Union Pacific and Norfolk Southern submitted a nearly 7,000‑page merger application to the board in December, kicking off a regulatory review of what would be one of the rail industry’s most significant transactions in decades.

The $85 billion deal (C$117.9 billion), announced in July, is aimed at speeding shipments by reducing handoffs and delays and would create the first U.S. coast-to-coast railroad. The proposal has drawn criticism from labor unions and rival railroads.

CN said the applicants did not fully detail their assessment of the merger’s competitive impact, citing incomplete market analyses, missing required market-share projections and other gaps in the filing.

“Given the scale and stakes of the proposed combination, the applicants must meet the highest standard of transparency and compliance,” Canadian National said.

“Rather than trying to convince everyone that there is ‘nothing to see here’, the applicants should instead be focused on meeting the rigorous and heightened standard called for by the new merger rules,” it added.

Union Pacific and Norfolk Southern did not immediately respond to a request for comment.

The review is expected to face intense scrutiny from the Surface Transportation Board and could take 12 to 18 months, with the companies targeting an early-2027 close.

“While the application outlines compelling earnings and free cash flow under favorable outcomes, regulatory uncertainty is elevated,” BMO Capital Markets analyst Fadi Chamoun wrote in a note last week.

— Reporting by Abhinav Parmar in Bengaluru

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The VRCPI for the Canadian National Railway is set at 1.9734, an increase of 1.72 per cent over last crop year. For Canadian Pacific Kansas City Railway, the VRCPI is set to 1.9349, an increase of 3.11 per cent from the previous crop year, the CTA said in a news release on Wednesday.

The VRCPI is an inflation factor determined based historical price information for railway inputs like labour, fuel, material and “other capital items,” the CTA said. Future changes in railway price components are also factored in.

The indices are used to determine the railways’ maximum revenue entitlements for movement of Western Canadian grain in the 2025-2026 crop year.

If the railways exceed their maximum revenue entitlement, they must pay the excess, plus a penalty, to the Western Grains Research Foundation.

In 2024, CPKC exceeded its revenue cap by a bit more than $1.8 million. CN did not exceed its maximum revenue entitlement.

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The Agricultural Producers Association of Saskatchewan had long advocated for the removal of the surcharges, saying they affected farm profitability.

Carbon surcharges were implemented to cover costs associated with emissions and fuel consumption.

Both Canadian National Railway and Canadian Pacific Kansas City eliminated the surcharges as of April 1 in Alberta, Saskatchewan, Manitoba, Ontario and New Brunswick after the federal government ended consumer carbon pricing.

“This is massive for farmers,” said APAS president Bill Prybylski in a news release. “Axing the surcharges puts more cash where it belongs, in our pockets and back into our rural communities.”

APAS said since 2019, Saskatchewan farmers paid about $200 million in the fees. It estimated that the bill in 2025 would have been $80 million.

“We’ve fought tirelessly for relief and seeing it finally come to an end is incredibly rewarding,” Prybylski said.

The move comes at a time of incredible trade uncertainty.

A CN notice to producers said the Low Carbon Fuel Standard is still in place in British Columbia and “will remain unchanged per the tariffs issued effective April 1, 2025.”

APAS said it remains concerned about that and whether it will increase shipping costs to B.C. ports. The organization is also advocating for transparency of how the federal Output-Based Pricing System, or industrial levy, impacts farm input costs.

CN said it would follow legislation closely and re-adjust if necessary.

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The new agreement replaces the previous three-year deal, that was effective through December 31, 2026, CN Rail said, adding that the new agreement does not require ratification from the union’s members.

The rail company had faced a threat of work stoppage last year by rail unions until the Canadian government called for a binding arbitration to reach an agreement over a new contract.

Monday’s announcement follows a recent wave of agreements and ratifications across sectors, as unions push for better working conditions and pay.

“The arbitrator’s decision underscores the importance of a full industrial review of labor relations in Canada’s rail sector,” said Paul Boucher, TCRC president.

Last year, Unifor, which represents more than 3,000 rail workers, ratified a new four-year collective agreement with CN Rail, averting a potential strike action.

—Reporting by Anshuman Tripathy in Bengaluru

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From the Port of Montreal to Algeria, the distance is around 4,500 nautical miles.

Therefore, one would think that most of the durum from Western Canada should logically be shipped through the St. Lawrence Seaway to a customer in Algeria.

