Union Pacific Corp. said it met with customers at the Midwest Association of Rail Shippers’ winter meeting to discuss the proposed merger with Norfolk Southern and respond to criticism of the transaction.
Last month, Union Pacific and Norfolk Southern submitted an application to the Surface Transportation Board seeking approval to create what the companies describe as the nation’s first transcontinental railroad. Union Pacific said the filing includes extensive analysis from independent experts and outlines how a single, coast-to-coast network would provide faster service, greater reliability and a lower cost structure.
The Omaha, Nebraska-based railroad characterized the deal as an end-to-end merger with minimal operational overlap, combining its western network with Norfolk Southern’s eastern system. The railroad said concerns raised by opponents that the merger would reduce competition for shippers are misplaced, noting that more than 500 customers have submitted letters in support of the application.
The company said the merger would reduce costs by limiting interchanges between railroads and enabling more efficient routing. Union Pacific cited a study by industry consulting firm Oliver Wyman that found interline merchandise traffic moving 1,000 to 1,500 miles costs, on average, 35% more than comparable single-line service.
Union Pacific also said the combined network would improve service reliability.
Critics have pointed to service disruptions tied to past rail mergers. However, Union Pacific officials said those comparisons overlook technological and operational advances made in the industry over the past three decades.
According to Union Pacific, the merger application includes about 2,000 letters of support from customers, public officials, industry associations and labor unions. The railroad said the meeting with Midwest shippers provided an opportunity to address questions and counter what it described as misinformation about the proposed transaction.
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