Major Rivals and Shippers Unite Today to Block the Largest US Rail Deal in History

The Union Pacific–Norfolk Southern merger has drawn opposition from a new industry alliance. The group warns that the proposed deal could alter the structure of the US rail market and weaken competition. This is reported by the railway transport news portal Railway Supply.

The organisation, called the Stop the Rail Merger Coalition, includes rail companies, industry bodies and labour representatives from different parts of the US economy. According to the coalition, the proposed deal would create the largest rail company in US history. The coalition says the merged company would also control a significant share of national freight traffic.

Also, its members include the American Chemistry Council, American Farm Bureau Federation, Teamsters Rail Conference and BNSF Railway. CPKC Railway, the Alliance for Chemical Distribution, the National Industrial Transportation League and the Vinyl Institute are also part of the coalition.

The coalition says the merger could lead to higher freight transport prices. It also points to less competitive service and greater risks for supply chains and employment. In addition, it cited concerns raised by more than 100 state and federal policymakers. These included attorneys general and agriculture officials.

Keith Creel, president and CEO of CPKC, said:
Opposition to the UP–NS merger proposal continues to grow across a broad range of stakeholders, including rail shippers and customers, business associations, unions and labor groups, railroads, elected officials, community leaders and more. All of them have deep and widespread unease about the implications of this unnecessary mega-merger on rail competition, affordability, supply chain reliability, and market balance. The US rail network supports the strength and vitality of the American economy and its future is at stake. This decision is irreversible – it is imperative the Surface Transportation Board hears from all concerned parties. Now is the time to make your voice heard.

Polling Cited In The Rail Merger Debate

Also, the coalition cited an April national poll carried out by McLaughlin & Associates. The survey found that 71 percent of respondents opposed the merger after receiving details about it. It found that 20 percent supported the proposal.

Most respondents said they expected rail shipping costs to increase. They also expected job prospects to worsen. At the same time, 68 percent believed any financial savings from the merger would not be passed on to customers.

American Farm Bureau Federation President Zippy Duvall said:
Farmers and ranchers rely heavily on rail service to get products to families across the country. This merger would lead to greater consolidation and higher costs when farmers are already hard-pressed with economic headwinds beyond their control. Ultimately, those costs ripple far beyond the farm gate, impacting not only the price of food for Americans, but also likely pushing farm margins even lower.

The poll also reported concern about market concentration across political affiliations. Around 70 percent agreed with previous remarks by U.S. Vice President J. D. Vance. Those remarks concerned risks created when a small number of companies dominate a sector. More than half of those surveyed said they would be more inclined to support a political candidate who opposed the merger.

Earlier Union Pacific Merger Cited By Coalition

The coalition also cited the aftermath of Union Pacific’s 1996 merger with Southern Pacific. That merger resulted in service problems and regulatory issues. It said commitments made during that earlier consolidation were not fully delivered.

Teamsters Rail Conference President Mark Wallace said:
Union Pacific has yet to make the workforce commitments necessary to maintain network reliability or protect the communities and customers that depend on this rail system. Merging two Class I carriers of this scale without binding employment guarantees is not a business decision. It is a gamble with the nation’s supply chain and the workers who keep it moving that ultimately the American taxpayer will have to bail out. The Teamsters Rail Conference will not stand aside while railroad executives hollow out the workforce and wreck our national freight rail system and call it progress while Americans suffer the consequences.

Surface Transportation Board Approval Remains Required

Meanwhile, Union Pacific and Norfolk Southern said in their recently updated merger application that the deal would allow more direct freight movements. They also argued that it could support a shift from road haulage to rail. They said this could save shippers around 3.5 billion USD annually.

The Union Pacific–Norfolk Southern merger would require approval from the Surface Transportation Board. The Stop the Rail Merger Coalition has urged regulators to reject the proposal. It says the plan should be rejected unless it can demonstrate clear improvements in service and competition.

BNSF Railway President and Chief Executive Officer Katie Farmer said:
This did not begin with a customer asking for a UP-NS merger to happen. It’s driven by Wall Street on the promise of a big shareholder payout. It will eliminate competition, raise costs for consumers, and destabilise the supply chain that powers the American economy.

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