b'APRIL 5 - 18, 2021NORTH AMERICAS TRANSPORTATION & LOGIS TICS NEWSPAPER 23(RESILIENTcontinued fromthatwhentheSTBrulesandica, CP President and Chief Exec- (NIMBLEcontinued froma pandemic could pick its prey, page 18) weighs the facts, they will comeutive Officer Keith Creel said. page 21) an industry with high fixed costs According to Salinas, Chil- to the same conclusion. PreviousCPeffortstocomplementingfivealreadyinlike massive ships seemed to be eancherry exports to countriesThetwonetworksdontmerge with American rail com- China, aiming to ensure enoughamong the slow buffalo. A real other than China this past seasonoverlapandwonttakeawaypanies CSX Corp. and Norfolkproducts are always available. bloodbath is what I was think-increased 40% over a year earlier. customersrailoptions,CreelSouthern never made it to regu- Thats a lot of costs for using, McCown said.BecauseCOVID-relatedsaid.Thecombinationalsolators. Those deals faced oppo- and thats a lot of risk, PittmanInstead,containerlines lockdowns didnt happen simul- willhelpreduceemissionsbysition from shippers who raisedsaid.Buttheoverwhelmingstuck together and didnt repeat taneouslyacrosstheglobe,attracting freight from truck toconcerns about competitive bal- positives that we get for our cus- pricewarsthatwreckedthem andbecausedifferentfruitisrail, which is about four timesanceissuesandwerescuttledtomers,wevedeterminedthatin the past. McCown now esti-exportedatdifferenttimesofmore fuel efficient. Some 80%before the surface transportationis worth more than being over- mates the carriers he tracks, both the year, exporters got a breatheroftheproductionfromthepanel weighed in. bought. publicly held and private ones, afterChina.TheywerebetterMexicanautoplantsalongtheTony Hatch, a rail industryDemandandsupplybothwillshowrecordnetincome prepared for the challenges thatnetwork crosses the border northconsultant, said CP and Kansaswerechallengeslastyearforof$8.4billioninthefourth came from the US and Europe,to the U.S. and Canada and canCity Southern are the sixth andPolaris Inc., the maker of snow- quarter.Containerservicesare andbetterabletocope.Thatbe hauled in one shot by the newseventhbiggestofthesevenmobiles,motorcyclesandall- cheap even at todays elevated included the quick shift in con- entity, the companies said. Class I railroad companies. Theterrain vehicles that had, in tworates,hesays,recountinghow sumer eating habits, notably theThetie-upwouldleaveproposedcombinationwouldstrokesofpre-pandemicseren- McLean was friends with Sam collapse of restaurants and insti- Canada with two railroads thatbeastabilizingmergerthatdipity, already started reinforc- Walton, the founder of Walmart tutionaldiningandtheheight- have similar coast-to-coast net- takes two of the smallest Classing its supplier base a few yearsInc.Bothenjoyedquailhunt-ened demands on supermarkets.works that reach down to U.S.Is, puts them together and givesearlierbeforerebrandingining and one time McLean asked FalloutfromCOVIDhasGulf ports. The U.S. would havethem a little bit of a bigger seat2019 to Think Outside. the key to the retailers success. helped boost demand for freshfourrailroadsbalancedalmostat the table. Behind nearly 3,600 PolarisAccording to McCown, Walton fruits, part of a growing aware- equally between two larger onesHatch expects the merger todealers is a production networkresponded, Were just better at ness into the need for a health- in the West and two smaller onesbe approved by regulators. feeding factories in Asia, Northmoving things around.ierdiet.Itsalsoreorderedin the East. Jennifer Hedrick, executiveAmerica and Europe. Making a priorities. The demand for freshWhile its impossible to saydirector of the National Indus- single Polaris recreational vehi-oranges, for example, has grownnevertofurtherindustrycon- trial TransportationLeague,ancleinvolvesasmanyas2,000(ALLIANCEcontinued from dramatically in certain countriessolidation, it probably wouldntassociationofshippers,saidparts,anachievementwhenpage 22)such as Japan. happenforadecadeormorewhile the organization is opti- about10%ofsuppliersatanyglobal supply chains. SEKO has Theheads-upfromChinaif it did, said Lee Klaskow, anmistic about the new deal, anygiven time were under some sortalso introduced home composta-also gave time for Latin Ameri- analyst with Bloomberg Intelli- merger in this industry and