The U.S. railroad NSF Railway has ruled that the potential merger between Union Pacific (UP) and Norfolk Southern Corporation (NSC) is unnecessary, anti-competitive, and would increase rates, impacting the U.S. supply chain.
“Our nation’s supply chain does not need the reduction in competitive options or the inherent integration risk we have seen occur after nearly every Class I merger. No customer is requesting a merger between UP and NS. It is driven by Wall Street with the promise of a large payout for shareholders,” the firm said in a filing.
Among the impacts, he said, the merger is expected to concentrate control of the country’s freight transport market in a single railroad, which would lead to long-term harm to competition and resilience in the national supply chain.
According to the railroad, the merger between UP and NSC would control 45% of the total U.S. tonnage , compared to the recent merger that created Canadian Pacific Kansas City (CPKC) , which resulted in control of 5% of the U.S. market.
In that sense, he emphasized that such a merger would bring less competition , meaning fewer alternatives and higher fares, as well as a reduction in capital investment across the entire rail industry.
“The revenue and efficiency gains claimed to justify the merger’s excessive premium simply don’t add up. Carriers will cover the $85 billion merger price tag, despite UP’s claims that it will be paid for through 10% growth over three years,” he said.
He also noted that UP has a history of increasing traffic fares and aggressively cutting costs, which will impact the entire supply chain, which is why industries such as the chemical and agricultural industries are actively opposing this merger.
“Truckload and agricultural customers will be the most affected, as they will lose the option to ship goods to the eastern United States or face significantly higher rates on traffic currently exchanged with NSC,” he said.
He reported that, according to Surface Transportation Board (STB) data , a combined UP-NSC railroad would control 50% of the chemical market (higher prices for consumer goods), as well as 50% of the metals market (higher construction costs) and 50% of lumber (higher housing costs).
The railroad company stated that if this merger were to materialize, 300 intermodal lanes would be closed . It recalled that after the last major round of mergers alone, 90 such facilities were closed.
“BNSF does not believe that the appropriate competitive response is to acquire CSX at this time. We should not be seen as the solution to correct the competitive imbalance that UP-NS is trying to create. Wall Street and UP would like to force BNSF into a competitive merger that would establish a coast-to-coast duopoly controlling over 90% of our nation’s rail traffic,” he stated.
He explained that the supply chain in general wants and needs greater collaboration between railroads and shared customers, greater technological innovation, and more strategic investments through privately funded infrastructure, as is being done with the Barstow International Gateway and the recent announcement with CSX.
He argued that these alliances provide more options while preserving competition and flexibility.
“BNSF must continue to offer competitive and efficient transportation services and grow alongside our customers. This requires competition, which is not possible with a dominant railroad resulting from the proposed UP-NS merger,” he emphasized.
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