CN, Watco agreement

An agreement between CN and Watco could see increased benefits for Northwoods businesses that ship products and raw materials by train across Wisconsin, the Upper Peninsula of Michigan and parts of Canada.

Lawmakers are praising the recent announcement that CN (Canadian National Railroad) and Watco have reached an agreement for the sale of non-core lines and assets on the Soo subdivision (about 250 miles of track) that runs from Sault Ste. Marie, Ontario, to Oba, Ontario, and about 650 miles of branch lines of Wisconsin Central Ltd. in Wisconsin and Michigan.

U.S. Rep. Tom Tiffany and Gov. Tony Evers both expressed their belief the move will improve access to rail service in northern Wisconsin and the Upper Peninsula of Michigan.

“Access to reliable rail service is a critically important to the viability of our agriculture, timber and manufacturing sectors,” Tiffany said. “Northern Wisconsin in poised for growth, and stable, affordable and dependable rail service a key component for reaching that potential. I hope we can work together to ensure a brighter future for the region.”

The announcement marks the successful conclusion of the sale process that CN announced and launched in July of 2020.

“This is truly great news for Wisconsin. This announcement means not only continued freight rail service for Wisconsin’s Northwoods, but it also presents an opportunity to expand service,” Evers said. “That is especially good news for our Northwoods economy and the timber and paper industries that rely heavily on freight rail to connect to major ports and markets all over the world.”

In Wisconsin, nearly all rail lines are owned by private companies.

“More than 170 million tons of freight move by rail in Wisconsin each year,” Wisconsin Department of Transportation Secretary-designee Craig Thompson said. “For many of Wisconsin’s major industries—agriculture, manufacturing, and wood products—rail is the most cost-effective way to move freight.

“Having reliable rail access will make our industries more competitive and contribute to our economic recovery. Rail is also a more energy-efficient way to move freight, reducing our state’s carbon footprint. Plus, every ton of freight that move by rail means less congestion and wear and tear on our highways.”

Owing to service reductions in recent years, businesses throughout the region face limited shipping options and must rely more heavily on trucking to transport goods as a result.

While the trucking industry plays a critically important role in regional and international commerce, the economics are often not as favorable or desirable as those associated with freight rail options.

“This is a great opportunity, but the devil is in details,” Tiffany said. “I look forward to working with CN and Watco, the Surface Transportation Board, industry leaders and other stakeholders to ensure that this agreement results in better service, lower rates and a long-term commitment to the region.”

In both the United States and Ontario, CN will continue to play a central role as the transferred segments will remain connected to CN’s tri-coastal network, linking businesses to markets around the world.

Watco owns and operates several short line railroads throughout the U.S. including Kansas, Illinois, Ohio, Michigan, and Wisconsin including the Wisconsin and Southern Railroad.

The terms of the agreement were not disclosed and the acquisition of the rail lines in the United States is subject to regulatory authorization by the Surface Transportation Board.