The Globe and Mail Report on Business speculates this morning there will soon be only two mega-railways in North America.
The article is based on an interview with CPR CEO Robert Ritchie who says the increasing importance of trade with Asia along the Pacific coast will force the consolidation.
The article outlines various merger scenarios.
http://www.theglobeandmail.com/servlet/story/RTGAM.20060205.wcprr0205/BNStory/Front/home
It would certainly also reduce the variety of models available.
I’m sure UP will go for it just for the licensing fees on more roads! [:)]
Makes me glad I am a transition era modeler.
Actually UP makes peanuts on the licensing, however, a mega merger between BNSF and CP seems to present potential. Inspite of its problems, UP is a still a very profitable corporation and a business to be reckoned with.
What about the very healthy KCS? CSX-NS should bring no surprises, but would a TEX-MEX connection make KCS lucrative for the future CSX-NS (if it does happen). All we can do is monitor the market and guess.
BTW: Don’t forget that after “mega-mergers” take place, Regional railroads are usually spun-off from the new companies less profitable lines. Seldom mentioned on these forums is that there are over 400 regional, industrial, and shortline railroads in the USA. Some like the Arizona & California are well maintained.
That is some interesting reading indeed! However, I would like to see things stay the way they are. Haveing 6 major railroads makes for a more “colorfull” rail system. [:D] Just my 2 cents.
I don’t think that will be much of a problem. But if we lose BNSF, i’d kill myself (it’s just a matter of speech) Then every RR i have liked will be gone- IC is gone, C&NW is gone, Santa Fe is gone (kind of; but i still don’t see it as “gone”). If we get down to 2 RR’s then not many people will model the present day.
Anything is possible, but the Feds would have to approve of such a merger and they probably still remember bailing out the PC mess, or at least I hope they do. Conrail cost a lot of money form us as taxpayers and then it was sold and merged.
There is very little competition now and it would be less if two only two lage railroads existed.
I hope USRA does not happen again in our lifetime.
Clear back in the USRA era, some pundits were pushing a plan for four mega-railroads in the United States. Here we are, almost a century later, and we haven’t gotten to that point yet.
As for two mega-railroads? Holdeth not thy breath!
Two railroads in North America is not likely to happen. If anything happens the number will most likely to be 4 railroads in North America.
Victor
Happy Railroading.[swg][swg]
It’s really the next logical step now that the U.S. west and east each have two large lines. Pick a partner on the other coast add one from Canada, whoever is left forms the other line in self defense. It’s probably not a good idea to have the bulk of railroading so concentrated, UP-SP and BN-ATSF may not have been a good idea. But I expect to see at least an attempt made within 5-10 years.
Enjoy
Paul
Um, that was a joke.
Well, we are now down to 6 large railroads:
CP
BNSF
UP
CN
CSX
NS
A BNSF/CN merger was sort of investigated, but it ran into too many Canadian legal issues at the time. Right now I might expect to see a NS/BNSF or a CSX/UP merger. The Canadian roads control their main traffic(Canadian generated), and get a long haul division of the total. CP would like to have single line access to the Gulf ports like CN now has to the Gulf(via their purchase of IC).
Right now, they can use UP or give the traffic to competitor CN(not likely). Where KCS/Mexico will fit in this is up in the air at this time. Everyone has an opinion, and the article is just more of that…
Jim Bernier
Onlyl. I never heard of such a word, but if you say so…
TL
Personally, I think that if a mega merger was to happen, the government would see it as a monopoly and reject it. Atleast I hope that. Railroads have gotten just about as big as they’re going to get, me thinks.
CN & CSX… they woud fit pretty nicley and would defiantly make for a larger controlling railroad in the east. If any thig happens CP will be the last railroad to be merged i’m sure, they want nothing to do with it.
If anything, signs point to CN & BNSF merging. There’s been a lot of talk between the two. Besides, CSX wants to get the heck out of Canada for some reason, as they’re selling off all their Canadian routes. CSX & NS would be most likely.
I think the current political climate favors such combinations, even if they are monopolies. Some may have noted UP’s kissing up to the current administration, and John Snow, Secretary of the Treasury is former chair of CSX. So I’d say those two RR’s have plenty of leverage in Washington DC.
I am not optimistic about the effects of such an merger, however.
Powerless in Portland!
Peter
conford
That’s a rather simplistic assement of Conrail. First off government meddeling, in addition to PC’s internal mismanagement caused the debacle in the first place. Had the ICC allowed PC, Reading, LV, and EL to rationalize or even completely abandon thier lines, the collapse of the Northeastern Railroads may not have been as severe. Second, when Conrail went public, it repaid it’s loans with interest. The government ended up making money on the deal.
I think we will see two mega-systems in our life-times. Personally, I think it will be BNSF-CN-NS-KCS and UP-CSX-CP. Slowly, but surely, the mega-systems, will abandon car load service, and concentrate on city to city service, leaving the actual servicing of the customer to the shortline and regional roads.
In a sense, with haulage and run-thru agreements, shared terminals, and other developements, the consolidation has already begun.
Nick
ok
Sounds good to me. I say, paint 'em all blue and call it Conrail [:D][:D][:D] Which actually, if you think about it, makes sense. Neither “NSX” nor “Chessie Southern” has much of a ring to it. Bring Back Big Blue.
Ray