The Northwest Seaport Alliance Launches Rail Cargo Incentive Program in Pacific Northwest

April 7, 2023 - The Northwest Seaport Alliance (NWSA) has announced the launch of its 2023 Rail Cargo Incentive Program aimed at driving growth and cost-effective operations in the Pacific Northwest region. The program will increase cargo volumes in the gateway while reducing costs to importers and exporters that utilize the NWSA gateway and their rail partners.

Approximately half the import cargo that moves through the NWSA gateway is bound for destinations outside of the Puget Sound region, primarily the Midwest. The 2023 Rail Cargo Incentive Program will provide a $50 incentive per rail lift for eligible rail volumes moving through the gateway beginning on May 1, 2023.

The program is expected to generate approximately 60,000 additional rail lifts, equivalent to roughly 15% of NWSA international intermodal lifts in 2022. The initial investment will total $3 million in incentive funding, with the option of extending the program beyond April 2024.

“The NWSA strives to be the most efficient gateway for cargo movement, and the implementation of the rail incentive will ensure that we remain cost-competitive while offering the same best-in-class service for our customers,” stated NWSA Co-Chair Deanna Keller.

"As competition in the shipping industry intensifies with current market conditions, the rail cargo incentive program is an important tool to help attract additional cargo volumes that provide critical jobs for maritime workers across our gateway," said NWSA Co-Chair Sam Cho.

The NWSA has supported the establishment and growth of inland rail hubs to drive agriculture export cargo to the NWSA. Most intermodal inland ramp locations served and/or operated by the BNSF and Union Pacific Railroads will be eligible for the incentive program including ramp locations in Minot, ND, Pocatello, ID, Millersburg OR, and Wallula, WA.

Managing Members approved the 2023 Rail Cargo Incentive Program at their April 4 Managing Member meeting. The NWSA will provide a mid-year update to Commissioners and determine if additional funding will be allocated to extend the program into the future.

For customers interested in the Rail Cargo Incentive Program, please reach out to our Business Development Team here.

SOURCE: The Northwest Seaport Alliance

Canadian Pacific and Kansas City Southern Combination Approved by U.S. Surface Transportation Board

March 20, 2023 - Canadian Pacific (“CP”) and Kansas City Southern ("KCS") on March 15 said the U.S. Surface Transportation Board ("STB") issued a decision approving the CP and KCS joint merger application, subject to certain conditions, thereby authorizing the two railways to combine to form Canadian Pacific Kansas City ("CPKC"), the first single-line railway connecting the U.S., Mexico and Canada.

The decision authorizes CP to exercise control of KCS as early as April 14, 2023, at or after which point CP and KCS would combine to create the new CPKC. CP is reviewing the full 212-page decision in detail and in the coming days will announce its plans with respect to the creation of CPKC.

CP President and Chief Executive Officer Keith Creel extended the company's sincere gratitude to the STB board and staff for their hard work as part of the comprehensive review of the combination.

"This decision clearly recognizes the many benefits of this historic combination," Creel said. "As the STB found, it will stimulate new competition, create jobs, lead to new investment in our rail network, and drive economic growth.

"These benefits are unparalleled for our employees, rail customers, communities and the North American economy at a time when the supply chains of these three great nations have never needed it more," Creel added. "A combined CPKC will connect North America through a unique rail network able to enhance competition, provide improved reliable rail service, take trucks off public roads and improve rail safety by expanding CP's industry-leading safety practices."

"This important milestone is the catalyst for realizing the benefits of a North American railroad for all of our stakeholders," said Patrick J. Ottensmeyer, KCS President and Chief Executive Officer. "The KCS Board of Directors and management team are very proud of the many contributions and achievements of the people who have made KCS what it is today and we are excited for the boundless possibilities as we move forward into the next chapter as CPKC."

CPKC will bring a new standard of safety to the North American rail landscape. CP has been the safest railroad in North America for 17 straight years as measured by the Federal Railroad Administration train accident frequency ratio. In 2022, CP had an all-time best frequency of 0.93, a rate nearly half what the company produced a decade ago and 69 percent lower than the Class 1 average.

CP's culture of safety, supported by its history of sustained investments in core infrastructure and technology, aligns with KCS's likeminded culture, allowing the combined system to operate at the apex of rail safety. CPKC will implement the combination with safety at the forefront of everything it does.

Among the core conclusions reached by the STB regarding the public and pro-competitive benefits of the CP-KCS combination, including that the combination "should ultimately enhance safety and benefit the environment":

"The Board expects that this new single-line service will foster the growth of rail traffic, shifting approximately 64,000 truckloads annually from North America's roads to rail, and will support investment in infrastructure, service quality, and safety," the board said in its decision, going on to say, "Indeed, approval of this transaction may even enhance safety for the nation as a whole" and that "thus, any rail traffic diverted to CPKC from other railroads will likely mean traffic moving to a railroad with a better safety record."

"The transaction is also expected to drive employment growth across the CPKC system, adding over 800 new union-represented operating positions in the United States," the board continued. "Of additional importance, the merger will foster new National Railroad Passenger Corporation (Amtrak) passenger rail opportunities, as Applicants have committed to support Amtrak's existing plans for expanded service on the new railroad's lines."

