Eastern Railroad Discussion > CP confirms termination of merger talks with CSX

CP confirms termination of exploratory talks with CSX
Says immediate action required to address industry-wide congestion

> CALGARY, Oct. 20, 2014 /CNW/ - Canadian Pacific Railway Limited
> announced today that exploratory conversations held
> with CSX Corp. about a possible business combination have ended. No
> further talks are planned.
>
> CP proposed an integrated coast-to-coast combination that would
> improve customer service, promote competition, alleviate congestion
> in North America – specifically the key Chicago gateway – and
> generate significant shareholder value. Such a business combination
> would offer creative alternatives for shippers, greater fluidity,
> increased capacity and improved efficiency industry-wide.
>
> While regulatory concerns appear to be a major deterrent for many
> railroads considering combinations, CP believes that given the right
> structure between the right players, and having thoughtful
> considerations and remedies to address shipper concerns, regulatory
> approvals are achievable. The North American rail industry is
> confronted today with the challenges of moving more freight than ever
> and the prospect of moving even more as oil production, crop yields
> and consumer demand grow alongside the economy. CP is convinced that
> the significant problems that beset the industry now will only worsen
> over time if solutions aren't put in place immediately. A
> pro-competition, customer-friendly, safety-focused railway
> combination is one such solution that could not be ignored on its
> merits by regulators.
>
> CP CEO E. Hunter Harrison will discuss the topic of railroad mergers
> and acquisitions and the need for a comprehensive North American
> transportation policy with the financial community, media and any
> other interested parties, in a conference call beginning at: 1:00 pm
> Eastern time, Tuesday Oct. 21.

Full story:

CP confirms termination of exploratory talks with CSX

Thank god, I was getting tired of hearing about that terrible idea so much

Posted from Android

The conference call should be interesting.

Harrison is enthused with the idea that railroads need to be "lean and focused" so I wonder if he'll pursue the idea that the common carrier doctrine has passed its prime? Dump low revenue, high seasonal cost products like grain, etc?

That ought to go over well in Ottawa, Kansas City, Alberta, Saskatoon, etc.

That's too bad. The name of the merged railway could have been "Southern Pacific"

Ray

The North American rail industry is
> confronted today with the challenges of moving more freight than ever
> and the prospect of moving even more as oil production, crop yields
> and consumer demand grow alongside the economy.

Well then show us what a genius you are by surmounting the challenges on your
own property. When you have proven your genius then perhaps someone will want
to talk to you. The other railroads have enough of their own challenges and
do not want to be saddled with yours also.

I hope everyone realizes all the Class Ones in the U.S. are all standard gage and
all interconnect. Any problems with cars flowing from one railroad to another are
caused by the railroads concerned.

CP says:

"A pro-competition, customer-friendly, safety-focused railway combination is one such solution that could not be ignored on its merits by regulators."

I say:

Oh yes it can. Too many shippers, of all sizes, are too pissed off about rail service right now. Because of the screaming more politicians are getting involved. That's not a good thing. See this:

http://www.ect.coop/public-policy-watch/legislation/senators-want-to-rein-in-freight-railroads/73590

While EHH is correct that railroads need to somehow fix the Chicago mess (traffic interchange), this is not the right time to propose a CP-CSX merger...he may be too hard headed to realize this.

Time to go the Plan B, Hunter...



Allen



Edited 1 time(s). Last edit at 10/20/14 10:15 by bradleymckay.

I think it is sad news. If you look at it objectively, there are a lot of benefits that transcontinental systems can bring. I paid $2.99 a gallon for the first time in years today at the pump. That is a result of Bakken oil moving halfway across the continent and I believe that oil would move more efficiently on one carrier and might counter balance BNSF's strength in the Upper Plains. Larger rail systems could give farmers more options to ship their harvest, which can help smooth out the effects of droughts, which happen frequently. A CSX-CP merger would open the entire Southeast to Canadian and Upper Plains farmers.

Do railroads need to get off their laurels and hustle more for every carload? Heck yes. The STB can do more to help by changing the process that shippers use to seek relief, and it can require more accountability from the carriers as well.

An opinion that many share inside and outside our industry is that mega mergers leave their customers unfulfilled. Very few mergers have resulted in people saying, "gee, that was great! We now are heard, appreciated, and our needs are met now! Thanks mega corporation!" The railroads can't handle the traffic and complications of geography, weather, and personnel now. How do you think and even LARGER company would react? It's almost like the political debate of doing things on a local level vs national level. The bigger it is, the more it takes to make it work AND it won't work nearly as well.

Joe

OPEC is lowering the prices so that it will make it unprofitable to drill for oil here. Domestic producers will quit and then we are back to $5.00 a gallon gas and a transcontinental railroad to no where, if a merger would go thru.

In this day of high technology and massive productivity, why shouldn't railroads learn to function at a higher level? My mega bank handles zillions of transactions a minute and seldom makes a mistake.

Time for him to turn his attention to the NS. LOL

MilwMike

What's the definition of " termination"....:)

The railroad business has enormous barriers to entry, it would be almost impossible for anyone to start a new one or impose competition on what's clearly a cozy industry. Yes, there's some competition, but no real bare knuckles grappling like you see in wholesale electric, phones, finance, etc.

Hunter was once a bull in the china shop, but he's one of the guys now...

rev66vette Wrote:
-------------------------------------------------------
> What's the definition of " termination"....:)

Good observation.

Sometimes, terminating a deal is a way to put some pressure on the target to get their stock price up or see a hostile from somebody in the future. The stock popped about 8% up when the talks were revealed. And just just dropped 1% when the termination was mentioned. Might seem to support the idea that the game's not over.

------------------------------------------------------
>> Improve Customer Service

Wow, hopefully nobody believes that line.

Guess reality of open access and massive trackage rights granted to meet the "increased competition" aspect finally hit old EHH. I'm not saying the Canadian RRs won't eventually merge with one of the US rails, but I simply don't see this country supporting any merger unless it essentially opens the merged rail system to all competitors via open access and massive trackage rights. Pretty sure that kills off any advantage of a merger!

What a "terrific time" to have set off the final Merger End Game. Is EHH finally succumbing to senility, or simply to the delusions of grandeur?

THe STB would never have approved of this.

For "you know what and GIGGLES," had this bad idea of CP-CSX actually been approved, let's speculate then on what the other INEVITABLE combinations would have been (and you can bet your a** that the rest of 'em would have been lining up to merge eith one another and/or friendly/hostile takeovers!!!).

UP plus ???
BNSF plus ???
NS plus ???
CN plus ???
KCS...probably still INDEPENDENT, I say!!!

It sounds like if Hunter wants to expand the systems (which I think is a good idea), he should provide better service and prices first. Maybe he is fighting the war on too many fronts.

Here is an idea. How about not sending a crew out of the initial yard Chicago yard on a train when there is no possible way they will make it even out of the suburbs.
Been reading some play by play reports of a crew that waited 5 hours for their train and 8 hours before departing a Chicago yard. Didn't make it out of suburbs before dieing then taking another 10 hours to get to home terminal. So now that crew has to be off duty twice as long as they would have if they were just pulled off taxied home inside their 12 hours. They then would have be ready in 10 to be used again.

The railroads are causing this congestion. More crews are not going to help much when you are wasting the ones you have.

Posted from iPhone

On another forum, I suggested why even re crew through trains at Chicago? Crew them at outlaying locations and send them ALL the way through the city without stopping, even if it meant cross-qualifying crews on other railroads, for instance BNSF crews running all the way through to Elkhart. I was told by a rail that this was not practical, but it sure seems like it would help the above noted situation. What do you think?