Union Pacific Corporation and Norfolk Southern Corporation today submitted an amended merger application to the Surface Transportation Board (STB) seeking approval to create America’s first transcontinental railroad. Additional analysis reinforces that the combination will drive growth, enable substantial cost savings for shippers and strengthen the U.S. supply chain.
The analysis in the updated application is the first in rail merger history to use 100% actual traffic data provided by all six North American Class I railroads, rather than the sample data available from the STB – making it the most thorough assessment of market and operational impacts ever.
Cost Savings for Shippers and Consumers
The deeper analysis confirms the merger will make rail significantly more competitive with long-haul trucking, taking approximately 2.1 million trucks off the road. Shifting freight from higher-cost trucks to low-cost rail will save shippers an estimated $3.5 billion annually – savings expected to flow through to consumer prices, making American goods more affordable. Shippers also will save on inventory and equipment costs with the combined railroad’s faster, more reliable service.
Positive Impact on Competition
The Union Pacific-Norfolk Southern combination is an end-to-end merger connecting the eastern and western United States with virtually no overlap. The goal: Growth through new routes and improved service that removes interchange handoffs that can add 24-48 hours and cost to the supply chain.
To meet the additional growth opportunities identified using the more robust Class I traffic data, the amended application increases the anticipated number of new premium intermodal lanes operating seven days a week from six to seven, with a new lane connecting Northern California and the Southeast. The analysis also confirms the combined company will have sufficient equipment and infrastructure capacity available to support the projected growth.
Additionally, the amended application confirms the merger will preserve customer access to competitive railroad alternatives and will have no meaningful impact on geographic competition or on the availability of independent routes.
More High-Paying Union Jobs
Additional growth also will create more high-paying union jobs. The amended application estimates the combined company will need 1,200 net new union jobs by the third year of the merger to handle new business, up from 900 in the original application. This growth is in addition to the unprecedented jobs-for-life guarantee – every union employee with a job at the time of the merger will continue to have one.
Projected Market Shares
As requested by the STB, the amended application includes more detailed market share projections that account for the growth the combined railroad expects to achieve as shippers shift traffic from trucks and other railroads to its faster, more reliable coast-to-coast service.
Additional Transparency of Merger Agreement
In response to the STB’s request for additional documents related to Union Pacific and Norfolk Southern’s merger agreement, the amended application goes further than required by entering these documents into the public record.
The Terminal Railroad Association of St. Louis
The Terminal Railroad Association of St. Louis (TRRA) is a Class III railroad that operates 170 miles of track, including two bridges over the Mississippi River. Union Pacific owns 42.84% of TRRA and Norfolk Southern owns 14.29%. The railroads initially requested authority to take a temporary controlling interest in TRRA to allow them time, if needed, to sell enough shares to prevent Union Pacific from retaining a controlling interest post-merger. In the amended application, the railroads commit to divest or otherwise relinquish control of TRRA as a condition to the merger’s close, so there will be no control of TRRA.
-via Press Release
