In a decision made today, the Surface Transportation Board (STB) confirmed that Canadian Pacific Kansas City (CPKC) can use Union Pacific’s (UP) tracks south of Beaumont, Texas, to transport Midwestern grain to export at the ports of Houston and Galveston.
This approval follows a 2023 dispute where Union Pacific sought to block CPKC’s use of the South End haulage rights, which were initially granted during UP’s 1988 acquisition of the Missouri-Kansas-Texas Railway.
Background of the Haulage Rights Dispute
The South End haulage rights were put in place to maintain competition and were intended to allow grain shipments to be transported from the Upper Midwest to the Gulf Coast ports via Kansas City.
Although Kansas City Southern (KCS) sporadically used these rights, the 2023 merger between Canadian Pacific (CP) and KCS sparked renewed interest from shippers in using CPKC’s single-line service to reach export markets through Houston and Galveston.
However, in 2023, Union Pacific contested CPKC’s right to use these haulage rights for shipments originating in North Dakota and other areas north or east of Kansas City. Union Pacific argued that traffic interchanged to CPKC at Kansas City was not covered by the South End agreements, a claim that was dismissed by the STB.
STB’s Decision and Its Implications
The STB’s ruling affirmed that the haulage rights, which were part of the conditions of the UP-MKT merger, remain in place. The board emphasized the importance of maintaining competitive options for agricultural shippers, which would help support a strong supply chain and facilitate access to export markets for U.S. grain.
STB Chairman Patrick Fuchs highlighted that the decision reinforced the board’s commitment to promoting competition within the rail industry.
The ruling ensures that CPKC can continue to use the haulage rights to move grain from the Upper Midwest to the Gulf Coast ports, ensuring that shippers have alternative transportation routes for their exports.
Controversy and Dissenting Opinion
Despite the unanimous decision, board member Robert Primus issued a separate dissenting opinion. While he agreed with enforcing the 1988 UP-KCS merger’s haulage and trackage rights, Primus expressed concerns regarding shipments originating from former CP locations, such as North Dakota.
He criticized the merger parties for their previous arguments during the merger review process, where they claimed the elimination of Kansas City interchange would result in “single-line service”—a position that now seems inconsistent with the STB’s ruling.
The STB’s decision solidifies the future use of South End haulage rights for CPKC and strengthens the options available to agricultural shippers, ensuring competition and market access to vital export ports like Houston and Galveston.
