The Surface Transportation Board (STB) has found five of the seven U.S. Class I railroads to be revenue adequate for 2020: BNSF, CSX, Kansas City Southern, Soo Line (the U.S. affiliate of Canadian Pacific) and Union Pacific.
Thirty-nine Members of Congress, all Democrats, have sent a letter to the Surface Transportation Board urging it to “not take any action that would undermine the ability of railroads to make … investments now and into the future.”
The Association of American Railroads, plus CSX and Union Pacific, are calling on the Surface Transportation Board to deny a Petition for Rulemaking that would update the demurrage and accessorial rules governing the railroads’ use and handling of privately owned freight cars.
There’s an 800-pound British gorilla pounding on the door of CN’s boardroom. He’s pissed, beating his chest, and licking his chops. He’s not going away until he cleans house. He’s Sir Chris Hohn, and the activist hedge fund he leads, TCI Fund Management Ltd., on Aug. 30 became a “beneficial owner” of CN, grabbing 5.2% of the railroad’s shares, putting Hohn and his business partner, Ben Walker, in a position to make CN an offer it probably can’t refuse.
UPDATED SEPT. 3, 2021: The United States Surface Transportation Board—as expected by many industry observers and financial analysts—on Aug. 31, 2021, by unanimous vote, rejected the CN-Kansas City Southern voting trust, effectively killing the merger, and opening the door for Canadian Pacific to re-engage with KCS on the CPKC (“Canadian Pacific Kansas City”) deal it struck with KCS on March 21, albeit with a sweetened offer. KCS postponed its Sept. 3 shareholder meeting to vote on the CN offer until 9 a.m. (CT) on Sept. 24. It is now “evaluating its options,” which includes considering CP’s offer.
On Aug. 30, 2021—the day before the Surface Transportation Board rejected the voting trust for the proposed CN/Kansas City Southern merger—TCI Fund Management Ltd. filed a Schedule 13D form with the U.S. Securities and Exchange Commission to report that it had increased its stake in CN to 5.2%. TCI already is CN merger rival Canadian Pacific’s second-largest shareholder. Some industry observers found TCI’s move “interesting” and “critical” as the activist hedge fund has strongly objected to CN’s merger attempt with KCS.
John D. Porcari, who served as the Obama administration’s Deputy Secretary and Chief Operating Officer of the Department of Transportation, has been named as Port Envoy to the Biden administration’s Supply Chain Disruptions Task Force.
In Aug. 26 comments filed with the Surface Transportation Board, the United States Department of Justice took issue with many aspects of the proposed CSX-Pan Am Railways merger, citing President Biden’s July 9 Executive Order, “Promoting Competition in the American Economy.”
CSX has recently proposed to acquire Pan Am Railways. Although, as I explain below, I am usually critical of mergers, I believe this merger will substantially enhance the rail network in New England by bringing the region more directly into the national railroad network.
For investors, industry watchers and rail consumers, August has been either the most interesting or frustrating month to date in the reality dating show, “I Want to Buy a Class I Railroad.”