A proposed merger could mean a big change for the U.S. railroad industry. Union Pacific is working to acquire Norfolk Southern, which would create the nation’s first transcontinental railroad.
Mike Steenhoek, executive director of the Soy Transportation Coalition, said there’s been positive and negative reactions from agricultural shippers.
According to Steenhoek, those in support “point to the fact that you’re going to likely have more steam or service from one area of the country to the next. So, you’ll have an agricultural shipper that has a collection of facilities that are west of the Mississippi River, and they would like to have greater access to maybe some of the livestock markets in the southeast part of the United States, or to the east coast for the ports over there, say, if there are problems at West Coast ports or markets in the west, so you have this prospect for more seamless service.”
The merger will mean fewer “handoffs” between railroad companies.
“One of the realities within supply chains is that handoffs are expensive, but because we have a couple of Western railroads, a couple of Eastern railroads, you have a collection of these handoff locations, like Chicago, like Memphis, Kansas City, etc., and freight does not like to be treated like a baton in a track and field relay race. The more you can eliminate handoffs, the better.”
Those against the merger say this isn’t their first rodeo. Acquisitions like this over the years have often led to higher rates and a decline in service.
“…and for agriculture and other industries, what you want is as many transportation providers competing for your business. That’s good for us, and when, all of a sudden, you start eliminating or reducing those transportation providers, you start changing that competitive balance away from the customer, agricultural shippers in our case. So, rightfully, there are a number of shippers who are very concerned about this.”
The purchase agreement is awaiting approval from the Surface Transportation Board.
Source: NAFB News Service