U.S. Senator Roger Marshall (R-Kansas) has joined a bipartisan group of senators in expressing concerns about the proposed merger between Union Pacific and Norfolk Southern railroads. The letter, led by Senator Tammy Baldwin (D-Wisconsin), was sent to the Surface Transportation Board (STB) on Tuesday, urging a thorough review of the deal.
The senators argue that this merger could significantly impact the U.S. freight rail industry and supply chain. They warn it may lead to higher costs for consumers, reduced service quality for producers, and further reduce competition in a market already dominated by a small number of companies.
In their letter to the STB, the senators stated:
“Since the 1950s, the rail industry has consolidated from over 100 Class I freight railroads to only six today. A long trend of industry consolidation has dramatically increased the power of railroads over shippers in the last few decades — leaving four carriers to provide nearly 90 percent of the nation’s freight rail transportation. In recent years, we have heard from too many U.S. manufacturers, utility companies, agricultural producers, and small businesses experiencing service and reliability problems while paying excessive rates. The railroad industry has proven to be more concerned with increasing their rates and profits rather than improving their service.”
“A major rail merger has the potential to trigger additional industry consolidation. We are encouraged that the STB shared this concern in the context of the 2001 rulemaking process, in which the STB set new rules governing major railroad mergers and started requiring Class I railroads to prove that mergers would both enhance competition and are in the public interest. We strongly encourage the STB to keep this at the forefront of considerations.”
The full text of their letter is available online.
The proposed merger comes at a time when only six Class I freight railroads remain from more than 100 in operation during the 1950s. These remaining carriers now handle almost 90 percent of all U.S. freight rail transportation.
