Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Canadian Pacific Railway (CP) has acquired Kansas City Southern (KCS) in a deal valued at $29bn. The merged entity is slated to strengthen the Trans American freight network.

The Calgary, Canada headquartered railway company said in a statement on Mar 21 that the combined entity would create the first rail network that connects the US, Mexico, and Canada via a “single network transportation” across the three countries. The merger is expected to be completed by mid-2022.

Keith Creek, chief executive officer of CP, who will also head the new entity, noted that the acquisition would also help in integrating the supply chains of the three countries. According to media reports, the CP-KCS merger will likely benefit manufacturing and trade activities among the three countries under the US-Mexico-Canada Agreement (USMCA), which came into effect last year.

It could especially streamline the transportation of scrap to steel producers in the Southeast and the Midwest, which are connected through the KCS rail network. The two companies also pointed out the environmental efficiencies provided by the integrated rail network, saying that rail freight produced 75pc less greenhouse gas emissions and was four times more fuel-efficient compared to road transportation.

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