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Canadian National locomotives are seen in Montreal on Monday, February 23, 2015.

Ryan Remiorz/CP

Canadian National Railway Co. and U.S. rival CSX Corp. are squaring off over the Quebec government's subsidizing of a major new intermodal terminal west of Montreal.

CN has sent a letter to Quebec Premier Philippe Couillard expressing concerns over government plans to invest in the new facility located in Vaudreuil-Soulanges, off Montreal's West Island.

Jacksonville, Fla.-based CSX just opened a new $100-million (U.S.) intermodal terminal in the area and received about $11-million from Quebec. The complex will connect the region to CSX's 34,000-kilometre rail network in the United States, expanding the railway's north-south business.

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CN and other key transportation players in the Montreal region have raised concerns that CSX will use the new logistics hub to divert ship traffic away from the Port of Montreal to New York.

"We believe Vaudreuil could become a satellite for the Port of New York," CN vice-president of corporate development François Hébert said in an interview.

CSX has an 845-kilometre track from nearby Valleyfield to New York, he said, adding: "They would literally be diverting vessels to the Port of New York. The government of Quebec should not be helping them do this."

Quebec's transportation minister says Vaudreuil-Soulanges is complementary to other facilities and will not take away business from Montreal's port on the St. Lawrence River. "It's not true this will harm the Port of Montreal. It's the opposite," Jean D'Amour said in an interview.

"If CN has development projects to do what CSX is doing, then they should approach us," he said, adding that CN's business is mostly east-west while CSX's is north-south.

CSX says the new development will be good for everyone.

"CSX is confident that the Valleyfield terminal is a benefit for businesses and shippers in Quebec. The terminal is designed to connect those shippers into U.S. and Mexican markets where rail provides value, at distances greater than 850 kilometres, namely to and from the U.S. West, mid-West, Southeast and Mexico markets which have previously not been available or underserved," CSX spokeswoman Melanie Cost said in an e-mail.

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"These service offerings are a complement to and by no means intended to replace the vital supply chain connection to and from Greater Montreal. We are supportive of the health and growth of the Port of Montreal, which further positions this area as a key logistics hub for Montreal's shippers."

Michel Leblanc, president and chief executive officer of The Board of Trade of Metropolitan Montreal, said he has also alerted the provincial government to the possible threat posed by CSX's development.

"We want to make sure the multimodal terminal doesn't weaken the Port of Montreal," he said.

CN's Mr. Hébert said opting for a centralized mega-hub in Vaudreuil-Soulanges is not a good strategy.

Instead of putting all its eggs in one basket with plans to invest an estimated $400-million (Canadian) mostly in the Vaudreuil-Soulanges region as part of its new maritime transport plan, the Quebec government should spread that money among six or seven sites around Montreal, he said.

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