CP-KCS combination offers a non-regulatory means to further
executive order's goals for competition and passenger access to the
freight rail network, whereas CN-KCS would reduce competition and
impede passenger service
CALGARY, AB, July 9, 2021 /CNW/ - Canadian Pacific
Railway Limited (TSX: CP) (NYSE: CP) said today that the executive
order signed by President Biden addressing competition in the U.S.
economy sends clear messages: no rail mergers that reduce
competition or hurt passenger service and that the U.S. economy
needs more competition among railways.
A CP-KCS combination would be a positive step toward more
competition – not less – in the freight rail industry with no need
for regulatory solutions. In contrast, a proposed CN-KCS
combination creates competitive issues and reduces options for rail
customers that will require additional regulation to overcome.
Additionally, CN-KCS brings with it more challenges for existing
Amtrak service on CN's lines south of Chicago that already have a history of
operating issues and one of the worst on-time performance records
in the industry, and challenges for the desired establishment of
future passenger service in Louisiana.
In contrast, CP has consistently received an A rating from
Amtrak, leading the industry for the previous five years-plus, in
its annual host railroad report card recognizing its
industry-leading on-time performance record. CP is also the first
Class 1 railroad to complete 100 percent certification of its
Amtrak schedules. CP is supportive of working with all stakeholders
to introduce intercity passenger rail service between New Orleans and Baton Rouge, an outcome that comes with far
more capacity and operational flexibility, and less risk to
Louisiana taxpayers.
CN's own map highlights the parallel route structure of a
combined CN-KCS system that would funnel all of its traffic through
Chicago. CN wrongly argues that
the only rail competition worth protecting is where a shipper would
suffer a reduction from two to one serving railroad. Even for those
shippers, CN cannot solve the problems its deal creates. The
proposed divestiture solution for the Baton Rouge to New
Orleans corridor fails to solve the underlying competitive
problem as it touches only the last mile for certain shippers,
while failing to address the reduction in competitive alternatives
inherent in combining these two railroads' parallel route
structures.
Promises, promises…
CN keeps adding promises that are no more than band-aid
solutions to the competition problems CN-KCS would create. The
promises keep stacking up and now include:
- A rate-freeze for so-called 2-to-1 shippers
- A divestiture of a 70-mile segment, still lacking in important
details
- Maintaining the level of capital spending on critical KCS lines
south of Kansas City
- Keeping KCS intact if it's divested
- A bottleneck rate commitment that CN claims would preserve
CP-KCS routes as competition against CN
All of these promises would require regulatory oversight to
enforce, and none would preserve true structural competition like
the CP-KCS combination would create. A CP-KCS combination offers
all the same benefits – and more – to rail shippers and the supply
chain with none of these harms, or need to enforce CN's growing
list of promises through regulation. The CP-KCS combination:
- Unlocks new capacity for Amtrak passenger service, rather than
interfering with passenger service between Baton Rouge and New
Orleans and south of Chicago
- Creates single line routes to all the markets that a CN-KCS
network would reach
- Brings new competition to and from Upper Midwest markets
dominated by BNSF or UP that CN-KCS cannot address
- Creates new competition versus CN that CN-KCS actually
eliminates
- Has a route network that does not funnel all of its traffic
through the congested Chicago
area
CP-KCS would be better for Amtrak and achieves the goals of
President Biden's executive order, while CN-KCS would reinforce the
problems the order is trying to solve.
CP-KCS remains the only viable Class 1 combination
As
previously announced, CP is continuing to pursue its application
process to acquire KCS so that the pro-competitive CP-KCS
combination can be reviewed by the STB and implemented without
undue delay, in the event KCS' agreement with CN is terminated or
CN is otherwise unable to acquire control of KCS.
For more information on the benefits of a CP-KCS combination and
the risks that a CN-KCS transaction would pose to the railway
industry and North America, visit
FutureForFreight.com.
FORWARD-LOOKING STATEMENTS AND INFORMATION
This news release includes certain forward-looking statements
and forward looking information (collectively, FLI). FLI is
typically identified by words such as "anticipate", "expect",
"project", "estimate", "forecast", "plan", "intend", "target",
"believe", "likely" and similar words suggesting future outcomes or
statements regarding an outlook. All statements other than
statements of historical fact may be FLI.
