Union Pacific and Norfolk Southern confirmed this morning that they are engaged in advanced merger discussions that would create the first U.S. transcontinental railroad.
“There can be no assurances as to whether an agreement for a transaction will be reached or as to the terms of any such transaction,” the railroads said.
UP and NS said they do not intend to make additional comments or provide an update unless they determine that disclosure is required or otherwise appropriate.
UP CEO Jim Vena said he would decline to take questions about a potential merger during the railroad’s earnings call this morning. But he did say the railroad industry cannot stand still.
Allen Meyers (troll?) Was government owned Conrail a failure?
Amtrak is a failure because the LAST thing either party wants is a world class rail passenger system. Both intentionally have cut and starved Amtrak.
Gregg: I can call you a troll too knucklehead. You don’t like what I have to say? Too bad. Deal with it. But apparently you can’t Mr. Social Engineer.
Conrail WAS a failure for many years. How could you forget? It took years and years to get Conrail turned around. It took a couple of bad economic recessions (early ’80’s), lopping off miles and miles of unprofitable trackage, reducing the workforce, etc. It wasn’t an overnight success as you seen to insinuate.
In 1976 Conrail inherited physical assets in abysmal shape. Huge sums were required to repair facilities and reorganize network operations. It was a monumental effort; I know, I was there working. There were 2 back-to-back recessions in 1979-81 which caused huge losses.
Without government ownership, the private sector would have done… nothing.
The deregulated class 1s have abandoned their common carrier obligations. Look no further than fewer carload than 20 years ago and 40% margins. The current uniparty government is incapable of fixing anything besides make things safe for billionaires and their minions like Jim Vena.
Someday it will change.
“The railroad industry cannot stay still.” Correct, but there are so many other things the Class I’s can do to improve their situation than merge. But yeah, let’s focus on merging.
I am curious as to how CN and CPKC will react. What will be the fate of the Meridian Speedway, for instance. Will CN push for trackage rights over the former Wabash to Kansas City? Will both push for access to Atlanta?
Could be the USA holdings of CP and CN are sold off to the 2 remaining US carriers??
A UP-NS merger would certainly trigger a CSX-BNSF merger. One will not work without the other. For what it’s worth, and the administration we have right now running the country, I see both of these coming. Am I an optimist, or a pessimist? I really can’t decide!
At this stage, a potential BNSF – CSX merger shouldn’t come as a surprise.
Dr. Güntürk Üstün
Regulatory approval for mega-mergers is far more certain in today’s Washington, DC than earlier times. Players of the consolidation game need only butter up the POTUS to rewrite the rules in their favor.
Rails carry less freight than 20 years ago for two big reasons. One is the loss of what was a massive surge in coal traffic, forced by Obama era clean air legislation. Another is the 2008 great recession, which decimated the US auto industry and its accompanying rail traffic. PSR followed those two tsunamis as an attempt by the railroads to simply survive, as I see things.
AP: “To be approved, any major rail merger must show it will enhance competition and serve the public interest under rules established in 2001, in the wake of that pair of mergers.”
There are 4 class 1 railroads in the US, with the two Canadian systems having N-S appendages into the US. One can imagine BNSF and CSX going for Me Too! Trump’s DOJ and Surface Transportation Board would likely rubber stamp this monstrosity.
Now how can creation of a duopoly will “enhance competition and serve the public interest”? The industry carries less freight than 20 years ago while trucking is up by 30%.This was the impact of Precision Scheduled Railroading (PSR). It resulted in reducing the workforce by 1/3 and 40% margins, accomplished largely by ripping out physical plant, abandoning huge market segments and radically reducing carload traffic.
I suppose the only upside is only one or two US systems would be far easier to nationalize some day in the distant future.
So you want to see the freight railroads nationalized? You know would happen? It would be just like Amtrak. And, outside the NEC, how is “filthy windows” Amtrak working out? I’ll tell you: POORLY.
The STB is not going to just give any huge merger, like this possible one, a pass. The big shippers will demand scrutiny and very likely access to another railroad. For example BNSF will undoubtedly request trackage rights on UP’s ex-MP main line between KC and St. Louis. That’s a no brainer. There are others…
Just let the STB do their due diligence IF UP+NS happens.
The amalgamation of Union Pacific and Norfolk Southern would be ideal for a true transcontimental merger. Both railways have several east-west connections in New Orleans, Memphis, Kansas City, St Louis, and Chicago to name a few. I have seen several Norfolk Southern locomotives venturing as far west as the Pacific Coast on Union Pacific freight trains.
I grew up travelling on the predecessors of Union Pacific and Norfolk Southern. My first train travel and trip out of my native Houston at 8 months was on board Missouri Pacific’s streamlined ‘Texas Eagle’. The other three predecessors I grew up travelling were Southern Railway, Norfolk & Western, and the Pennsylvania Railroad.
NS fills the biggest hole in the UP system: a direct KC-Chicago line of its own.
It’s starting to look like this mega-merger will happen sooner or later…
Dr. Güntürk Üstün
As long as these 2 wannabe partners don’t sign any ridiculous “pre-merger” commitment poison pills. CPKC paid CN millions as part of the KCS merger to satisfy a breakup fee KCS had agreed to.
Everyone thinks that a merger will make Chicago less relevant. Hardly!
The merged entity will be even more motivated to consolidate transfer in Chicago because there will be no more competitive pressure to go anywhere else.
I will say it again for the cheap seats, any attempts to merge any of the 6 remaining Class 1’s will require a lot of concessions, including the exchange of track ownership, something they will vehemently object to.
The amount of hoops, hurdles and hindrances for such a union is long and impressive. Uncle Pete is doing the legwork determining valuation. All Uncle Warren will have to do is cut a check.
Yeah, Uncle Warren can cut a check…to buy Watco.
Once the dust settles …. But image how snarled the national rail network will be at first. UPNS will try to reroute to its own rails all of that interchange traffic that currently goes to BNSF and CSX. How is that going to work?
We have all been talking for years about the congestion and problems in the Chicago area with interchange. These potential end-to-end mergers would certainly improve the flow-through once the dust settles and operations gel.
Would like to see a better name than BNSF-CSX however 🙂
Maybe Pan Am Railways will resurface!
This will get real interesting.
Part of this is no doubt because UP wants better access to Global 4 near Joliet. UP trackage rights over BNSF between KC and Chicago is expensive (BNSF raised the trackage rights fees). UP has been eyeing NS’s ex-Wabash main line to Springfield via Hannibal (then trains would use the ex-GM&O north to Joliet/Global 4). It also keeps certain stack trains from from routed via St. Louis, which is less than ideal.
Under the current merger rules, is this even possible? Note that the CP/KCS merger was approved under former, less strict rules. But, these discussions may be able to improve the flow of traffic between these two, a distinct benefit without actual merger.