About the CN-Iowa Northern Combination

On January 30, 2024, Canadian National and Iowa Northern filed their application for a minor transaction with the U.S. Surface Transportation Board (STB). The filing can be found here. Key takeaways about the combination include the following:

  • The combination will offer customers new single-line service which will help them more efficiently reach markets and destinations through access to CN’s national rail network.
  • The combination would support important local service for commodities currently moved between points on the Iowa Northern System with consistent and reliable service and access to CN’s U.S. fleet of railroad-owned and leased railcars.
  • Iowa rail customers will retain existing transportation options. CN has committed to maintain existing active gateway access on commercially reasonable terms, ensuring Iowa Northern-served customers receive commercially reasonable rates and service for interline traffic with existing rail carriers other than CN (Union Pacific, CPKC, and CRANDIC).
  • All Iowa Northern craft employees are needed to maintain and expand operations post-combination and are eligible for retention bonuses, and CN expects to hire an additional 16 conductors and engineers to ensure Iowa Northern is able to meet current and future demand from its customers.
  • The combination with a Class I railroad places this important Iowa shortline on firm financial footing through access to financial resources and investment over time.

Surface Transportation Board’s “Minor” Transaction Finding

On February 29, 2024, the Surface Transportation Board (STB) found that CN’s proposed combination with Iowa Northern Railway Company is a “minor” transaction.

  • In the decision, the STB stated that “Iowa Northern shippers could benefit from operational efficiencies and access to markets through single-line service on the combined CN-Iowa Northern system” and found that “the Proposed Transaction does not appear to pose any significant anticompetitive effects.” 
  • The STB’s decision on the Minor nature of the transaction is available here. 

CN and Iowa Northern issued a joint statement on the STB’s classification. That joint statement can be found here.

FAQs

The proposed CN-Iowa Northern combination is subject to approval by the Surface Transportation Board.

  • Iowa Northern is a Class III railroad that operates approximately 218 route miles in Iowa.
  • Iowa Northern’s main line runs northwest from Cedar Rapids, IA, through Waterloo and Cedar Falls, IA, to Manly, IA. Iowa Northern’s current service is to run, typically daily, one train in each direction on its mainline (Manly–Waterloo–Cedar Rapids) and one local train in each direction on the Oelwein Subdivision.
  • Iowa Northern’s traffic includes both local traffic (where the origin and destination are both on Iowa Northern lines, typically from grain elevators to processors) and traffic interchanged with connecting carriers including CN, Union Pacific, CPKC, and CRANDIC.
  • There will be few changes to current train operations immediately after the combination. In the first three years, CN expects that it may add one train in each direction on CN’s Dubuque, Freeport, Chicago, and Matteson Subdivisions to accommodate its projections of transaction-related traffic growth (approximately 52 railcars/containers per day) as well as anticipated organic traffic growth each year during the first three years.
  • CN is committed to preserving competition by maintaining existing active gateway access on commercially reasonable terms. In short, if the combination is approved, CN would provide Iowa Northern-served customers with commercially reasonable rates and service for interline traffic with existing rail carriers other than CN (Union Pacific, CPKC, and CRANDIC).
  • CN anticipates streamlining interchange operations in Cedar Rapids and Waterloo. These changes will create capacity in existing yards and simplify operations.
  • After gaining experience and familiarity with Iowa Northern’s local customers, CN expects to develop a scheduled local service plan to provide consistent and reliable service.
  • CN plans to retain Iowa Northern’s existing fleet of railroad-owned railcars and leased railcars, and Iowa Northern customers will have access to CN’s U.S. fleet of railroad-owned and leased railcars.

To the extent Iowa Northern does not complete its continuous welded rail installation work before the CN-Iowa Northern combination is approved, CN plans to finish those upgrades.

  • There are no planned abandonments or discontinuances as a result of this combination.
  • Iowa Northern has been working with the City of Cedar Falls toward removal of Iowa Northern’s Cedar Falls Utility Spur, a 1.75-mile utility spur through downtown Cedar Falls. CN will cooperate with pre-existing efforts by the City of Cedar Falls to abandon and remove this track after it assumes control of Iowa Northern, including obtaining any necessary STB authority.
  • It is CN’s expectation that all existing Iowa Northern craft employees will be needed for operations on the Iowa Northern to help this combination succeed, though some positions could be transferred to different locations in the future. That is why the CN-Iowa Northern transaction agreement includes provisions for a retention bonus for all current Iowa Northern employees.
  • Implementing agreements will be reached with the respective union(s) representing craft employees or, in the case of unrepresented employees, with the employees themselves.
  • CN anticipates hiring 16 additional conductor and locomotive engineers in Iowa to ensure Iowa Northern is able to meet current and future demand from its customers.
  • Iowa Northern employees will have access to new career opportunities as members of the larger CN family.
  • Customers will benefit from more efficient and competitive single-line service that will move traffic in and out of Iowa. In particular, there will be more opportunities for Iowa’s agricultural and biofuels products to reach new markets and destinations by leveraging CN’s national rail network. 
  • More efficient, single-line service will also create increased opportunities to divert traffic from truck to rail.
  • As part of CN’s network, Iowa Northern will have greater access to financial resources to make capital investments and support future growth.
  • The combination will also support important local service for commodities currently moved between points on the Iowa Northern system.
  • Iowa Northern customers will benefit from access to a broader range of railroad equipment, and improved equipment utilization, which will include access to CN’s larger fleet of U.S. railroad-owned cars.
  • The combination presents more opportunities for single-line service, which will reduce the number of handling events and interchanges for approximately 29,000 railcars per year. This will reduce operating costs and dwell time, benefiting customers as well as benefiting the fluidity of the rail network.
  • Modifications to interchanges between CN-Iowa Northern and CRANDIC will reduce two train movements in downtown Cedar Rapids to light movements (locomotives with no railcars), which are less impactful to the community and the corridor.