onofCovid-relatedduress,saidblepackagingintoitseCom-can fruit producers and export- gence. That round of consolida- thisscalewillbeviewedwithKen Pucel, executive vice presi- mercefulfilmentoperationsto ers, often one and the same, totion would be more complicatedhealthyskepticismbasedondentforglobaloperationsandreplacesingle-useplastics,is initiateadequatesafetymea- becausecompanieswouldbeprior history and experience ofengineering. adopting solar energy solutions sures and protocols for handlingjockeying not to miss out of therail mergers. TheMedina,Minnesota- at major facilities in Europe and andpackingbeforeCOVIDfew deals left to be made. TheIn 2000, the Surface Trans- based company adjusted assem- the U.S., and piloting a Green struck the region.CanadianPacificoffertobuyportationBoardimposeda15bly lines to make products basedLanecarboncalculator,which TheregionsabilitytoshipKansas City Southern is muchmonth moratorium on rail merg- onwhatpartswereavailable.itultimatelyintendstodeploy fruit safely around the world is amorestraightforward,mostlyers to prevent over-consolidation.Itusedmoreartificialintelli- globally for clients.marvel of planning and execution.because the two networks dontItthenimposedstringentrulesgence and digital technology. ItShawnRichard,SEKOs Fruitexportersandtheirduplicate track, Klaskow said. designed to maintain competition. dispatched an employee to LosVicePresidentGlobalAir logistics partners over the yearsTheyinterchangeinoneAngeles to run an operation usu- Freight,commented:Weare havedevotedtimeandmoneylocation,Klaskowsaid.Itsc omPetitiveh aRmally left to logistics providers working on sustainability initia-intodevelopingpackagingandthe easiest deal to get done. The agencys rules requiretheflowofcontainerimports.tives in our own operations and shipping technology that ensuresapplicantstodemonstratethat,Port congestion is one of ourfacilities globally, but the simple quality and lengthens shelf life.m entoR andP Rotege among other things, a proposedlargestsupplychainissuesfact is that 75-80% of our carbon Fruit must be packed to weatherButrailroaddealsarenttransactionwouldenhancetoday, Pucel said. footprint is related to our indi-avoyagethatnowtakes22oralways easy. competitionwherenecessaryTranspacific snarls have alsorect procurement of transporta-23daysfrom,say,ValparasoWhileHunterHarrisonwasto offset negative effects of thereachedEurope,whereDssel- tion. As members of SAFA, we to Shanghai. That, in itself, is aCEOofCanadianPacific,hetransaction, such as competitivedorf-basedXSTAFFGmbH,awillengagemoreproactively marked improvement from abouttriedtobuyCSXCorp.andharm,andtoaddressfullythepurchasingnetworkforretail- withourpartnersandbepart five years ago, when ships tookNorfolkSouthern.Hedeclinedimpact of the transaction on ser- ersandwholesalers,charteredof a community to advocate for 30 to 33 days to make the voyage.topursueacombinationwithvice, including plans for serviceitsowncargoshipinFebruarydecarbonization. We will access Kansas City Southern at the timereliability, according to a Junetohelpensurememberscouldbetter data from airlines to help because of its large operations in2001 press release. importgoodsfrom Asia.Ratesmanage our carbon calculations.(DEALcontinued fromMexico. Harrison didnt like theCPhasexploredmergersfora40-footcontainerfromAirtransportrepresents page 19) currency risk nor the lack of legalwith AmericanrailcompaniesChinatoEuropearehoveringaround2%ofglobalcarbon receive 0.489 of a CP share andand regulatory transparency. before, but those mergers facedaround $8,000, nearly quadrupledioxide emissions and although $90 in cash for each share theyCreel is betting that Harri- oppositionfromshipperswhothecostayearago,andprob- improvementsinaircraftfuel hold, valuing the stock at $275son was wrong. raised concerns about competi- ablywillstayabove$5,000atefficiency will make an impor-apiece. Thats23%morethanIfanybodyknowsHuntertive balance issue. The KansasleastthroughJune,XSTAFFtant contribution to reducing this, the record close, according to aHarrison and has experience withCity Souther tie-up could makeChairman Bodo Knop said. Thetheindustryneedstransforma-statement from both companies. him,itsme,CreelsaidinanCanadianPacificmorecom- demand side is much bigger thantive change to meet the climate CreelwillbeCEOoftheinterview. Hes a human being.petitivewithCanadaNationalthe