CPKC says it won't participate in rail industry consolidation

Canadian Pacific Kansas City (TSX: CP) (NYSE: CP) stated it has no interest in participating in immediate rail industry consolidation and does not believe further consolidation is necessary for the industry as currently structured.

The company said it remains focused on delivering benefits from its three-nation network, which connects shippers across North America through interline service options.

"We believe that a transcontinental merger would trigger permanent restructuring of the industry and result in a disproportionately large railway whose size and scope would require others to take action," said Keith Creel, CPKC President and CEO. "This will likely result in an unnecessary wave of railway mergers that today is not the best way to support American businesses nor the public interest, and has the potential to create more issues than it solves."

CPKC stated that major rail mergers pose risks to customers, rail employees and the broader supply chain, with those risks amplified by follow-on consolidation.

The company pointed to existing partnerships as alternatives to consolidation, citing its network alliance with CSX in the Southeast U.S. and a recent alliance announced by BNSF and CSX. CPKC recently announced a collaboration with CSX on the Southeast Mexico Express service linking the U.S. Southeast to Mexico.

According to the company, the existing six major railways in the United States can offer high quality transportation services across the continent. CPKC said the current U.S. rail network has sufficient capacity and operational fluidity for years of service improvement and volume growth.

The information was provided in a company press release.

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