The two freight rail companies hoping to create the United States’ first transcontinental railroad sought to convince regulators on Friday that their merger was good for the country and would not give them outsized power in the industry.
Union Pacific and Norfolk Southern’s plan to combine, announced in the summer, would put around 40 percent of rail freight in the hands of one railroad, prompting concerns that competition in the rail sector would suffer and lead to higher shipping rates for customers.
On Friday, the companies made a much anticipated, 6,700-page filing detailing their plans with the Surface Transportation Board, the federal agency that will decide whether the merger can occur based on how it might affect competition for freight.
Union Pacific and Norfolk Southern said the combined company would provide a quicker, more efficient and reliable service that would persuade more businesses to use rail to ship their goods. And they said they would make arrangements — like pricing commitments — aimed at preserving competition among railroads after the merger.
“The application provides clear evidence that this significant transaction exceeds the S.T.B.’s merger requirements, ” Jim Vena, the chief executive of Union Pacific, said on a call on Friday with Wall Street analysts.
Six major railroads operate in the United States, but most goods are moved by four companies: Union Pacific, Norfolk Southern and CSX. There’s also BNSF, Union Pacific’s rival in Western states, which is owned by Warren Buffett’s Berkshire Hathaway.
BNSF’s chief executive, Katie Farmer, said in a statement on Friday that the merger “would leave shippers with fewer options — driving higher rates and ultimately higher prices for consumers.” She added that past mergers had led to big disruptions to service that damaged the American economy.
Union Pacific has tried to address that criticism. “The merger will be the most thoroughly planned, carefully executed railroad merger in history,” Mr. Vena said in the filing.
Shareholders of Union Pacific and Norfolk Southern have voted for the merger, but the Surface Transportation Board likely won’t come to a decision until 2027. The regulator will for the first time apply more stringent rules aimed at assessing whether a merger of large railroads is good for competition.
The Surface Transportation Board faces a dilemma. If it allows Union Pacific and Norfolk Southern to combine, CSX and BNSF may decide to merge, a move that would put nearly 90 percent of rail freight would be in the hands of two companies.
Today, Union Pacific operates in the Western states and Norfolk Southern in Eastern states. The combined railroad would stretch across 43 states and connect some of the country’s largest ports.
The deal would, for the first time, allow a single railroad to ship goods, say, all the way from Los Angeles to New York.
Currently, a Union Pacific train would go only as far as Chicago, where the goods going further east would have to be transferred to Norfolk Southern or CSX, which also operates in the Eastern states. Changing trains can create delays and rail companies say there is less incentive to transport goods that end up on another railroad.
The filing said that the merger would reduce the journey time from California to the Southeast by around 70 hours. A Union Pacific spokeswoman declined to say how long the journey takes today.
Until recently, a big rail merger seemed unlikely, in large part because regulators would have opposed it, out of concern about concentrating power in too few railroads. But analysts speculate that Union Pacific may have moved to buy Norfolk Southern now because it believed that the Trump administration would take a more favorable view of the deal.
In August, the Trump administration removed Robert Primus from the Surface Transportation Board. Mr. Primus, who is contesting his firing, voted against a smaller rail merger in 2023. Mr. Vena said last month that he did not think the removal of Mr. Primus made it more likely that the board would approve the merger. “We have a strong case,” he said.
Union Pacific donated an undisclosed sum to President Trump’s White House ballroom project, for which the East Wing was demolished. Mr. Vena has denied that the donation was aimed at gaining Mr. Trump’s approval for the merger. “We give because we think it’s a worthwhile cause,” he said last month.
Rail has lost a big share of the freight market to trucks in recent years, but Union Pacific and Norfolk Southern said the merger would help them win back business. They said that a consulting firm had estimated that the combination would convert two million truckloads of freight from road to rail annually.
Rail workers belong to several different unions. SMART-TD, a major rail union, endorsed the merger but this week two other large rail unions, both associated with the Teamsters, said they opposed the tie-up, contending, among other things, that it would make railroads less competitive.
“They’re trying to get a better deal,” Mr. Vena said, referring to the Teamsters unions. “We’ll sit down with them as we go through and see where we end up.”
Peter Eavis reports on the business of moving stuff around the world.
The post Rail Giants Aim to Prove Benefits of Coast-to-Coast Network appeared first on New York Times.
