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National Wheat Organizations Slam Railroad Merger by Matthew Weaver Capital Press, March 15, 2023

A major concern is the merger's impact on competition.

The federal Surface Transportation Board has approved the merger of the Canadian Pacific Railway and Kansas City Southern Railroad, a move U.S. Wheat Associates and the National Association of Wheat Growers say is disappointing and could add to already high shipping costs.

The board has given the green light to rail consolidation without regard for the consequences for agricultural shippers from the lack of competition in the rail sector, the wheat organizations said in a press release.

The merger takes the U.S. rail system from seven to six Class 1 railroads, the organizations said in a press release.

"U.S. rail industry consolidation has led to poorer, not improved, service for agricultural shippers," U.S. Wheat president Vince Peterson said. "In addition, we see extreme disparity in rates for wheat shippers. Rail rates over the last decade have increased exponentially and rates for wheat are higher than rates for other commodities even with similar handling characteristics."

Those higher rates make U.S. wheat less competitive in the global market, he said.

"NAWG is disappointed by today's STB announcement and maintains our concerns that the merger of CP and KCS will impede competition in the rail market and increase rail rates," NAWG CEO Chandler Goule said.

With 50% of U.S. wheat being exported, the commodity is heavily reliant on rail transportation to move across the country to ports, Goule said.

Since the merger was proposed in 2021, NAWG has filed four comments with the board opposing the merger, citing concerns about its impact on competition and changes to tariff provisions that could impact wheat farmers.

The organizations called on the board to conduct "more rigorous" oversight of rail rates and service issues.

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