Agriculture Interests Indicate Railroad Merger Concerns

Agriculture interests have expressed doubts about a proposed merger re-filed April 30 by Union Pacific and Norfolk Southern railroads, indicating that preventing the merger could be important to preserving competition on the inland waterways.

In January, the Surface Transportation Board, which must approve any rail merger, had criticized the initial paperwork as incomplete. Regulators asked the railroads to include information on projections of their combined market share and a list of conditions that would cause Union Pacific to walk away.

Agriculture agency leaders from Iowa, Minnesota, Missouri, Mississippi, Montana, North Dakota, Ohio, Oklahoma, South Dakota and Wisconsin have written to the STB, asking it to preserve competition. Those states have the most significant inland waterway freight flows.

Some of the information is confidential and redacted in the public filing. The STB said stakeholders could submit comments on the revised application’s completeness until May 8.

If approved, the merger would create a single coast-to-coast rail network connecting more than 50,000 route miles across 43 states. “After completing the additional work requested by the STB, the facts remain clear: This merger enhances competition and delivers real public benefits that make America’s supply chain stronger,” Union Pacific CEO Jim Vena said. “Our analysis uses complete systemwide traffic data provided by all Class I railroads to identify even more opportunities for our combined railroad to grow and compete.”

“The analysis in the updated application is the first in rail merger history to use 100 percent actual traffic data provided by all six North American Class I railroads, rather than the sample data available from the STB – making it the most thorough assessment of market and operational impacts ever,” Vena said.

“This merger is fundamentally about growth,” Norfolk Southern President and CEO Mark George said. “Shippers have been clear about what they value, and the data backs it up. When single-line rail service is available, they choose it. Our combined network will deliver seamless freight moves within and across the Mississippi watershed markets with one Class I railroad accountable from origin to destination.”

Some rail analysts believe that if the merger is approved, the two remaining major rail competitors, BNSF and CSX, would be compelled to merge in response. The STB is evaluating this proposed merger under its 2001 rules, which require that Class I mergers enhance competition, not merely maintain it.

Opponents of the merger include the American Farm Bureau Federation and the Teamsters Rail Conference. They argue that past mergers, like the UP/Southern Pacific merger of 1996, disrupted service and took years to stabilize. Polling suggests 71 percent of Americans fear the merger will increase prices of everyday goods.