Commentary

A Fight for Shareholder Approval

Canadian Pacific, CN and Kansas City Southern have been battling for votes in KCS’s upcoming shareholder vote on August 19 to approve or reject the CN transaction. CP has been actively telling investors to vote no, while KCS and CN have been pushing for approval. It remains uncertain if there will be a decision from the STB on a CN/KCS voting trust prior to the shareholder vote. We continue to believe that there is a 60% chance of approval for the voting trust, but remain wary of the political climate.

STB Issues Decision on CP’s Declaratory Order Petition

The Surface Transportation Board (STB) has granted in part Canadian Pacific’s (CP) petition for declaratory relief: It confirmed that CP may use “discovery” under STB regulations to seek relevant material from Kansas City Southern (KCS) to prepare its control application.

CSX: Pan Am Merger Application Moves Forward, Support Builds

The Surface Transportation Board (STB) has accepted for consideration CSX’s amended and re-filed Pan Am Railways acquisition application, and set a procedural schedule, with a final decision to be rendered April 1, 2022. The proposed merger is also gaining support, CSX reported.

CP to KCS Shareholders: Read the Blue Card and Vote Red (“Stop”)

Know your colors and words: Canadian Pacific has filed a preliminary proxy statement and accompanying “BLUE” proxy card with the Securities and Exchange Commission (SEC) to be used to solicit votes of Kansas City Southern (KCS) shareholders to vote “AGAINST” the proposed CN-KCS combination at a scheduled Aug. 19, 2021 KCS special shareholders meeting.

Railcar Owners Seek STB Demurrage, Accessorial Rules Changes

Four organizations representing private freight car owners have petitioned the Surface Transportation Board to institute a rulemaking that would update the demurrage and accessorial rules governing the railroads’ use and handling of their equipment.

STB to Class I’s: Terminal Congestion, Demurrage Data, Please

Surface Transportation Board (STB) Chairman Martin J. Oberman has called on the CEOs of the seven North American Class I’s to provide information on the extent of congestion at key U.S. container terminals and on their policies and practices for assessing container demurrage fees, citing reports of “substantial charges being levied by the railroads for container storage at these terminals.”

CN: ‘Strong’ 2Q21, Voting Trust Answer Expected Soon

CN followed potential merger partner Kansas City Southern (KCS) in reporting financial results for second-quarter 2021, noting C$3.598 billion in revenues—an increase of 12% over the prior-year period—and a 13% increase in revenue ton-miles (RTMs).

SMART Adds Freight to its Service Mix

Northern California’s Sonoma-Marin Area Rail Transit (SMART) has assumed freight operations and common carrier duties from Northwestern Pacific Railroad Company in Marin, Napa and Sonoma counties, after acquiring right-of-way from the North Coast Railroad Authority.

CSX, NS to STB: Deny Amtrak Request

CSX and Norfolk Southern (NS) are calling on the Surface Transportation Board (STB) to deny “as moot” Amtrak’s renewed request for an interim order requiring the Class I railroads to provide track access between New Orleans and Mobile so Amtrak can prepare for proposed Gulf Coast service.

Commentary

High Time for Sunshine at STB

In 1913, three years prior to taking his seat on the Supreme Court, Justice Louis Brandeis wrote in Harper’s Weekly that “sunlight is said to be the best of disinfectants; electric light the most efficient policeman.”

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