Base Oils Get Moving
By train, boat or automobile, North American base oil makers need to ship their product across the continent. Shipping and logistics are crucial elements to success for these businesses and present a number of challenges all the same. On the truck and rail side of the logistics question, recent changes big and small could alter the transportation landscape in the United States, Canada and Mexico.
Last month, Canadian Pacific Railway acquired Kansas City Southern, one of the largest transporters of base oil and lubricants from the United States into Mexico, for $25 billion, creating the first Canada-to-Mexico railway system in North America. Though the combined companies still make the least revenue of all Class 1 railroads—the largest railroad companies on the continent—the deal is the biggest railroad-railroad merger since the 1990s. More recently, in 2009, financial giant Berkshire Hathaway acquired Burlington Northern Santa Fe for $44 billion.
According to Canadian Pacific, over 300 customers, ports, transloads and other stakeholders have filed statements with the U.S. Surface Transportation Board in support of the acquisition, and have even urged the STB to approve the transaction as quickly as possible. The company said in an April 6 press release that supporters believe the acquisition would “provide new service offerings that would improve transit times and reliability.” The STB review is expected to be completed by the middle of 2022.