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A proposed railroad merger’s potential impact on Southern Illinois transit

<i>The Southern Illinoisan</i><br/>Passengers board the Amtrak train in Carbondale in 2017.
The Southern Illinoisan
The Southern Illinoisan
Passengers board the Amtrak train in Carbondale in 2017.

By Les O’Dell

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    CARBONDALE, Illinois (The Southern Illinoisan) — A pending railroad merger could impact train traffic and Amtrak service in Southern Illinois and elsewhere in the state served by the City of New Orleans, Illini and Saluki lines, leading some – including Carbondale’s mayor – to oppose it.

But one industry expert told The Southern it’s still too early to tell what, if any, changes will take place.

Canadian National owns much of the railroads in the region including the north-south line from Chicago to New Orleans through communities including Centralia, Du Quoin and Carbondale.

On May 21, the rail company entered into an agreement to combine with the Kansas City Southern railway.

Some predict the proposed merger — if approved by federal regulators — will increase freight traffic through Southern Illinois and make passenger service to the area more unreliable. Others say the argument is part of a public relations battle and it is too soon to know the effect.

Carbondale Mayor John “Mike” Henry recently called for a “thorough review on how a CN-KCS deal would impact the already poor performance of Amtrak service in the region,” in a letter dated July 20 and submitted to the Surface Transportation Board, the federal regulatory body reviewing the proposed merger.

His letter also said that the city feared the merger would mean “more traffic, more congestion and exacerbate an already frustrating situation.”

“We just really can’t afford a downgrade in service from Amtrak. That’s the reason I wanted to get involved,” Henry told The Southern this week.

The timing of the possible acquisition also coincides with Carbondale’s plans for a new $17.3 million transit hub in the downtown area. Mostly funded by federal and state dollars, the station will replace the current Amtrak station and ultimately become a central location for numerous regional transit services, along with Amtrak, Greyhound, and the Saluki Express.

Railroads and rivalries At the forefront of the purchase is a century-old feud between Canada’s largest railroad companies, the Canadian National and Canadian Pacific.

Both railroads have made pitches to buy the Kansas City Southern Railway in recent months.

In March, the CP offered $29 billion to buy the railroad. Then, a few weeks later, rival Canadian National made a $33.6 billion competing bid for the railroad, which was approved by KCS stock holders.

This purchase still requires approval by the Surface Transportation Board, however. STB’s ongoing review of what is called a “voting trust” includes time for input from the public and other entities including Amtrak.

In the meantime, both Canadian railroads are working to portray themselves as the ideal suitor for the Kansas City Southern.

Canadian National, commonly known as CN, is North America’s fourth highest-earning railroad with nearly 20,000 route miles. Primarily serving southern Canada, the railroad branches southward to New Orleans, including the former Illinois Central Gulf Railroad, running north and south through Illinois.

Its longtime rival, the Canadian Pacific, has its rail system running through much of Canada as well as the upper Midwest including lines through Minnesota, Wisconsin, Iowa and tracks from Chicago across northern Illinois, through Iowa and Missouri to Kansas City.

Freight Waves, a resource for the global freight industry, reports CP is North America’s No. 6 railroad company.

The continent’s seventh-largest railway by revenue, according to Food and Power, an industry policy analysis firm, is Kansas City Southern. Its holdings include the very desirable cross-border route into Mexico. Analysis of rail maps shows that purchase of the KCS by either Canadian entity, would give the buying railroad lines spanning the North American continent into Mexico.

Concerns More than 2,000 letters expressing opposition or support were filed with the STB during the initial public comment period that is now closed.

Opposition to the merger has come from a number of fronts. Canadian Pacific has called the pending CN-KCS merger “anti-competitive.” A CP-produced fact sheet alleges if the merger is approved, freight traffic on many Canadian National tracks, including those that run through Southern Illinois, will grow.

Amtrak, the country’s passenger rail service, which runs on tracks owned by railroads, also is against the CN purchase of the Kansas City Southern railroad.

In a filing with the Surface Transportation Board, Amtrak specifically mentions concerns with plans the Canadian National has to divest itself of a Baton Rouge to New Orleans line following the merger.

Passenger rail performance Amtrak’s filing with the STB makes no mention of the former Illinois Central Gulf lines or its service on them. However, when asked about the impact the merger may have on passenger service in Illinois, a spokesman for Amtrak referred the newspaper to the “Host Railroad Report Card,” a grading system for the on-time performances of its trains on freight lines.

By law, freight trains are supposed to yield to passenger trains, but this law is not enforced and, in most cases, the opposite is true; passenger service routinely waits on sidings until freight trains clear the tracks, according to the grading system documents.

The grades reflect how frequently host railroads prioritize their own trains over Amtrak. For service to Southern Illinois on its City of New Orleans, Saluki and Illini routes, on the 2020 Report Card, Amtrak has assigned Canadian National a four-year average grade of D+, documents show.

