Amtrak Says CP Will Allow Passenger Expansion

Amtrak said in a brief filed with the U.S. Surface Transportation Board that Canadian Pacific has agreed to back the passenger carrier’s efforts to expand service in several locations, including Michigan.

The brief was the final filing by Amtrak in the proposed merger of CP and Kansas City Southern.

CP has agree to allow Amtrak to institute new service between Detroit and Windsor, Ontario, that would connect at the latter with trains of VIA Rail Canada. The service would use a tunnel under the Detroit River that is owned by CP.

No details about that proposed service have been released nor is there a timeline for its implementation.

Amtrak’s current Wolverine Service between Chicago and Detroit continues northward to suburban Pontiac. One or more of those trains would have to be diverted to Windsor.

The existing Detroit Amtrak station is not located on the route into Windsor.

Amtrak’ s brief described CP as a “reliable partner in working with Amtrak to provide safe, efficient and effective passenger-rail services.”

The brief said CP also agreed to allow Amtrak to add other additional or new services including:

• Expansion on the CP-owned portion of the Hiawatha Service route between Chicago and Milwaukee;

• Between Chicago and Minneapolis-St. Paul, Minnesota, on lines owned by CP; 

• Between New Orleans (IC Junction) and Baton Rouge, Louisiana, on a KCS line.

CP also has agreed to participate in a study with Amtrak, Norfolk Southern, Union Pacific and various governmental agencies of implementing new service between Dallas and Meridian, Mississippi.

CP to Allow Amtrak to Use Detroit River Tunnel

Canadian Pacific has agreed to allow Amtrak to use its tunnel between Detroit and Windsor, Ontario, for one roundtrip per day, but it’s unclear if that will actually lead to any new service on the route.

The agreement was revealed in a filing by Amtrak in the case before the U.S. Surface Transportation Board of CP’s efforts to acquire Kansas City Southern.

Amtrak is supporting the merger and its filing cited a number of new service expansions for which CP has pledged to cooperate.

In theory, use of the Detroit River Tunnel might be a step toward reviving Amtrak service between Chicago and Toronto.

In practice, that concept faces many hurdles. Those begin with a lack of commitment by Amtrak or VIA Rail Canada to operate such a train.

The two passenger carriers once operated a Chicago-Toronto train known as the International, but it ran via Port Huron, Michigan, and Sarnia, Ontario, on Canadian National tracks rather than via Detroit and Windsor.

The International was discontinued in April 2004 and replaced with the existing Chicago-Port Huron Blue Water that is funded by the Michigan Department of Transportation.

MDOT had not indicated if it would be willing to fund service that extends to Toronto.

Amtrak and/or VIA would need to construct a connecting track between CP track in Windsor and the CN route now used by VIA between Windsor and Toronto.

The existing VIA Toronto-Windsor route ends at a stub-end terminal north of downtown.

In Detroit, Amtrak would need to build a new station in downtown Detroit or else have trains engage in a time-consuming backup move to the existing Detroit station in the New Center neighborhood.

Existing Chicago-Detroit trains terminate and originate in suburban Pontiac and the Detroit Amtrak station is located along that route rather than on the line that leads directly into the CP Detroit River tunnel.

The CP-Amtrak agreement does not require any capital investment from Amtrak for use of the Detroit River tunnel.

Also unclear is where customs inspections for the Chicago-Toronto train would be conducted.

For the International, those inspections were done on each side of the border, which led to longer running times.

CP Completes Purchase of Detroit Tunnel

Canadian Pacific has completed its transaction to buy a majority ownership stake in the Detroit River Tunnel.

The carrier said this week it bought the shares of an Ontario municipal employees pension fund, which constituted 83.5 percent of the tunnel ownership.

CP previously had a 16.5 percent ownership share in the 1.6-mile tunnel, which was built by the Michigan Central and links Detroit with Windsor, Ontario.

In a news release, CP said the purchase price of the Ontario pension fund shares was $312 million, subject to closing adjustments.

CP said the acquisition will reduce its operating costs of traffic movements through the tunnel.

STB Approves CP Purchase of Detroit Tunnel Owership Share

The U.S. Surface Transportation Board has given Canadian Pacific approval to purchase an ownership share of the the Detroit River Tunnel.

CP, which already had a 16.5 percent ownership stake in the tunnel, will buy the ownership share of Borealis Transportation Infrastructure Trust in a $312 million transaction.

The deal will give CP full ownership of the tunnel, which links Detroit and Windsor, Ontario.

The tunnel was built by the former Michigan Central and has two tracks.

Borealis, an arm of the Ontario public employee pension fund, had earlier acquired the half ownership share of Canadian National.

Pandemic Gave CP Opening to Buy Detroit River Tunnel

In a twist of fate, the COVID-19 pandemic gave Canadian Pacific an opening to take complete control of the Detroit River Rail Tunnel in a $312 million transaction that is awaiting regulatory approval.

CP executives said during an earnings call this week to announce third quarter financial numbers that gaining control of the tunnel is key to the railroad having more control over its destiny in competing for traffic in the corridor between Chicago and Eastern Canada, including the cities of Toronto and Montreal.