Although we believe that the FLI is reasonable based on the
information available today and processes used to prepare it, such
statements are not guarantees of future performance and you are
cautioned against placing undue reliance on FLI. By its
nature, FLI involves a variety of assumptions, which are based
upon factors that may be difficult to predict and that may involve
known and unknown risks and uncertainties and other factors which
may cause actual results, levels of activity and achievements to
differ materially from those expressed or implied by these FLI,
including, but not limited to, the following: changes in business
strategies and strategic opportunities; estimated future dividends;
financial strength and flexibility; debt and equity market
conditions, including the ability to access capital markets on
favourable terms or at all; cost of debt and equity capital;
potential changes in the CP share price; the ability of management
of CP, its subsidiaries and affiliates to execute key priorities;
general North American and global social, economic, political,
credit and business conditions; risks associated with agricultural
production such as weather conditions and insect populations;
the availability and price of energy commodities; the effects
of competition and pricing pressures, including competition from
other rail carriers, trucking companies and maritime shippers in
Canada and the U.S.; North
American and global economic growth; industry capacity; shifts in
market demand; changes in commodity prices and commodity demand;
uncertainty surrounding timing and volumes of commodities being
shipped via CP; inflation; geopolitical instability; changes in
laws, regulations and government policies, including regulation of
rates; changes in taxes and tax rates; potential increases in
maintenance and operating costs; changes in fuel prices; disruption
in fuel supplies; uncertainties of investigations, proceedings or
other types of claims and litigation; compliance with environmental
regulations; labour disputes; changes in labour costs and labour
difficulties; risks and liabilities arising from derailments;
transportation of dangerous goods; timing of completion of capital
and maintenance projects; sufficiency of CP's budgeted capital
expenditures in carrying out CP's business plan; services and
infrastructure; the satisfaction by third parties of their
obligations to CP; currency and interest rate fluctuations;
exchange rates; effects of changes in market conditions and
discount rates on the financial position of pension plans and
investments; trade restrictions or other changes to international
trade arrangements; the effects of current and future multinational
trade agreements on the level of trade among Canada and the U.S.; climate change and the
market and regulatory responses to climate change; anticipated
in-service dates; success of hedging activities; operational
performance and reliability; regulatory and legislative decisions
and actions; public opinion; various events that could disrupt
operations, including severe weather, such as droughts, floods,
avalanches and earthquakes, and cybersecurity attacks, as well as
security threats and governmental response to them, and
technological changes; acts of terrorism, war or other acts of
violence or crime or risk of such activities; insurance coverage
limitations; and the pandemic created by the outbreak of COVID-19
and resulting effects on CP's business, operating results, cash
flows and/or financial condition, as well as resulting effects on
economic conditions, the demand environment for logistics
requirements and energy prices, restrictions imposed by public
health authorities or governments, fiscal and monetary policy
responses by governments and financial institutions, and
disruptions to global supply chains.
We caution that the foregoing list of factors is not exhaustive
and is made as of the date hereof. Additional information about
these and other assumptions, risks and uncertainties can be
found in reports and filings by CP with Canadian and U.S.
securities regulators. Reference should be made to "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Forward-Looking Statements" in CP's
annual and interim reports on Form 10-K and 10-Q. Due to the
interdependencies and correlation of these factors, as well as
other factors, the impact of any one assumption, risk or
uncertainty on FLI cannot be determined with certainty.
Except to the extent required by law, we assume no obligation to
publicly update or revise any FLI, whether as a result of new
information, future events or otherwise. All FLI in this news
release is expressly qualified in its entirety by these cautionary
statements.
ABOUT CANADIAN PACIFIC
Canadian Pacific (TSX: CP) (NYSE: CP) is a transcontinental
railway in Canada and the United States with direct links to major
ports on the west and east coasts. CP provides North American
customers a competitive rail service with access to key markets in
every corner of the globe. CP is growing with its customers,
offering a suite of freight transportation services, logistics
solutions and supply chain expertise. Visit www.cpr.ca to see the
rail advantages of CP. CP-IR
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SOURCE Canadian Pacific