An order President Joe Biden signed late last week could hinder the pending merger of Canadian National Railway and Kansas City Southern, S&P Global Platts reports.
Citing growing concern over railroad consolidation, the broad anti-competition executive executive order in part targets a railroad industry that has seen the number of major, Class I freight railroads in the U.S. shrink to seven from 33 in 1980, limiting the number of crude-by-rail providers.
As S&P Global Platts reports, Canadian National’s nearly $30 billion acquisition of Kansas City Southern would create the only Canada-to-Mexico rail network in North America that could move Canadian crude exports to the Gulf Coast and refined products to Mexico.
That combination is expected to prove more beneficial thanks to the revised United States-Mexico-Canada Agreement trade deal. With only CN having rail routes stretching from Alberta to the Gulf Coast now, adding KCS would allow CN to further dominate the crude-by-rail market.
CN has a lot of north-to-south parallel routes with KCS, S&P Global Platts reports, but the only direct overlap is in Louisiana. CN’s existing rail network moves crude to the refining hub of St. James, Louisiana, but KCS additionally offers more direct access to hubs along the Texas Gulf Coast and into Mexico.