However, until the tunnel can be enlarged to accommodate all double-stacked container trains, CP will continue to rely on CSX to move that traffic between Chicago and Buffalo, New York.

CP also must continue to use Norfolk Southern to move traffic between Chicago and Detroit because it does not have its own tracks between those cities as does Canadian National.

The tunnel between Detroit and Windsor, Ontario, was built by the Michigan Central in the early 20th century.

A strong financial position during an economic downturn prompted in part by the COVID-19 pandemic enabled CP to acquire the tunnel, CP CEO Keith Creek said during the earnings call.

He noted that CP during the 2008 Great Recession reduced its ownership stake in the tunnel from 50 percent to 16.5 percent in an effort to raise $110 million in cash.

But this around during an economic downturn CP was in a much stronger financial position.

The advantage of tunnel ownership, Creel said, will be avoiding the toll charges the railroad now pays to use the tunnel.

Those amount to more than $14 million annually Trains magazine reported this week.

The tolls are paid to majority tunnel owner Borealis Transportation Infrastructure Trust.

Borealis is a subsidiary of the Ontario public employee pension fund and decided to sell its stake in the tunnel earlier this year.

As a part owner of the tunnel, CP had a right of first refusal, which it is exercising.

 “It made compelling sense to buy this asset back,” Creel said, adding that owning the tunnel will reduce CP’s operating costs and therefore boost profit margins on the route.

CP and Canadian National at one time jointly owned the twin-bore tunnel after buying Conrail’s interest in the Canada Southern Railway in 1984.  CN sold its half of tunnel ownership to Borealis in 2001.

One of the tunnel tubes was enlarged in 1993 to handle auto racks and international double-stack containers but the clearance is not enough for double-stacked domestic containers.

CP now uses the tunnel for merchandise and automotive traffic.

CP to Fully Own Detroit River Tunnel

Canadian Pacific said this week it will acquire full ownership of the Detroit River Rail Tunnel for $312 million under an agreement with Ontario benefit pension plan.

The two have an ownership partnership in which CP has a 16.5 percent share. The 1.6-mile tunnel links Detroit with Windsor, Ontario.

In a news release, CP said full ownership will reduce its operating costs related to movements through the tunnel.

OMERS initially invested in the tunnel partnership in 2001.

The sale, which is subject to regulatory and customary closing conditions, is expected to be finished by the end of the year.

Building New Detroit Rail Tunnel Put on Hold

A proposed $400 million new rail tunnel underneath the Detroit River is on hold because its financial supporters say a business case for it isn’t there yet.

Toronto-based Borealis Infrastructure Management Inc. and Canadian Pacific Railway had committed $200 million to the project with the remainder of its cost expected to come from government sources.

The state of Michigan had $10 million contingent on the project getting all of its other funding and approvals, but no other government funding has been committed.

Canadian National had been part of the project but sold its share to Borealis in February 2000.

“The Continental Rail Gateway replacement tunnel is being idled pending review by the partners, Canadian Pacific and Borealis Infrastructure,” CP and Borealis said in joint statement this week. “At present, the business case and economics of the project are not sufficient to proceed with a majority privately funded development. We continue to focus our attention on the existing tunnel, which remains in full commercial operation and is a key component of Canadian-United States border infrastructure.”

The proposed tunnel would be about 50 feet below the riverbed and 30 feet deeper than the current tunnel, making it large enough to accommodate double-stack container trains. Construction was estimated to take two years.

The existing Michigan Central tunnel underwent a $27 million enlargement of one tube in 1993 that allowed it to accept some but not all double-stack cars.

Borealis is the investment arm of the Ontario Municipal Employees Retirement System. It increased its stake in the tunnel and the project to 83.5 percent from 50 percent in an $87.7 million deal in 2009.

New Detroit River Tunnel Plans Proceeding

Supporters of a plan to build a tunnel beneath the Detroit River between Detroit and Windsor, Ontario, say they expect to have all financing in place soon and will commence construction next year.

Continental Rail Gateway is backing the proposed $400 million project that will enable double-stack containers and multilevel auto racks to use the tunnel. The current tunnel was opened on July 26, 1910, and sees 22 to 25 trains per day with an annual volume of nearly 400,000 cars.

Although enlarged in 1994, it can’t be further expanded. Continental Rail Gateway said it will soon have all approvals in place and that construction should start in the second or third quarter of 2014.

Marge Byington Potter, executive director of corporate affairs for Continental Rail, told Detroit Business that the project still lacks half its estimated funding and requires Canadian environmental approvals.

Potter said much of the pre-construction work is finished. “Engineering is in place. All the testing has been done,” she said. “We will go out for bid for the tunnel boring machine and be looking for construction (bids), on both sides of the river.”

The tunnel will take three years to complete. Design and engineering work has been done by Omaha, Neb.-based HDR Inc.; Toronto-based MMM Group; and Iselin, N.J.-based Hatch Mott Macdonald Group Inc.

The Windsor Port Authority, Borealis Infrastructure and Canadian Pacific formed the Continental Rail Gateway coalition in June 2010.