A U.S. Rail Merger Can Have Outsized Benefits to a World in Need

RealClear Policy, By James ‘Spider’ Marks

The war in Ukraine and the ongoing unrest in the Middle East are having economic and geopolitical consequences that could impact global stability if not ameliorated by the United States and its allies. U.S. commodities production and infrastructure development can be part of that long term solution.

As recently as 2020, Ukraine was the world’s fifth largest supplier of grain to the global market, new estimates now predict grain production will be down more than 20 percent because of the shortened – or canceled – planting season in the war ravaged nation. Meanwhile, militant attacks near the Suez Canal are reducing cargo and freight – including natural gas and petroleum products throughout the region.

America’s heartland plays an integral role in providing agricultural and energy products to U.S. and global markets. Home to major agricultural and ethanol producers, Midwest states, like Iowa, can help provide needed goods when other parts of the world struggle.

However, in order for the Midwest to meet its full potential, and to act as a hedge against the foreign challenges that we are seeing, there needs to be a commitment to the infrastructure that can bring the products to market quickly, efficiently, and safely.

In early December 2023, Canadian National (CN), a Canadian Class I freight railway company based in Montreal, announced integration with intrastate short line railroad Iowa Northern (IANR). This seemingly minor acquisition represents a major opportunity for agricultural and ethanol producers to break through to U.S. and global markets.

By approving this combination, the Surface Transportation Board will enable CN to strengthen critical supply chains in the U.S. and expanded access to different markets.

Specific to ethanol, the U.S. Energy Information Administration says, “Iowa is the nation’s largest fuel ethanol and biodiesel producer,” accounting for “about one-fourth of U.S. fuel ethanol production capacity and almost one-fifth of biodiesel production capacity.” Ethanol accounts for 10 percent of the finished motor gasoline consumption in the U.S. and our country is the largest exporter of ethanol in the world – reducing reliance on foreign sources of energy around the world. And, due to its chemical composition – more specifically its alcohol content – rail is the preferred method of long distance ethanol transportation.

Looking to the future, an integration between an expansive transcontinental railway like CN and midwestern IANR can ensure quicker and more efficient transportation of ethanol both here in the U.S. and abroad.

The success and well-being of America’s breadbasket are directly connected to the effectiveness of the infrastructure system that is available to transport its products to market – both domestic and foreign. U.S. federal regulators should support the amicable combination of CN and IANR, that strengthen America’s infrastructure, allowing American farmers and businesses to continue to provide their products to a world in need.

Major General James ‘Spider’ Marks (retired) is the former Commanding General of the US Army Intelligence Center.