BNSF Railway made its strongest argument yet against the proposed Union Pacific-Norfolk Southern merger by releasing a position paper that states the combination would cause chaos on the national rail network and negatively affect shippers. In the paper, the Class I railroad urges shippers and the public to speak out against the $85 billion deal that would create the nation’s largest railroad
In the paper, BNSF officials note that a combined UP-NS would hold 45 percent of the total U.S. freight tonnage, including 50 percent of the market share for chemicals, metals, and lumber. The railroad argues that this would lead to higher shipping costs for railroad customers. In comparison, the recent Canadian Pacific-Kansas City Southern merger resulted in control of 5 percent of the U.S. freight market
“No customer is asking for a UP-NS merger to happen,” the position paper begins. “It’s driven by Wall Street on the promise of a big shareholder payout. BNSF does not believe a merger is necessary at this time, when we can deliver immediate benefits to our customers while preserving competition.”
The paper further criticized how UP’s past mergers, especially with Southern Pacific in 1996, disrupted the national rail network for months afterward. It pointed out that concessions to other railroads don’t always work. For example, BNSF has had to take UP to court multiple times over the years to force it to honor its commitments regarding trackage rights granted in the late 1990s
BNSF reiterated it isn’t interested in merging with CSX, something its owner, Warren Buffett, has stated multiple times since UP and NS announced their plans in July
“BNSF doesn’t believe the appropriate competitive response is for BNSF to acquire CSX at this time,” the railroad wrote. “We should not be viewed as the fix to correct the competitive imbalance that UP-NS are trying to create. Wall Street and UP would like to force BNSF into a competing merger that creates a coast-to-coast duopoly controlling over 90 percent of our nation’s rail traffic.”
—Justin Franz