supply side, he said. needs of our planet. All around newcompany,tobebasedinHe didnt get everything right. Railway Co Such imbalances will eventu- us,weseesomeoutstanding Calgary, and plans to stay at theIwouldjustsaythatheTeamsters Rail Conferenceally level out. While goods tradeinitiatives, such as United Air-helmuntilatleastearly2026.wasnt seeing these same com- andBrotherhoodofLocomo- wont likely to return to its heightlines recent announcement that Thenewentity,tobecalledpellingfactsandthisperfecttiveEngineersandTrainmeninglobalizationsheydayafewit intends to be carbon neutral by CanadianPacificKansasCity,time to combine these two com- NationalPresidentDennisdecades agoexpanding twice2050.Thisreinforcesthevery or CPKC, will have revenue ofpanies,orImcertainthathePiercesaidtheSurfaceTrans- as fast as the world economy clear and simple message to our about$8.7billionandalmostwould align and agree with whatportationBoardsreviewwilltheWTOsKoopmanexpectsaindustry;sustainabilityisno 20,000 employees. Shareholderswere doing. likely take 12 months or longer,return to the long-term average oflonger a nice to have in logis-of CP will hold 75% of the com- andwillrequiretheinvolved1.4 times global growth. tics but a determining factor in bined company. Rail Carriers to negotiate imple- E-commerce will keep fuel- whocustomersandconsumers R egulatoRyi SSueS (JOURNEYcontinued frommentingagreementswiththeingthat.Alotofpeopleforwill choose to do business with.page 19) affected Rail Unions. the first time ever experiencedThe Sustainable Air Freight The companies, whose boardsthe U.S. and Mexico. The com- TheteamstersintendtotheconvenienceofclickingaAlliancewasestablishedby unanimously approved the deal,bined company would be calledparticipateinthoseproceed- buttonandhavingaproductBSR, a team of sustainable busi-saytheyareexpectingtogetCanadianPacificKansasCity,ings, and stand ready to pro- showupattheirdoor,saidness experts that works with a finalapprovalfromregulatorsor CPKC, will have revenue oftect the work rights, pay rulesRyanPetersen,founderandglobal network of more than 250 by mid-2022. In the U.S., its theabout$8.7billionandalmostand benefits of all BLET mem- CEO of Flexport, a San Fran- member companies.SurfaceTransportationBoard20,000 employees. bers who may be impacted bycisco-basedfreightforwarder.Wereproudtowelcome that will have the biggest say. The transaction, if approved,thisproposedmerger,PierceThats an addictive thing. SEKO Logistics as a new member RailcombinationsreachedwouldgivetheCanadiancar- said in a statement. PetersenreckonsbetterofBSR,andtheSustainable afeverpitchinthe1990s,rier access to the Missouri-basedWallStreethasalargelytechnology will help the shift toAirFreightAlliance(SAFA),a withsomecausingsuchchaosKansas City Southerns sprawl- positive outlook on the deal. more speed and complexity, butcollaborationwhichseeksto that the STB raised the bar foringMidwesternrailnetworkLeeKlaskow,aBloom- doesnt anticipate big dramatictrackandreducecarbondiox-approvingdealsin2001.ButconnectingfarmsinKansastobergIntelligenceanalyst,saidshifts in supply chains or pro- ideemissionsfromairfreight one small railroad got an exemp- ports along the Gulf of Mexico.the proposed merger has mostduction locations. and promote responsible freight tion from stricter rulesKansasItwouldalsogiveitreachtoof the hallmarks for regulatoryJohn McCown, the foundertransport, said Sarah Mourio, City Southern. Mexico, which made up almostapproval. of Blue Alpha Capital, has seenBSRDirector,Transportand Weve got complete con- halfofKansasCitySouthernsHe said the combined com- plentyofshippingboomsandGreen Freight. We look forward fidenceinthisdealandtherevenue last year, and create thepany will remain the smallestbusts. His mentor was Malcomto working with SEKO on their reviewprocess,regardlessonly network that cuts through allClass I railroad and the lack ofMcLean,theNorthCarolinajourney to become a more sus-of which set of rules the STBthree North American countries. overlapandtheextensionoftruckingexecutivewhopio- tainablecompany,contributing applies, Creel said. We thinkThistransactionwillbethe combined networks will notneeredcontainerizationintheto our movement to create a more that the facts are so compellingtransformativeforNorthAmer- impede competition. 1950s. If a worldwide shock likejust, sustainable world.'