Canadian National buys Chicago railroad

Monday, February 2, 2009

Canadian National (CN), the Montreal-based rail operator, has bought the main lines of the U.S. Elgin (EJ&E).

CN began to buy the railway from U.S. Steel in September 2007. Regulatory approval in the US was given in January. The Canadian railway company will use the lines to avoid congestion in Chicago, taking freight along a 300km loop through the American Midwest. The route will begin the new operations on March 4.

U.S. Steel will keep the facilities and staff required to keep the Gary steelworks in Indiana rail connected, renaming the resulting operations to the Gary Railway. The rest of the EJ&E will be integrated into CN's existing networks. The railway passes through suburban areas of Chicago, causing residents to fear the noise and traffic that greater intensity of operation could bring.

The Surface Transportation Board (STB), the US rail regulator, has required CN to make upgrades to ease local concerns but opponents have vowed to continue to fight against the changes. The Chicago Tribune speculates that CN will switch trains from the former Wisconsin Central line to the EJ&E south of Mundelein. This would reduce traffic in suburbs north of the crossover from 19 trains a day to just two; whilst south of the junction trains would increase from five a day to 20.

CN paid $300 million for the lines, and will pay $100 million to upgrade them and $60 million to make the STB's required improvements.