Support to STB in Favor of CP-NS Merger is Mostly Form Letters from Small Canadian Shippers

A survey conducted by Stephens, Inc., has found that 70 percent of shippers are opposed to any merger of Class 1 railroads in North America.

Those findings by the Little Rock, Arkansas, company are similar to the results of a survey conducted last year by investment banking and research firm Cowen & Company that found 71 percent of shippers oppose a merger of Canadian Pacific and Norfolk Southern.

Those findings fly in the face of assertions by CP that its proposed takeover of NS enjoyed widespread shipper support.

An analysis by Trains magazine of letters written to the U.S. Surface Transportation Board found that most of the letters in support of the merger appear to be form letters that were written by small Canadian shippers.

Although the letters contained some variations, in many instances the letters are identical with the only change being the name of the shipper.

In at least two cases, the shipper failed to change the basic form of the letter and included the wording “Our ORGANIZATION/COMPANY” in the letter that it sent to the STB.

The Trains analysis said that of the 65 letters that the STB has posted on its website, 65 support the merger while 57 are against it.

Notable opponents of the merger include major shippers and trade groups. More than half of the shippers who wrote to support the merger are based in Canada.

The findings of the Trains analysis belie comments made by a CP spokesman in response to the findings of the Arkansas company about widespread shipper opposition to a merger.

“I cannot comment on someone else’s survey, but I can tell you that letters posted to the STB website from shippers in favor of the transaction outnumber shippers opposing the combination by three to one,” said Martin Cej.
CP said it has received letters from 80 shippers in support of the transaction.

Among those who have written in opposition to the merger are the Automakers Alliance, UPS, FedEx and Consol Energy.

Public officials who have written to the STB are united in their opposition and most short line railroad that have written are likewise opposed.

The STB has received four letters of opposition from four labor unions and from 52 groups that include port authorities and economic development officials.

Common concerns expressed by opponents include pricing, service quality and further consolidation of the railroad industry.

Although they have expressed public opposition to further mergers, none of the other Class 1 railroads have written to the STB in regards to the proposed CP-NS merger.

Tags: Canadian Pacific, Class 1 railroad mergers, CP-NS merger, CP-NS merger talks, merger, Norfolk Southern, NS-CP merger talks, railroad mergers, STB, Surface Transportation Board