Canadian Pacific finalizes US portion of Atlantic Canada short line

A photograph of a train locomotive outdoors on a track.

Canadian Pacific (NYSE: CP) has been given the green light to own the portion of the Central Maine & Quebec (CMQ) Railway operating in the U.S.

The Surface Transportation Board approved CP’s acquisition of CMQ US on May 4. It became effective on Wednesday, June 3.  

CMQ will act as a subsidiary of CP. The acquisition of CMQ’s Canadian operations was finalized on December 30, 2019. 

CP has said the acquisition of the U.S. and Canadian operations of the short line railroad would boost CP’s reach into eastern Canada, as well as grow CP’s network into about 13,000 miles coast-to-coast over six Canadian provinces and 11 U.S. states.

The short line provides CP access to ports at Searsport, Maine, and Saint John, New Brunswick, via the Eastern Maine Railway and the New Brunswick Railway. The connections give CP access to a route to Montreal and Toronto that’s approximately 200 miles shorter than its competitor CN (NYSE: CNI). CP executives have also said previously that the acquisition could provide opportunities to compete with the eastern Canadian trucking market. 

CMQ Canada’s 236.8-mile route spans from St-Jean-sur-Richelieu, Quebec, to the Maine border, while CMQ US consists of 244.2 route miles in Maine and Vermont. CMQ US also consists of 57.3 route-miles leased from the Maine Department of Transportation. 

“This transaction is a generational business opportunity for CP,” said Keith Creel, CP’s president and CEO. “It enables us to serve customers through a larger coast-to-coast network across Canada and brings direct Class I freight rail service to the State of Maine for the first time in decades.”

CP also said it would invest as much as $90 million over the next three years to bring the infrastructure up to Class III standards as designated by the Federal Railroad Administration.

Previously, portions of the track have been reported as having structural deficiencies.

“Today’s expansion of the CP network creates opportunities to move products in literally every line of business in our portfolio,” said John Brooks, CP’s chief marketing officer. “Through the precision scheduled railroading model and the commitment of our people, we will unlock new potential for business and industry across this region and beyond.”