Canadian National Railway Company (CN) and Kansas City Southern (KCS) recently outlined the benefits of its pending merger which is currently awaiting clearance from the Surface Transportation Board (STB). 

In an op-ed co-authored by JJ Ruest, president and chief executive officer of CN and Patrick J. Ottensmeyer, president and chief executive officer of KCS, the top executives or the firms highlighted the benefits of the rail merger to economic growth and supply chain security.

Ruest and Ottensmeyer argued how the combination of CN and KCS will supply critical infrastructure to shorten supply chains.

They also underscored that the combination will enhance competition and support the economies of the United States, Mexico and Canada, allowing the US-Mexico-Canada Agreement — which earlier replaced the NAFTA deal between the three countries  — to yield its full potential.

“Consider an auto manufacturer in Michigan: Our track would directly connect Detroit to the heart of Mexico, giving U.S. manufacturers more competitive routes and the ability to create U.S. jobs as they meet new domestic and regional content requirements under the USMCA,” the executives wrote in the op-ed.

They noted that other potential beneficiaries include grain farmers in Illinois, Iowa and Wisconsin who would have expanded reach into global markets, as well as ethanol producers in Iowa who would have direct access to markets in Mexico; home-builders in Texas and poultry farmers in Arkansas would benefit from expanded supply networks of lumber and source feed ingredients.

Ruest and Ottensmeyer also highlighted key environmental benefits the combination will deliver.

“For a single route, from San Luis Potosi, Mexico, to Detroit, Michigan, moving freight from trucks to trains would save 260,000 tons of CO2 per year, the equivalent of the average annual emissions of more than 300 long-haul trucks,” they said. “Multiply that across multiple routes and years, and the impact would be significant.”

The op-ed also advocated for the approval of CN-KCS’ proposed “plain vanilla” voting trust.

“The voting trust is identical to the CP (Canadian Pacific Railway) trust approved by the STB and meets the test for approval,” the executives wrote, adding that a clearance prevents premature control of KCS; allows KCS to maintain independence during the STB’s review of the ultimate combination of CN and KCS; and protects KCS’ financial health during this period.

KCS announced in May that it is exiting its earlier merger plans with CP noting that CN's offer constitute a “company superior proposal.”

CN made a roughly US$30 billion bid for KCS, topping the one offered by its Canadian rival after the railroad operator already agreed to a sale to CP in March — in a roughly US$25 billion deal.

Since then, the rail companies have been building their own cases in arguing which deal would end up being more beneficial. 

Meanwhile, CN and KCS are currently awaiting for the STB's greenlight of its planned merger.