US-MEXICO-CANADA\\\


A KCS de Mexico train passes by a grain distribution center at Morales en route from Nuevo Laredo, Tamaulipas to Monterrey, Nuevo Leon. (KCS photo)


Issue 5 2021 - FBJNA


21


Major developments underway for North American logistics By Peter Buxbaum


The Canadian Pacific Railway made big news in late March when it announced that it and the Kansas City Southern had entered into an agreement to merge the two carriers. That news was upstaged a month later when the Canadian National Railway announced it had proposed a merger with KCS that was 16% richer than the already-approved CP-KCS agreement. In mid-May KCS’s board accepted CN’s proposal, and, on May 24, canceled the CP agreement and paid CP a $700 million termination fee which will be reimbursed by CN.


The CN-KCS merger will


create the first North American rail network, combining CN assets in Canada


and the


United States with KCS’s operations in the U.S. and


The Canadian National Railway will be merging with Kansas City Southern, once regulators approve the combination. (Peter Buxbaum photo)


Mexico. The transaction will first have to pass muster with regulators, a process that could take a year or two. Still, it’s worth considering the merger’s impact on shipping options and its interplay with the year-old U.S.- Canada-Mexico Agreement (USMCA), the successor to the North American Free Trade Agreement (NAFTA).


North American Trade


NAFTA has had its detractors, but North American trade proliferated since it was enacted. Trade between the U.S. and Mexico more than quintupled to over $480 billion in a dozen years. U.S. farmers benefitted from greater access to Mexico’s markets and USMCA expanded their reach into Canada by easing some protective measures. NAFTA also profoundly impacted automobile manufacturing, helping create an integrated


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2021-06-17 4:33 PM


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