would not block any proposed improvements to the tunnel and that it would sell its interest in the Detroit River Tunnel at fair market value. We have fulfilled these commitments and have done so through a privately negotiated agreement,” said Paul M.Tellier, CN’s president and chief executive officer.

CN moved only 4,000 carloads through the Detroit River Tunnel in 1999, less than one percent of the volume CN moved between Canada and the United States through its St. Clair Tunnel, which CN opened in 1995 between Sarnia, Ont., and Port Huron, Mich. This new tunnel beneath the St. Clair River can accommodate high cube automobile carrying railcars and intermodal cars.

“The transfer of our interest in the DRT property preserves our right to use the facility,” said Tellier. “This agreement also ensures shippers that vigorous competition between rail carriers will continue in this important NAFTA corridor.”
Tellier said the transfer of operations of DRT to CPR will take place gradually over the next three to six months to assure a smooth transition and continuation of safe operations through the tunnel.

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