Single-Line Railroad Connecting North America Could Offer New Supply Chain Opportunities for Toymakers
March 15, 2023 | The Toy Association is alerting members of a newly approved single-line rail service connecting Mexico, the U.S. and Canada and the opportunities this could present to companies considering Mexico as a manufacturing hub or import point.
The U.S. Surface Transportation Board (STB) approved Canadian Pacific Railway Limited’s $31 billion acquisition of Kansas City Southern on March 15, marking the first single-line rail service – called Canadian Pacific Kansas City (CPKC) – to connect Mexico with Kansas City, Chicago, and Canada.
“Mexico has become a key production hub for the toy industry, and the Port of Lazaro Cardenas and other Mexican ports are increasingly relied on by U.S. companies importing from Asia, especially as labor issues remain unsettled at West Coast U.S. ports,” said Ed Desmond, executive vice president of global government & regulatory affairs at The Toy Association.
Although the merger received opposition from Union Pacific, Canadian National, and multiple Illinois municipalities, the board approved the deal under several conditions and a seven-year oversight period. The conditions are designed to mitigate environmental impacts, preserve competition, protect railroad workers, and promote efficient passenger rail, according to the STB.
The STB anticipates the merger will result in safety improvements and the reduction of carbon emissions.
The decision authorizes Canadian Pacific to exercise control of Kansas City Southern as early as April 14, 2023, at or after which point the new CPKC will be formed. Once combined, full integration of the new rail line is expected to happen over the next three years.
As Toy Association members continue to seek out ways to diversify supply chains, the Association is offering resources on business opportunities in Latin America, including a recording of a recent webinar presented by Mercado Libre, the leading e-commerce website in Latin America.