But that’s not what happens.

Why it matters: Rail logistics drive the path of the supply chain for grain grown on the Canadian Prairies.

In the 2023-24 crop year, Canada exported about 892,000 tonnes of durum to Algeria. Most of that, 561,000 tonnes, went through the Port of Vancouver, said Warren Bohm, director of research and analysis in Quorum Corp.’s marine industry section.

Quorum, based in Edmonton, monitors the handling and transportation of grain on the Prairies.

In a presentation at the 2025 Durum Summit, held earlier this year in Swift Current, Bohm explained how durum and other grain from the Prairies are shipped to an overseas destination and the logic behind the route.

The critical factor isn’t the distance from a port in Canada to a particular destination.

Instead, it’s the distance from a country grain terminal to a port.

“Canada is big. Rail transportation can be as much as two or three times [more expensive than] ocean transportation,” said Bohm.

“Most grain moves by rail to its closest port of export, within Canada.”

In a report published in the fall of 2023, Quorum studied the cost of moving 50,000 tonnes of wheat from seven Prairie locations – from Winnipeg to Camrose, Alta. – to buyers in East Asia, the Mediterranean, India, Iran and Venezuela.

The total cost has four components:

• Rail transportation to port.
• Port handling fees.
• Re-loading grain onto a larger vessel if taking the Thunder Bay-St. Lawrence Seaway route.
• Marine transportation to customer.

Of those components, Quorum learned that rail is the largest cost.

“Rail freight costs comprise between 60 and 75 per cent of the total … cost of the grain movement from origin to final destination.”

The report was published 17 months ago, so some of the figures may have changed, but Quorum estimated that rail freight ranges from $25 to $80 per tonne:

To Vancouver, rail freight from Camrose was $50 per tonne. From Yorkton it was $70 per tonne.

To Thunder Bay, rail freight was $25 per tonne from Winnipeg and more like $70 per tonne from Lethbridge.

In the 2021-22 crop year, the average length of rail length of haul was 945.6 miles, Quorum said.

“This is approximately the distance between Swift Current and Vancouver (958 miles) or Thunder Bay (935 miles). The tariffs with CPKC [Canadian Pacific Kansas City] for those routes are $61.55 per tonne and $51.34 per tonne, respectively.”

Ocean freight for moving grain from a Canadian port to an overseas customer is significantly lower. It ranges from $25 to $40 per tonne, Bohm said in Swift Current.

Still, ocean freight rates are not fixed. If there is strong demand for shipping and a shortfall of vessels in a certain region, costs can spike, which would affect how grain exports are routed in Western Canada.

In its report, Quorum has a pie chart that illustrates how grain moves to port in Western Canada. From 2018 to 2023, only five per cent of Manitoba grain was shipped west to Vancouver.

In that same period, one per cent of Alberta grain went to Thunder Bay.

“[So] it’s really hard to push grain from Manitoba west and from Alberta east,” Bohm said.

Grain that originated in Saskatchewan went both east and west. It represented 47 per cent of grain going through Thunder Bay and 54 per cent of Vancouver’s volume.

Bohm told the audience at the Durum Summit that Swift Current is a break-even location for rail freight. Grain could go east to Thunder Bay or west to Vancouver, at a similar cost.

The share of grain going west or east could change if ocean freight rates went through the roof or if there were chronic issues at the Port of Vancouver, such as the shut down of a railway bridge in the Lower Mainland.

One example is the New Westminster Bridge, which was built in 1904 and upgraded in 1937.

“It handles about 35 per cent of traffic going into the Greater Vancouver area by rail,” Bohm said.

“The solution for this [bridge] is likely eventual replacement.”

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Some 750 signals and communications workers at the railway had voted to strike as early as today if a deal was not reached.

No details of the agreement were released.

CN has been in talks with the International Brotherhood of Electrical Workers (IBEW) union since September.

In 2022, IBEW workers walked off the job for 17 days. The strike concluded when the union and CN agreed to take the dispute to binding arbitration. That strike did not directly affect rail traffic.

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“CN’s contingency plans are in place, operations will continue, and our dedicated teams are prepared to ensure the seamless continuity of service,” the railway said on its website.

CN has been in talks with the International Brotherhood of Electrical Workers (IBEW) union since September. According to the railway, the union, which represents 750 workers, rejected a recent offer and issued a strike notice. A work stoppage could begin just after midnight on January 28.

