/javascript" src="../static/js/analytics.js"> CalTrade Report - BNSF MERGER SPECULATION SWIRLS California, CalTrade Report, Burlington Northern Santa Fe Railway, Canadian National, intermodal, railroads, Port of Lazaro Cardenas - BNSF MERGER SPECULATION SWIRLS - CalTrade ReportAsia Quake Victims FT. WORTH – 12/08/05 – Speculation is growing that the Burlington Northern Santa Fe Railway may be mulling new merger opportunities to significantly increase its North American service profile; industry publications say the rail carrier is considering a merger with the Canadian National Railway or the Kansas City Southern fueled by some $2 billion in “free cash” to spend over the next 26 months on increasing the dividend paid to investors, or acquisitions. - FT. WORTH – 12/08/05 – Speculation is growing that the Burlington Northern Santa Fe Railway may be mulling new merger opportunities to significantly increase its North American service profile; industry publications say the rail carrier is considering a merger with the Canadian National Railway or the Kansas City Southern fueled by some $2 billion in “free cash” to spend over the next 26 months on increasing the dividend paid to investors, or acquisitions. - BNSF MERGER SPECULATION SWIRLS California, CalTrade Report, Burlington Northern Santa Fe Railway, Canadian National, intermodal, railroads, Port of Lazaro Cardenas - BNSF MERGER SPECULATION SWIRLS

 

Sunday, January 01, 2006

 

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Page Two

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BNSF MERGER SPECULATION SWIRLS

FT. WORTH - 12/08/05 - The Burlington Northern Santa Fe Railway's healthy financial position is fuelling speculation in the trade media that it may be considering new merger opportunities to significantly increase both its service profile in the US, Mexico, and Canada.
 
Last week, several Canadian industry publications quoted an international rail consultant as saying that the rail carrier - one of the two major railroads serving California - may again attempt a merger with the Canadian National Railway, which operates the former Illinois Central, Grand Trunk Western, and Wisconsin Central railroads.

An article in a transportation law publication last month speculates that BNSF may also make a grab for the Kansas City Southern (KCS), which also controls the Tex-Mex and Mexico's TFM railroad.

Wall Street analysts report that the BNSF will have some $2 billion in "free cash" to spend over the next 26 months on increasing the dividend paid to investors, buying back its own stock - reducing available shares and lifting the stock price - or acquisitions.

BNSF is North America's second-largest railroad, behind Union Pacific, operating around 32,000 miles of railroad and collecting around $10 billion annually in freight revenue.

The UP - the other carrier serving California - operates a slightly larger track network than the BNSF, but earns around $12 billion in freight revenue annually. A BNSF combination with either the KCS or the CN could more than overtake the Union Pacific in terms of network coverage and revenue.

According to one railroad industry consultant, the Canadian National would be the BNSF's most logical partner.

In 2000, BNSF and CN voluntarily cancelled merger plans after US regulators imposed a fifteen-month freeze on railroad consolidations while new rules were written.

However, according to the Association of Transportation Law Professionals, the BNSF may have an interest in acquiring KCS, a combination considered by some analysts to be more likely than a renewal of the BNSF/CN consolidation.

KCS would be an attractive match because of its control of the Tex-Mex - which links Houston to the US-Mexico border crossing at Laredo - and its TFM subsidiary, a major Mexican railroad that controls virtually all tracks into and out of the Port of Lazaro Cardenas and is currently spending $12 million to improve its rail-monopoly access.

The Port of Lazaro Cardenas is 600 rail miles closer to Houston than the ports of Los Angeles and Long Beach; only 200 miles further from Chicago than Southern California; the closest Mexican port to the capital of Mexico City; and labor costs are reported to be 30% cheaper that at US ports.

Furthermore, Wal-Mart is reportedly working with ocean carrier Maersk to invest in additional port capacity at Lazaro Cardenas, while terminal operator Hutchison Wampoa already is in the process of increasing the port's capacity ten-fold.
 
Meanwhile, the Wall Street firm of UBS projects that the Lazaro Cardenas port expansion and increased Asian imports will boost TFM's rail-freight revenue associated with port traffic from $29 million to as much as $225 million by 2025.

UBS projects that the Port of Lazaro Cardenas will be handling around 2 million containers by 2025, compared to the current 9 million at the ports of Los Angeles and Long Beach and less than 2 million at the ports of Oakland and Seattle.

The US Surface Transportation Board has, with very few exceptions, approved most rail mergers presented to it, despite substantial opposition by shippers and rail labor.
 
During the past two decades, the UP gained approval to acquire the former Western Pacific, the Missouri Pacific, the Chicago & North Western, and the Southern Pacific.

BNSF is the combination of the former Burlington Northern and the Atchison, Topeka & Santa Fe. One of the few mergers rejected was the 1984 proposed merger of the Santa Fe with the Southern Pacific.

Go back, or read the latest Page Two stories:

DotVN, INC. OPENS SAN DIEGO OFFICE

SAN DIEGO – 01/01/06 – Vietnam’s official provider of Internat and telecommunications services, DotVN, Inc., has opened its North American headquarters in San Diego; Vietnam's Internet usage has grown over 1,000% over the past five years and there are currently about 6.1 million Internet users in Vietnam, penetrating only about 7.4% of the population.


NIXON ACQUIRED BY AUSSIE SURFWEAR GIANT

ENCINITAS – 12/27/05 – California-based Nixon Inc. has been acquired by Australian surfwear company Billabong International Ltd in a package deal valued at $93 million; Billibong’s global business which includes such popular brand names as Von Zipper eyewear, Element shoes, Kustom footwear, and Honolua Surf and Mrs. Palmers surf wax and accessories.


EVERGREEN MEGA-SHIP CALLS AT L.A.

LOS ANGELES – 12/23/05 – Evergreen Marine’s Hatsu Sigma recently made her maiden arrival at the Port of Los Angeles; the 7,024-TEU containership is the largest vessel in the company’s fleet and is the second of ten new ''S'' class vessels operated by Hatsu Marine Ltd., the carrier’s British-flag subsidiary, that the Taiwan-based ocean carrier is planning to fold into its fleet over the next two years.


GERMANY WANTS WINE ''PURITY'' LAW

BRUSSELS, Belgium – 12/21/05 – Germany is asking the European Commission to extend the reach of the recent US-EU wine agreement by imposing a ''purity law'' to protect European wines from certain US production practices; the transatlantic wine trade is worth some $2.8 billion a year with most US exports produced in California.


NEW SoCAL DISTRIBUTION CENTER FOR UPS

ONTARIO – 12/16/05 – Expedited air carrier UPS has opened the doors at its new distribution center adjacent to Ontario International Airport in Southern California; the new facility adds considerable clout to the roughly 1.1 billion square feet of industrial warehouse space available in Southern California, almost twice that of other distribution hubs such as New Jersey, Chicago, Atlanta, and Dallas.


NEW CALIFORNIA WINE WEBSITE LAUNCHED

SAN FRANCISCO – 12/14/05 – A new website has been developed to showcase premium California wines in potential overseas markets such as China; the entire website will be translated into Simplified Text for the Chinese marketplace and will reach out through ''unique and innovative programs'' to the Chinese wine, hotel, and import trade as well as affluent consumer markets in China.





 

 

 


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