The grade is based upon whether 80% or more of Amtrak passengers are able to arrive at their destinations within 15 minutes of the scheduled time. For the Illini and Saluki routes — which run daily between Chicago and Carbondale — Amtrak specifically assigned Canadian National a failing grade of 72%. Opponents of the Canadian National–Kansas City Southern merger hint that a post-merger CN would increase train traffic through Southern Illinois and put more pressure on already congested lines in the Chicago area, according to a “Fact Sheet” published by rival Canadian Pacific.

Canadian Pacific President and CEO Keith Creel told the Chicago Tribune in June that his rail line would not increase the number of trains on the north-south line because it would go westward from Chicago through rural Iowa to reach the southern parts of the nation.

Amtrak’s opposition to the deal has been bolstered by an executive order signed July 9 by President Joe Biden. With it, the president urged the Surface Transportation Board to consider freight railroads’ treatment of passenger trains.

Growing opposition With the possibility in mind that a merger could mean more freight traffic and passenger service delays, Carbondale’s mayor is worried about the potential impact.

“Every time I’ve ridden Amtrak in the last five or six years, the passenger trains have had to yield to the freight trains and, of course, some of these freight trains are very, very long so it causes Amtrak service to be off its schedule,” Henry said. “I would really like to see Amtrak service be much more reliable.”

A 2019 Amtrak Inspector General report called out the passenger carrier’s poor performance on the Saluki and Illini lines. The report showed only 6% of northbound Illini trains arrived on time between September 2017 and 2018.

Henry added that the burden for Amtrak delays does not lie solely with CN.

“In all fairness to them, they need some infrastructure improvements and help. I know they are looking for some federal money to do that,” he said.

In Henry’s letter to the STB, he wrote that following complaints by Amtrak over the last decade, the officers of the railroad said “the greatest issue by far affecting the performance of that service are a lack of sufficient infrastructure to avoid traffic congestion and the perpetuation of unrealistic schedules.”

Henry said he has not spoken to representatives of the CN in regard to the merger, but said the railroad and city have “a decent relationship.”

Congressional leaders are voicing concerns as well.

Peter DeFazio, D-Oregon, chair of the House Transportation Committee, specifically mentioned Canadian National’s downstate Illinois railways in a letter to the STB this week in opposition to the CN-KCS merger.

He said the merger is “not in the public interest.”

On a website promoting the merger, Canadian National describes the merger as a way to greater competition and efficiencies.

In a prepared statement for The Southern, Canadian National said, “The CN-Kansas City Southern combination will create the premier railway for the 21st century by expanding North American trade, powering economic prosperity, providing numerous new service options for customers, while delivering many compelling benefits for employees, communities and ports.”

‘Too early to tell’ Jim Blaze, a nationally recognized railway economist who is watching the battle for KCS closely, said those expressing support or opposition to either proposed merger are, in essence, putting the caboose before the engine.

In an exclusive interview with The Southern, Blaze said the STB has not greenlighted any railroad mergers in 30 years and has generally said any merger needs to enhance competition and serve the public interest.

Blaze worked as a long-range freight planner with the Illinois Department of Transportation for seven years. He said it is too early to gauge either railroad’s plans post-merger and he is shocked by both company’s efforts to win over public opinion.

“I’ve never seen quite so much media hype and assertions of competitive benefits since maybe the fight to split up Conrail in 1996,” Blaze said. “Even that pales compared to what we are seeing here. Both roads have gone out and gotten shippers, customers and communities to sign up, saying they support one or the other.”

Blaze explained that as part of the Surface Transportation Board’s consideration of a merger proposal, applicants must file extensive documentation and projections, reporting everything from financial records and projections to planned routes and railroad capacities. Neither the Canadian National nor Canadian Pacific has submitted these application materials — called evidence — yet.

“I want to emphasize all that’s been filed so far is the intention of an application,” he explained. “Neither has filed an application with all of the details of how this is going to work. I think this is a lot of hype with very little technical ammunition on the strengths and weaknesses of the plans.”

Blaze said even if the Canadian National is permitted to purchase the Kansas City Southern and if it does lead to increased freight traffic in Chicago, it may not all immediately travel south.

“There are different routes they could use to divert traffic,” Blaze said. “Any increase is not necessarily going to flow through Carbondale and Southern Illinois. We won’t know what their intentions are until they file their routing.

“Nobody has filed their evidence yet, so everyone is making arguments hypothetically but we don’t know the actual numbers yet,” Blaze said.

In its statement to The Southern, CN said the company will include plans for its routes in future filings with the STB.

“Throughout the combination process, we will work closely with Amtrak, communities and other stakeholders and will fully document the impacts of our combination in our application to the STB. We look forward to a decision on our voting trust so we can further engage with stakeholders and move forward in the process,” the statement read.

Blaze said the Surface Transportation Board is likely to consider the matter in the next several months. Until then, and before the evidential filings, the public relations battle is likely to continue.

*Spokespersons for both Amtrak and Canadian Pacific provided background for this report, but declined to be interviewed. Canadian National provided a written statement, but also did not make a representative available for comment.

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