In 2022, IBEW workers walked off the job for 17 days. The strike concluded when the union and CN agreed to take the dispute to binding arbitration. That strike did not directly affect rail traffic.

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The program, which opens up rival rail routes for shippers under certain conditions, has been in place since 2023 and is set to expire in March.

The timeline is further compressed by the prorogation of Parliament in early January. Parliament is out until March 24.

“There is effectively no path forward for the program’s renewal or permanency before its expiry, leaving grain farmers and the grain sector once again exposed to the uncompetitive forces of rail monopolies,” the Grain Growers of Canada said in a Jan. 16 statement.

Why it matters: Interswitching has been a years-long battle, with the grain industry arguing it’s key for bolstering competition when most rail traffic is dominated by two companies, while railways say its too expensive and hits at their own competition with American railways.

Interswitching applies when a shipper has access to a single carrier, but is located within a specific radius of other lines.

Interswitching regulations have been in place since 1904, but they became critical in 2013 when an exceptional harvest in Western Canada overwhelmed the rail system, delaying grain shipments to export terminals.

The old radius of 30 kilometres was extended to 160 in 2014 to ease those logistical hurdles.

In a 2016 review, then-MP David Emerson, who conducted the reassessment, advised the federal government to roll back the expanded radius. There had been little use of the expanded limits, he said. The rule should go back to 30 kilometres, which it did in 2017.

At the same time though, Emerson expressed concern over rail monopolies and how they could harm grain shippers. His review also suggested broadening interswitching options.

Part of the response was the Long-Haul Interswitching (LHI) which allowed shippers to access competing rail carriers within 1,200 kilometres, assuming they made arrangements for the transfer with their local carrier or, if negotiations failed, appealed to the Canadian Transportation Agency.

The latest round of interswitching drama kicked off after the 2021 drought, when railways cut grain cars, thinking harvest would be small. After deliveries fell short, interswitching blazed back into the limelight.

In 2023, a new pilot re-extended the radius to 160 kilometres for 18 months.

Advocates for extended interswitching argue that the program provides essential competition within Canada’s rail duopoly, reducing shipping costs, improving service reliability, and enhancing supply chain predictability.

“Its expiry will be a step backward for the sector, once again leaving the agriculture sector with no true competitive rail service options,” the GGC said.

The farm group also argued that the federal government could have laid out provisions to extend or make the program permanent in the last fall economic statement, calling the pilot a “no-cost initiative supporting the agriculture sector and broader economy.”

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That’s as per the Canadian Transportation Agency’s (CTA) ruling, announced on Christmas Eve in a news release.

• CN’s grain revenue of $1,213,732,435 was $34,329,653 below its entitlement of $1,248,062,088.
• CPKC’s grain revenue of $871,716,922 was $1,824,083 above its entitlement of $869,892,839.

CPKC has 30 days to pay the excess revenue, plus a five per cent penalty of $91,204, to the Western Grains Research Foundation.

The CTA determines the two railways’ annual revenue entitlement as a form of economic regulation, the CTA said.

The total amount of Western Canadian grain moved in 2023-2024 was a bit more than 43.7 million tonnes. This was down 3.5 per cent from the previous crop year, which the CTA attributed to lower crop exports for the year.

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Unifor, which represents more than 3,000 members at the railroad’s Council 4000 and Local 100 committees, said the agreement includes improvements to wages and benefits as well as job protections for members working in CN terminals and headquarters across Canada.

The railroad earlier this month had reached a new tentative four-year collective agreement with the union. These new four-year agreements include three per cent wage increases annually, CN said in a statement.

“This agreement secures important gains that reflect the critical contributions of Unifor members to CN’s operations,” Unifor National President Lana Payne said in a statement.

“By working together with Unifor, we now have new agreements that strengthen our workforce and enhance our ability to serve customers reliably across North America,” said Tracy Robinson, CN’s president and chief executive officer in a statement today.

The ratification comes after Unifor members last month authorized a strike action if the parties failed to reach an agreement by Jan. 1.

The union had initiated negotiations with CN Rail in September, with bargaining priorities that included higher wages, addressing concerns about the pension plan and job security for its members.

— Reporting by Nilutpal Timsina in Bengaluru. Additional reporting by Geralyn Wichers, Glacier FarmMedia.

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