CN sells its half of Detroit River Tunnel

Canadian Pacific Railway will replace Canadian National Railway as the operator of the Detroit River Tunnel after CN agreed to sell its 50% interest in the tunnel to a third party.

Although CN will continue to hold trackage rights that still allow them to operate trains through the tunnel-a 1.6-mile tube that crosses the Canada-U.S. border between Detroit and Windsor-it honored a commitment it made to the Surface Transportation Board when it acquired Illinois Central Railroad. CN ended up selling its stake-pending STB approval-to Borealis Transportation Infrastructure Trust, which is controlled by the Ontario Municipal Employees Retirement System, for an undisclosed amount. CP will continue to own the other 50%.

The DRT became less attractive to CN after it began moving more volume through its solely owned St. Claire Tunnel between Sarnia, Ont. and Port Huron, Mich. The tunnel has clearance that allows CN to move high-cube automobile-carrying cars and double-stack intermodal traffic through it. CN only moved 4,000 carloads of freight through the DRT in 1999.

Although CP has expressed interest in enlarging the clearance, it is unlikely it will invest additional capital in the tunnel.