CN reaches deal with Watco to sell rail lines in Wisconsin, Michigan
About 650 rail lines in Wisconsin and Michigan are under new ownership as part of an agreement between CN and Watco.
The agreement includes non-core lines and assets on the Soo subdivision (approximately 250 miles of track) that runs from Sault Ste. Marie, Ontario to Oba, Ontario and approximately 650 miles of branch lines of Wisconsin Central Ltd. in Wisconsin and Michigan. The sale process was originally announced last July. The sale was praised by state and federal government officials.
“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,” Governor 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.”
“More than 170 million tons of freight move by rail in Wisconsin each year,” Transportation Secretary 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 moves by rail means less congestion and wear and tear on our highways,” he said.
In Wisconsin, nearly all rail lines are owned by private companies. Watco currently operates the Wisconsin and Southern Railroad (WSOR), which connects to the CN line and other Class I railroads. The logistics company was founded in 1983 and operates about 5,000 miles of lines in both the United States and Australia.
“Access to reliable rail service is critically important to the viability of our agriculture, timber and manufacturing sectors,” said Rep. Tom Tiffany. “Northern Wisconsin is poised for growth, and stable, affordable and dependable rail service is a key component for reaching that potential.”
“It’s good that CN followed through on their commitment to spin off the old Wisconsin Central lines and I hope we can work together to ensure a brighter future for the region,” Tiffany added.
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, safely and reliably linking businesses to markets around the world.
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.
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 the details,” concluded Tiffany. “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.”