[dunkalunk]

There are many practical reasons for CN and CP to join forces. Their shared infrastructure will allow them to become more competitive in the North American rail freight market by increasing destinations and efficiency through shorter routes.

A combined entity would also be more willing to sell its track to regional transit agencies, creating a huge boon for GO and others.

However, there are drawbacks to a merger, the largest one being that if the new 'Canadian Railway' entity were to fail, so would all freight operations in Canada.

The third option would be to allow a merger, but only if the new entity becomes a nationalized with a subsidiary having control over operations in the US.

Now discuss!

 

[unimaginative2]

The biggest disadvantage is the elimination of competition across the country. Canada has two of the most successful freight railways in the world. It would be a real shame to mess with it. Passenger operators should take over lines near major cities and build dedicated routes in other congested areas, but we should leave the freight railways as they are.

 

[kEiThZ]

No offence Duncan but this is sooo an idea that the NDP would embrace…take two successful private rail enterprises and combine them into one nationalized entity that's likely to be subject to demands for subsidized service, have a union monopoly, etc. We would seize a company like CP that does the bulk of its business shuttling bulk goods in the Prairies, to provide improved commuter rail service to a region with 15% of the population. It's Toronto centric ideas like this that cause so much consternation in the rest of Canada.

Do you remember what happened to air fares after Canadian was bought out, and before Westjet expanded? Air Canada was having a field day. They cut capacity and raised fares immediately after the merger. It hurt the public and in the long run it has hurt the airline which has since suffered a stream of labour issues, fleet management problems, etc. arising from the merger. A CP/CN merger would be worse. The lack of competition would drive up bulk freight rates screwing farmers, miners, etc. throughout the country, unless of course, we mandate the new entity not to be as profitable and subsidize their customers. Our entire rail system would also be left at the mercy of a single union controlled entity. And the merger of two unionized entities would probably lead to some of the same labour issues that Air Canada faced post-merger.

Next, there is the issue of nationalization. Nationalizing CN/CP would probably be the largest expropriation of private assets in the history of Canada. I'd be curious to know how it would be pulled off. Would you expect the government to pay tens of billions to buy out all the shareholders? Or would you simply pass a bill nationalizing the companies, screwing over thousands of investors out of tens of billions of dollars?

I have no doubt that CN/CP have probably considered a merger as private enterprises. I also have no doubt that both have reached the simple conclusion that it would be difficult to pull off and that no Liberal or Conservative government would ever allow it.

If you want to improve rail service in the GTA, it's simple to do it. The weston sub is a good example. Empower GO to negotiate with CN/CP. Let them buy corridors, lease capacity, etc. Better yet, have GO build it's own corridors (we have plenty of unused Hydro ROWs for example) that would not be subject to interference from any other company. In the worst case scenario we can expropriate CN or CP owned corridor. There is no need however, to expropriate their entire business.

 

[Conrad Black]

They are fine as is. Leave them alone.

 

[andomano]

^^ Agreed.

 

[unimaginative2]

I didn't mention it before but CP actually offered to merge with CN east of Winnipeg, the idea being that the less profitable eastern routes would be combined while they would compete out west. They did some fairly serious examination of the possibilities of route rationalization, which probably would have benefitted GO, but fortunately the government went with full privatization instead.

 

[afransen]

Alternately, why not a semi-private rail ROW company (something like GTAA or Enbridge) that owns the track and charges tolls to private rail operators. If anything, it could only increase competition by lowering the barriers to entry that currently exist.

 

[dunkalunk]

@ Keithz, none taken. I like to keep my biases incredibly obvious.

The major problem I see is that there is no incentive for CN or CP to give track allowances for passenger rail. Freight always has a higher priority as freight is what makes them money. This is entirely understandable, however, passenger rail often suffers as a result. For example, waiting on a siding for 25 minutes for a freight train to pass outside Stratford.

In reality, nationalization of Canada's rail network will never happen unless the companies are on the verge of collapse, at which point Canada will likehey have much larger problems.

IMO, government entities should continute buying rail corridors in urban areas and should be putting conditions on any increase in track capacity in privately owned rail corridors stating that passenger rail gets priority over freight. I see this as fair because it's the government that put forward the money to increase capacity.

I also think that building new rail corridors in hydro ROWs is a good idea, however, you can expect to see a lot of hurdles put in place by Hydro One regarding building infrastructure in their corridors. One incredibly beneficial corridor that should be built is one directly south of the 407 connecting the CN North York sub to the CP mainline.

 

[urbanfan89]

Perhaps a deal can be negotiated with CN and CP, where the government takes control of the fixed assets and charges for access for them, and the freight companies retain their freight business. They might welcome having the track maintenance being taken off their books.

 

[dunkalunk]

I agree urbanfan. It's also not like government of Canada would be buying assets outside of the country (US law makes this tricky). CN and CP would still keep control of their US trackage. CN and CP would still run freight operations and own vehicles, but would be charged a rental fee for the track.

 

[afransen]

Perhaps a deal can be negotiated with CN and CP, where the government takes control of the fixed assets and charges for access for them, and the freight companies retain their freight business. They might welcome having the track maintenance being taken off their books.

Hey, I think that's what I said.

At any rate, I think that the railways would primarily like this move as it would free up a colossal amount of capital that is current tied up in ROWs. This capital could be ploughed into more acquisitions in the US, for instance.

 

[DavidJamesTO]

Perhaps a deal can be negotiated with CN and CP, where the government takes control of the fixed assets and charges for access for them, and the freight companies retain their freight business. They might welcome having the track maintenance being taken off their books.

Only if the government learns the lessons of Railtrack and Network Rail in the UK and Railcorp in New South Wales. The former are well-publicized disasters (especially the privatized Railtrack), while Railcorp brought the end of electric-hauled freight trains by overcharging the freight-operating company for electric generation--not a situation we want in a city that's trying to string wires up all over town. You'll be walking a regulatory tightrope with this one.