A new industry coalition has been launched to oppose the proposed merger between Union Pacific and Norfolk Southern, warning that the deal could reshape the United States rail sector and reduce competition.
The group, known as the Stop the Rail Merger Coalition, brings together rail operators, trade associations and labour representatives from across the US economy. It argues that the merger would create the largest rail company in the country’s history, with control over a significant share of national freight traffic.
Stop the Rail Merger Coalition opposes Union Pacific–Norfolk Southern merger
© BNSF
Members of the coalition include the American Chemistry Council, American Farm Bureau Federation, Teamsters Rail Conference, BNSF Railway, CPKC Railway, the Alliance for Chemical Distribution, the National Industrial Transportation League and the Vinyl Institute.
The coalition argues that the proposed merger could lead to higher transport costs, reduced service competition and increased risks to supply chains and employment. It also noted that more than 100 policymakers at state and federal level, including attorneys general and agriculture officials, have expressed concern about the deal.
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.
To support its position, the group cited a national poll conducted in April by McLaughlin & Associates. According to the survey, 71 percent of respondents opposed the merger after being presented with details, while 20 percent supported it.
A majority of those surveyed said they expected rail shipping costs to rise and job prospects to worsen. The poll also found that 68 percent believed any financial savings from the merger would not be passed on to customers.
President of the American Farm Bureau Federation 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.
Concerns about market concentration were reported across political affiliations. The survey indicated that around 70 percent of respondents agreed with comments previously made by U.S. Vice President J. D. Vance regarding the risks of dominance by a small number of firms within a sector. More than half of those polled said they would be more likely to support a political candidate who opposed the merger.
The coalition also referred to the aftermath of the 1996 merger between Union Pacific and Southern Pacific, which led to service disruptions and regulatory challenges. It argued that previous commitments made during that consolidation were not fully realised.
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.
Meanwhile, in their recently updated merger application, Union Pacific and Norfolk Southern argued that the merger would allow for more direct freight movements and could save shippers around 3.5 billion USD annually by facilitating the shift from road haulage to rail.
The proposed merger would require approval from the Surface Transportation Board. The Stop the Rail Merger Coalition has called on regulators to reject the plan unless it can demonstrate clear improvements in service and competition.
President and Chief Executive Officer of BNSF Railway 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.