STB chairman Oberman’s letter today suggests (to me at least) that there won’t be any mergers in the near future. His letter (Trains newswire) makes it pretty clear that the STB doesn’t think more mergers are a good idea. He also took direct aim at JJ Ruest’s comment that single line service is needed to effectively move freight from road to rail. Will be interesting to see how CP/CN/KCS respond…
As a railfan, I personally think it woud be great if KCS remained independent.
Honestly, as long as someone doesn’t try to merge the Strasburg and dieselize it I really don’t pay much attention to mergers.
However, the “Surf Board” chairman’s probably correct.
Some oil/gas pipelines between western Canada and eastern Canada take a shortcut thru the US around the Great Lakes. One that crosses under 5 miles of open waters between Lakes Michigan and Huron has become controversial. The Canadian pipeline company has brought up international agreements that say that the intermediate country (US) can not interfere in pipeline transit. I fear that the same legal theory might be extended to a Mexico-US-Canada rail merger. In the KCS merger, I think any Mexican subsidiary should be spun off or remain neutral.
How does the STB come to a decision? I’m assuming there are x number of members on the board, and they vote and the majority rules. Is that how it works?
Yes that is how it works. The decision on the CP Voting Trust was split, the majority approved it. Chairman Oberman was not the dissenting vote.
Just a wild guess on my part, but I think we’ll have a decision on the voting trust late this afternoon.
What the hell is a voting trust?
My understanding is that it is a legal construct that puts KCS in amber while the regulators decide the merger.
Down the Rock Island line she’s a mighty fine road.
The STB sure seems like a very powerful entity. I had thought that that kind of regulatory power vanished along with the ICC.
“A central theme of this book is that railroads, throughout their history, were so important to the US economy that politicians could not leave them alone, and when governments did intervene in transportation markets, they usually made a mess of things. Government regulation distorted consumer choices, found awkward and costly ways of subsidizing competing modes of transportation, taxed or regulated away profits needed for reinvestment and capacity expansion, and—while generally contributing to greater safety—typically fell far short of stimulating optimal safety performance for all transport modes.”
Gallamore, Robert E… American Railroads . Harvard University Press. Kindle Edition.
Let the CN buy the KCS!
+1
Interesting - never thought of it that way, but it does follow.
Mr. Tree as much as I would love to take credit for that quote. That’s from Mr. Gallamore’s book American Railroads that Greyhounds quoted. A book I have on my reading list along with DeBoer’s book on Intermodal.
Agreed - I should have made that clearer.
Regarding the quotation and government regulation:
Suppose there were no government regulations whatsoever. Then one very wealthy individual or group could end up owning all railroads and perhaps turcking comopanies and petrolium suuppliers and be able to charge whatever they wish to maximize profits without real social responsibility.
The ICC was a reaction to abuse of power. It was fair as long as railroads had the clear technilogical advantage ovrer other forms of freight transportation. The fairness ended when the ICC and USA Government policies deliberaterly favored trucking at ar-freight at the expense of railroads.
I don’t think it’s the problem of gov’t regulation. The problem stems from the ICC overstepping it’s boundaries by creating unrealistic rates, caps, and restrictions for the railroads…
It was! But as is the case with much of government regulation, the regulators became an entity unto themselves. They failed to recognize until it was nearly too late the changes in the transportation industry.
I dealt with government regulators for most of my career. I never ceased to be amazed how little they understood about our business – banking and electric utilities.
In many instances, the career regulators had a vested interest in the status quo. Protecting their jobs seemed to be their primary concern.