Union Pacific and Norfolk Southern are moving to create the first coast-to-coast freight rail operator in US history, announcing an $85 billion merger that, if approved, would link 50,000 miles of track from New Jersey to California, across 43 states. The deal promises to streamline shipping and give supply chains a jolt of efficiency—at least according to Union Pacific CEO Jim Vena, who says railroads need to move forward or risk being left behind, reports the Wall Street Journal.
But history suggests a bumpy ride. Past mergers have snarled traffic and even led to accidents, prompting regulators to adopt a more cautious stance. Those regulators, now led by Surface Transportation Board Chairman Patrick Fuchs, must sign off before the deal becomes reality. Skeptics worry that a single operator could mean higher prices, fewer safety upgrades, and diminished service for shippers.
Union Pacific agreed to acquire Norfolk Southern at $320 a share in a mix of cash and stock. If rubber-stamped, the new transcontinental network could offer shippers a "one-stop shop" and potentially lure freight away from trucks, per the Journal. Vena is banking on this approach, arguing that fewer handoffs across the country would mean faster, more reliable service.
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Labor unions aren't completely on board, warning of job cuts and service issues, while big shippers like chemical companies fear the deal will hike prices and reduce competition. The New York Times notes that if the deal goes through, about 40% of rail freight will end up under Union Pacific's purview. "This merger is not good for labor, the rail shipper/customer, or the public at large," says Jeremy Ferguson, president of the SMART union's transportation arm, per Reuters. The last significant merger—the $28 billion Canadian Pacific-Kansas City Southern tie-up—ran into service delays and technical headaches, fueling more regulatory scrutiny.
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