This week, the editors of Railfan & Railroad Magazine are looking at some of the biggest stories in railroading in 2021. Be sure to check Railfan.com every weekday all year long for all your (free) railroad news and if you like what you see, consider subscribing. 

By Justin Franz

The North American railroad map could look very different on New Year’s Eve 2023. 

Over the last five days, the editors of Railfan & Railroad have looked back at some of the biggest stories in railroading this year but without question, the biggest of all was the pending merger of Canadian Pacific and Kansas City Southern. If federal regulators approve the deal — and by many indications, they will — it would be the first Class I merger in more than two decades. 

One of the reasons there have been no mergers over the last two decades was that the U.S. Surface Transportation Board changed how it would judge railroad combinations in 2001 following a flurry of chaotic mergers in the 1990s. The new rules that came out that year set a higher bar for approval, forcing railroads to ensure that the merger would increase competition and be for the public good. However, the rules did not apply to everyone: The STB decided that the smallest Class I, the 6,700-mile Kansas City Southern, would be exempt. Since then, it was assumed that if any Class I would be a target for acquisition, it would be KCS. But regardless, no one had ever seriously tried to test the rules. That was until news broke late on the night of March 20, that CP was making a move for KCS. Just hours after the Financial Times broke the story, CP and KCS announced that it was true. 

A look at what the combined Canadian Pacific-Kansas City Southern system will look like. 

“This transaction will be transformative for North America, providing significant positive impacts for our respective employees, customers, communities, and shareholders,” said CP President and Chief Executive Officer Keith Creel. “This will create the first U.S.-Mexico-Canada railroad, bringing together two railroads that have been keenly focused on providing quality service to their customers to unlock the full potential of their networks.” 

But not long after CP and KCS announced their intentions to merge, Canadian National made an unprovoked offer: $33.7 billion for KCS, more than the $29 billion CP was offering. KCS announced that they would evaluate the new offer and that launched a months-long battle between the two Canadian Class Is. KCS would eventually take CN’s offer, but by the end of the summer, the deal was off after the STB torpedoed a key part of CN’s proposal. A few days later, it was announced that “Canadian Pacific Kansas City” was back on. In October, the two railroads formally filed their merger plans with the STB, which is expected to either approve or deny the transaction sometime in 2022. Earlier this month, CP officially purchased KCS and put it into a blind trust where it will continue to operate independently for now. 

In New England, Pan Am Railways is poised to become a fallen flag if it’s taken over by CSX Transportation. Photo by Justin Thomas Winiarz.

But “Canadian Pacific Kansas City” isn’t the only change we could see in the next year. In New England, CSX Transportation is continuing to pursue its acquisition of Pan Am Railways, a deal that will dramatically shake up the railroad landscape there. As part of the proposal, Genesse & Wyoming would takeover Pan Am Southern, a jointly owned Pan Am-Norfolk Southern operation across western Massachusetts. However, that part of the plan has raised eyebrows, especially in Vermont, which is already dominated by G&W operations. Amtrak has also come out against the plan over fears that a CSX takeover would negatively impact passenger rail expansion in the region. The Department of Justice has also raised concerns about competition in the region if CSX, which would suddenly have two lines across Massachusetts, were to get Pan Am. A decision on the CSX-Pan Am deal is expected sometime in 2022. 

Another map change will happen in the Upper Midwest and Ontario, where Watco Companies will take hundreds of miles of former Wisconsin Central trackage in 2022.