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Railroads show on-time improvement

FARGO, N.D. -- The region's two Class I railroads -- BNSF Railway and Canadian Pacific Railway -- are reporting improved status on late cars, and CP has proposed a major merger to bypass an infamous Chicago bottleneck blamed for last winter's delays.

BNSF reported 5,695 cars past due in its single car category as of Oct. 10. Of those, 3,706 were in North Dakota and late an average of 12.3 days. The other top states were Montana, with 693 cars late an average of 12.3 days; South Dakota, 470 cars late an average of 5.2 days; and Minnesota, 289 cars late an average of 9.7 days.

In a separate podcast, the company reported shuttle turns had reached 2.7 times per month.

"With shuttles fully built and operational, general fleet cars can once again be directed toward single cars and (nonshuttle) unit car orders," said John Miller, vice president of the company's agriculture group. He said despite an overall uptick in velocity, some customers will see periodic delays because of ongoing work to improve infrastructure.

CP on Oct. 10 reported fulfilling 2,386 grain order requests, exceeding the 1,675 new requests for the week. Of those, 143 were filled on the Rapid City, Pierre & Eastern Railroad, which was short of the 175 requests.

CP still had 1,872 open grain car requests an average of 3.5 weeks late per car. North Dakota accounted for 1,771 of them, Montana, 50; Minnesota, 25; and South Dakota, zero.

The railroad said all trainload customers have transitioned to a new dedicated unit train ordering system analogous to the BNSF shuttle system. On Oct. 3, CP reported 3,089 open requests and said 2,589 would be serviced through its existing request program.

Dedicated trains were being turned nearly 2.5 times per month, ahead of the railroad's internal 2.2-turn plan. Turns to the Pacific Northwest were a bit slower, at 2.4 per month. CP had delivered 29 locomotives to the RCP&E since Oct. 1, while RCP&E had delivered 48 to CP.

'Mega-railroad' merger

On Oct. 1, Hunter Harrison, CEO of CP Railway Ltd., told a group of industry analysts he is seeking a merger with CSX Corp., the third-largest U.S. railroad, for a transcontinental merger to increase efficiency.

Harrison told Bloomberg analysts that spanning North America would allow cargo to go coast to coast without handing off in Chicago. CSX has extensive networks in the eastern U.S. and has twice the annual sales of CP, which spans Canada and operates in the U.S. Harrison said some type of merger will happen in two to five years.

Steven Paget, a Calgary, Alberta, analyst with FirstEnergy Capital Corp., told Bloomberg the approval of the merger could start a "wave in what might be the final consolidation of North American railroad companies," and would eventually end in cutting the current field of four major railroads in the U.S. and two in Canada, to "two mega-railroads."

Other analysts have suggested the deal couldn't pass muster with the Surface Transportation Board because of concerns about anti-competitiveness.

Canadian National Railway Co. abandoned a merger attempt with BNSF Railway, after the STB opposed it and rewrote acquisition rules to make such mergers more difficult.

U.S. Sen. Amy Klobuchar, D-Minn., raised concerns over the potential CP and CSX merger.

"Given recent concerns about shipping delays and ongoing concerns about anticompetitive conduct in the railroad industry, any further consolidation would prompt significant concern," Klobuchar wrote in a letter to Attorney General Eric Holder and STB Chairman Daniel Elliott. "Should CSX and Canadian Pacific agree to merge, I expect your agencies to fully review the competition implications of such a combination."

Also last week, the STB issued a formal order, saying CP's reporting on its plans and status were inadequate for describing its ability to handle peak fall grain loads.

CP had said it would have "sufficient resources" to handle peaks "to the extent of its ability to do so." The STB demands that CP define that "extent."

Among other things, the STB asked about the regionality of CP's announced personnel cutbacks and whether they allow adequate service in the U.S.