Union Pacific (UP) reiterated that its merger with Norfolk Southern (NS) will increase rail competition and that, unlike other productivity-driven mergers, this union will benefit the growth and future of the sector.
“With the merger, we see opportunities to enhance that growth profile by moving a significant portion of the business from trucking to rail. Today, trucks transport 43% of all freight tonne miles. To capture that market share, we will need to compete not only against trucks, but also against other railroads. We expect to win,” emphasized Jennifer Hamann, UP’s executive vice president and chief financial officer.
He mentioned that, according to the Association of American Railroads (AAR) , their freight movement increased by 7% between 2020 and 2024. “We have grown in volume by delivering the service we sold to our customers and by operating with a resource margin that can adapt to demand.”
He noted that if the end-to-end merger is completed, it will offer a single-line service on 10,000 routes , connecting 88,000 new points; in addition, it will improve speed and increase service reliability by eliminating time-consuming interchanges.
He explained that currently, when an exchange is involved, railroads require at least one transfer, send more than one invoice, and cannot offer a single system for pricing, shipment tracking, or customer service.
“With the merger, we are also expanding our service product, adding seven new daily intermodal routes and six new manifest trains that will allow our customers to enter new markets. These new services strengthen rail competition. For our rail colleagues to compete against us, they will have to improve their own service offerings, reduce their prices, or both,” Hamann explained.
In that regard, he said that the Land Transportation Board (STB) recognizes that end-to-end, single-line, open-door service enhances competition, as it stated when approving the Canadian Pacific-Kansas City Southern merger.
“Our merger is also end-to-end and inherently pro-competitive. The Gateway Committed Fare (GCF) extends those benefits to customers who would not otherwise benefit from enhanced competition, specifically at the origin or destination by CSX, BNSF, or a shortline partner. The GCF has been misrepresented as the sole competition-enhancing element in our record, but that misunderstands or misrepresents the key point: the GCF isn’t the ice cream, it’s the cherry on top,” he said.
It should be recalled that the STB accepted for consideration the revised merger application between UP and NS earlier this month and ordered the applicants to submit supplementary information by July 27.
“The STB considers that the applicants have provided sufficient information to meet the integrity requirements for a major merger application. Given the rather limited procedural issue of integrity, the issues raised by the commentators do not justify rejecting the revised application,” the agency stated.
According to UP, following this decision, more than two thousand letters have been sent to STB’s file , highlighting comments from a growing number of industry specialists, policymakers, and academics, who have expressed their opinions on the merger’s ability to strengthen the supply chain and boost the growth of the US economy.
Comment and follow us on LinkedIn: @GrupoT21
