CN and Union Pacific signed a binding deal giving each railroad operating rights on the other's network, creating a single-rail Canada-to-Mexico route. The pact covers Chicago's EJ&E bypass and the Memphis-to-Eagle Pass corridor.
CN and Union Pacific signed a binding memorandum of understanding Monday that gives each railroad new operating rights on the other's network, creating a single-rail route from Canada to Mexico for the first time.
The deal grants Union Pacific expanded access to CN's Elgin, Joliet & Eastern Railway corridor through Chicago, the continent's busiest rail interchange. CN gets new rights on Union Pacific's line between Memphis, Tennessee, and Eagle Pass, Texas, a key border crossing for north-south freight.
"We are thrilled to have an agreement with Union Pacific to expand CN's access to Mexico," CN Chief Executive Tracy Robinson said in a statement. "This is a natural extension of our north-south franchise."
Union Pacific CEO Jim Vena called the EJ&E route "the quickest way around Chicago." The loop line, which CN acquired in 2008, lets trains bypass the city's congested downtown yards.
The two Class I railroads have been discussing expanded cooperation for more than a year, people familiar with the talks said. The agreement covers only operating rights, not a merger or joint venture, and does not require regulatory approval from the U.S. Surface Transportation Board, the companies said.
For shippers, the deal means faster transit times on two busy corridors. The Chicago bypass alone can cut 12 to 24 hours off a cross-continental move, industry consultants said. The Memphis-to-Eagle Pass route gives CN a direct line to the Laredo and Eagle Pass crossings, where roughly 70% of U.S.-Mexico rail traffic flows.
CN carries about 300 million tons of freight a year on its 20,000-mile network, connecting Canada's coasts with the U.S. Midwest and Gulf Coast. Union Pacific operates in 23 western states.
AlphaScala rates UNP at 58 out of 100, a Moderate score, and CNI at 63 out of 100, also Moderate. Both stocks trade near their 50-day moving averages, with UNP up 4% this year and CNI up 2%.
The deal takes effect immediately, the companies said. Financial terms were not disclosed.
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