The merger of Union Pacific (UP) and Norfolk Southern (NS), two of the largest rail freight companies in the US, continues to stir controversy. Shippers worrying they will be held captive and workers fearing for massive personnel cuts and worsening safety conditions are urging authorities not to approve the deal.
UP struck a deal to buy NS a little over a month ago, in a move that would create a behemothic company with the first trans-continental network. The agreement, north of 70 billion euros (85 billion USD), still needs to be approved by the Surface Transportation Board, but it is already causing adverse reactions.
The workers’ concerns
In the case of workers, various trade unions voiced their disapproval of the UP-NS merger. For example, the Transport Workers Union (TWU) and the Railroad Workers United (RWU) highlighted the possible risks behind a merger this size. Earlier, trade union SMART-TD also said it would oppose the initiative. The two main concerns from the workers side are reduction of the workforce and higher risks of toxic derailments.
Over the past 45 years, the number of Class I railroads (the largest railway operators in the US, including UP and NS), has drastically decreased. This led to the employment of significantly fewer people, from almost half a million in 1980 to a little over 120,000 last year, according to The Guardian. Representatives from both TWU and RWU agree that, if approved, the merger would lead to even more job cuts.
Moreover, the trade unions underlined their concern regarding safety. TWU, which represents NS workers, called UP’s safety record “shameful”, claiming that such a company should not be in charge of a coast-to-coast network. On the other hand, NS does not have a great record either, at least in recent history, as the derailment in East Palestine, Ohio, in February 2023 showed. What many agree on, though, is that a UP-NS merger would increase the risk of such events occurring again.
‘Shippers are captive’
Railway workers are not the only group of people rooting against the merger. Many shippers have also manifested their worries, especially when it comes to fair competition. Market consolidation through mergers can lead to quasi-monopolies where the biggest companies have the power to set their own rules undisturbed. Seven shipper associations, including the American Fuel and Petrochemical Manufacturers, have publicly shared their disapproval, highlighting how 90% of the US market is controlled by four companies.
No more mergers for now
The news of UP’s intention to buy NS sparked rumours about more Class I Railroads joining forces to remain competitive against such a beast. For example, CSX said it was open to possible mergers, with experts speculating it could join forces with BNSF. However, the two companies are denying the allegations, at least for now. Nevertheless, the two companies just announced the launch of new, coast-to-coast intermodal services across their networks.