Norfolk Southern wants close look at proposed CPKC-CSX Southeast corridor

Norfolk Southern wants the Surface Transportation Board to compel Canadian Pacific Kansas City and CSX to provide more information on how their plans to create a Mexico-U.S. Southeast corridor will affect passenger and other freight rail traffic — including the Meridian Speedway that NS operates with CPKC.

NS (NYSE: NSC) is asking STB to get CPKC (NYSE: CP) and CSX (NASDAQ: CSX) to consolidate seven applications into one, as well as require CPKC and CSX to provide more analysis on how their proposed corridor will affect passenger and freight rail traffic.

NS also does not want STB to take any action that would move forward with CPKC’s and CSX’s applications until those two railways consolidate their applications and send in additional information.

Earlier this month, CPKC and CSX submitted plans asking STB to allow them to acquire portions of the Meridian & Bigbee Railroad (MNBR), a southern U.S. short line that is currently a subsidiary of short line operator Genesee & Wyoming. CPKC would acquire the western line of the MNBR, while CSX would acquire the eastern line. CSX previously operated the MNBR prior to G&W’s acquisition of the short line.

The purpose of these acquisitions would be to create more efficient rail freight flows between Mexico, Texas and the southeastern U.S., the two railways said.

But attorneys representing NS told the board in a Wednesday filing that CPKC’s and CSX’s applications don’t take into account how their plans could affect passenger and freight rail traffic, including how traffic that might need to access NS and NS’ Meridian Speedway via the MNBR.

The Meridian Speedway, created as a joint venture between NS and Kansas City Southern, is a corridor that serves NS’ intermodal segment and goes between the Southeast and the central Texas market and the Southeast and Southwest markets in California and Arizona. The corridor starts in Meridian, Mississippi, and heads west. NS stressed the importance of the corridor to its business when STB was reviewing the merger between CP and KCS.

“The applications as filed fail to address certain key impacts on freight rail customers and passenger traffic that rely upon the same rail assets that the Applicants’ traffic will utilize,” NS said. “In particular, the applications as filed do not identify in any meaningful way how the traffic reaches the CPKC-CSXT Transcon Corridor, and therefore ignore any potential impacts to traffic that currently utilizes the Meridian Speedway and the Meridian Gateway.”

Amtrak also operates about 17 trains per day through Meridian, a point on MNBR’s western line, and NS hosts two long-distance Amtrak trains through Meridian, according to NS.

Consolidating the various CPKC-CSX applications into one appreciation would provide “a full and clear picture of the potential impacts,” NS said.

“Now is the appropriate time for consolidation. The Board has not acted to set a procedural schedule for any of the proceedings. The Board also has not yet determined whether the individual Western Line and Eastern Line applications should be treated as minor transactions or not. But it cannot do so without fully understanding the effects of the proposed consolidated transaction on the broader markets and operating segments alluded to throughout the Applicants’ pleadings,” attorneys representing NS said.

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