Union Pacific by Jim Bauer is licensed under CC BY-ND 2.0.
The proposed merger between the Union Pacific and Norfolk Southern railroads would create new efficiencies that benefit American consumers and small businesses. The Surface Transportation Board (STB) should uphold free-market principles and consumer welfare in their consideration of the merger.
Earlier this year, Union Pacific and Norfolk Southern announced plans to combine their networks to form “America’s first transcontinental railroad,” linking 43 states and 100 ports from coast to coast. The proposal has since gained a wide range of support from businesses, lawmakers, labor unions, and free-market advocates alike.
In September, President Trump also told reporters that the deal “sounds good to me.”
By creating a coast-to-coast rail network, shippers can avoid costly and time-consuming interchanges, where rail cars must be transferred from one railroad to another instead of being transported seamlessly across the country. With a newly formed transcontinental railroad, shipping times and operating costs can be greatly reduced.
These lower operating costs could ultimately benefit nearly every American: Since excess costs are no longer passed onto consumers, the affordability of products purchased by American families can be improved. Small businesses which rely on inputs that are shipped by rail can deliver their products more quickly and at a lower cost. National security is also improved by strengthening the reliability of critical supply chains like energy and agricultural products.
Railroads in the United States face significant competition not only from other railroads, but also from alternative modes of transportation such as freight trucking, maritime shipping, and pipelines. For example, trucking moved 72.7 percent of the nation’s freight by weight last year. The efficiency gains and expanded network created by the proposed merger can improve the competitiveness of freight rail and improve consumer welfare in the broader freight transportation market.
In October, Americans for Tax Reform and the Center for Worker Freedom joined 24 other advocacy organizations in a coalition letter to the STB in favor of approving the merger:
“The UP–NS merger is more than a business deal; it is an investment in America’s future. It will create high-quality jobs, revive domestic manufacturing, and position our nation to lead in a fiercely competitive global economy. We urge the Surface Transportation Board to approve this merger without delay,” the groups wrote.
As Union Pacific and Norfolk Southern submit their merger application on Friday, the Surface Transportation Board should consider the significant benefits that this merger would have for all Americans.