"This transaction is "end-to-end," meaning that there are little to no track redundancies or overlapping routes. If consummated, it will reduce travel time for traffic moving over the single line service; it should result in increased incentives for investment; and it will eliminate the need for the two now-separate CP and KCS systems to interchange traffic moving from one system to the other. This will enhance efficiency, which in turn will enable the new CPKC system to better compete for traffic with the other larger Class I carriers," the decision says.

The board concluded, "The Transaction will make possible improved single-line service for many shippers and will result in merger synergies that are likely to allow CPKC to be a vigorous competitor to other Class Is by providing improved service at lower cost."

CP completed its US$31 billion acquisition of KCS on Dec. 14, 2021. Immediately upon the closing of that acquisition, shares of KCS were placed into a voting trust with Dave Starling, former KCS President and CEO, appointed as the trustee. Upon Mr. Starling's death, Ronald L. Batory was appointed as successor trustee with the STB's approval. The Voting Trust has ensured that KCS operates independently of CP during the regulatory review process, and until CP exercises control pursuant to the STB decision, CP and KCS will continue to operate independently.

Headquartered in Calgary, Alberta, Canada, CPKC would be the first railway connecting North America. While remaining the smallest of six U.S. Class 1 railroads by revenue, the combined company will have a much larger and more competitive network, operating approximately 20,000 miles of rail, employing close to 20,000 people. Once combined, full integration of CP and KCS is expected to happen over the next three years, unlocking the benefits of the combination.

SOURCE: Canadian Pacific

Work Stoppage Saturday Initiated by TCRC, Not by CP

March 20, 2022 (Press Release) - Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) said that while the company was still engaged in ongoing negotiations facilitated by federal mediators, the Teamsters Canada Rail Conference (TCRC) withdrew its services and issued a news release misrepresenting the status of the talks.

“We are deeply disappointed that, in the final hours before a legal strike or lockout was to potentially occur, the TCRC Negotiating Committee failed to respond to the company’s latest offer that was presented to them by the federal mediators,” said Keith Creel, CP President and Chief Executive Officer. “Instead, the TCRC opted to withdraw their services before the deadline for a strike or lockout could legally take place. The TCRC is well aware of the damage this reckless action will cause to the Canadian supply chain.”

Additionally, prior to the midnight deadline, the TCRC Negotiating Committee issued a news release that completely misrepresented the truth. The release falsely claimed that CP had initiated a lockout. Contrary to the TCRC Negotiating Committee’s claim, the work stoppage was initiated by the TCRC. In reality, it was CP, with the Director General, Federal and Conciliation Services, that remained waiting at the table with the desire to continue bargaining.

This is clearly a failure of the TCRC Negotiating Committee’s responsibility to negotiate in good faith. The company will be reviewing avenues to have this egregious behavior properly addressed.

As a result of the TCRC’s action, CP is executing a safe and structured shutdown of its train operations across Canada and will work closely with customers to wind-down Canadian operations.

TCRC represents approximately 3,000 locomotive engineers, conductors, train and yard workers across Canada.

CP has launched a fact-based information hub with materials about negotiating history and the issues and consequences of a work stoppage. Visit cpr.ca/TCRC2022 to learn more.

SOURCE: Canadian Pacific Railway (CP)

Canada's Forest Sector Calls for Action on Supply Chain Woes

Feb. 2, 2022 (Forest Products Association of Canada) - When Federal Transport Minister Omar Alghabra and his colleagues host a discussion on Canada’s supply chain [Jan. 31], the forest products sector and its workers will be looking for leadership from Ottawa to address a transportation system that is too often fragile and under-performing.

Canada’s forest industry provides more than 225,000 direct jobs across over 600 communities – many of which are hundreds of kilometres from larger cities and key customer markets.

A resilient and reliable transportation system is critical to Canadian forestry’s ability to meet increasing global demand for our products, keep forestry workers working, and improve economic conditions in rural and northern forestry communities.

“There are three main issues we need collective action on – future-ready infrastructure, rail service reliability, and the labour force of tomorrow,” noted Forest Products Association of Canada (FPAC) President and CEO Derek Nighbor. “For one, bottlenecks in key corridors are repeatedly slowing our supply chain down and hurting our global competitiveness. Getting to the bottom of issues in frequently congested spots like BC’s Lower Mainland must be a top priority of this discussion,” Nighbor said.

The industry will also be raising the issue of rail service reliability. Canada’s railways have an important and difficult job to do. Unfortunately, there is a recurring problem with too many mills simply not getting rail cars when they need them. This can have a negative impact on customer relationships and confidence, especially as more and more customers in Canada and around the world are turning to forest products for their climate benefits. Labour supply challenges are an ongoing concern as well, especially as it relates to truck driver shortages across the country.

“We are a reasonable group in Canadian forestry. We understand there are going to be system delays when the weather is bad or when our transportation partners are dealing with employees off sick because of COVID-19,” Nighbor added. “But over the past few years there have been way too many Groundhog Day moments. There are systemic issues that absolutely require solutions for the long-term and we look forward to working with the federal government and our transportation and labour partners on a plan for action,” he concluded.

The Forest Products Association of Canada (FPAC) provides a voice for Canada’s wood, pulp, paper, and wood-based bio-products producers nationally and internationally in government, trade, and environmental affairs. As an industry with annual revenues exceeding $75B, Canada’s forest products sector is one of the country’s largest employers operating in over 600 communities, providing 225,000 direct jobs, and over 600,000 indirect jobs across the country.

SOURCE: FPAC