STB decisions pave way for CSX-CPKC U.S.-Mexico interchange

Last week, the Washington, D.D.-based Surface Transportation Board (STB), an independent adjudicatory and economic-regulatory agency charged by Congress with resolving railroad rate and service disputes and reviewing proposed railroad mergers, said it issued two separate decisions, resulting from respective applications by Class I railroad carriers CSX and Canadian Pacific Kansas City (CPKC).

STB said it approved, with conditions, CSX’s request for STB authority to acquire and operate the rail line of Meridian & Bigbee Railroad, L.L.C. (MNBR), running approximately 93.7 miles between Burkeville and Myrtlewood, Alabama, as well as CPKC’s request to acquire from MNBR and to operate approximately 50.4 miles of rail line between Meridian, Mississippi, and Myrtlewood, Alabama.

STB said this approval will take effect on November 16. And it added that on October 6, 2023, CSXT and CPKC filed separate applications seeking STB approval for their transactions. 

“The applicants sought to acquire these segments to, among other benefits, create a direct interchange between them in Myrtlewood, Alabama, and eliminate the need for MNBR to serve as an intermediary carrier,” it said. “On November 6, 2023, the Board accepted both CSXT’s and CPKC’s applications and preliminarily determined the transactions to be minor and subject to an Environmental Assessment (EA).  The final EA was completed on May 3, 2024.”

CSX said on October 17 that through this transaction, CPKC will acquire and operate across the 52-mile segment between Meridian, Miss., and Myrtlewood, Ala., which is currently owned by MNBR, and CSX will operate the lines currently operated by MNBR east of Myrtlewood.

What’s more, CPKC and CSX will establish a direct Class I-to-Class I interchange at or near Myrtlewood and connect shippers in Mexico, Texas and the Southeast U.S, with MNBR continuing to provide local service to customers between Meridian and Myrtlewood.

Leadership at CSX and CPKC welcomed the STB’s decision.

“We thank the Surface Transportation Board members for their careful consideration of this vision to create a new Class I corridor providing more efficient service for existing CPKC and CSX traffic, while introducing new competitive shipping options between Mexico, Texas and the U.S. Southeast for our customers,” said Keith Creel, CPKC President and CEO. “With this new east-west Class I route, we are creating competition, providing a service that will take more trucks off the road, and growing rail transportation by expanding markets across the southern U.S., from Dallas to Atlanta and beyond.”

And said Joe Hinrichs, President and CEO of CSX, said that this new interchange with CPKC highlights CSX’s ongoing efforts to provide sustainable rail solutions and service excellence for its customers.

“Once complete, the interchange will help drive long-term business growth allowing customers to have greater connectivity and efficiency to reach key markets in Texas, Mexico, and the U.S. Southeast—all while providing safe and reliable service.”

Michael Miller, G&W CEO, said this transaction is a win for customers, who benefit from a new Class I connection in the growing Southeast U.S. and uninterrupted short line service from MNBR between Myrtlewood, Alabama, and Meridian, Mississippi.  

Morgan Stanley analyst Ravi Shanker wrote in a research note that this development will provide another option for shippers to and from Mexico.

“This could bode well for both CSX and CPKC especially considering our recent shipper survey in which shippers showed increasing willingness to participate in IM [intermodal] and a preference towards CPKC’s Transcon offering,” he wrote.