Merged UP-NS would control half of all rail freight: BNSF CEO

MINNEAPOLIS — The projected coast-to-coast merger of Union Pacific and Norfolk Southern is atrocious for the industry, a rival CEO warned, and would springiness the transcontinental behemoth a ascendant 50% stock of each U.S. obstruction freight.

“We’ve had tons of opportunities to beryllium precise wide that we’re opposed to this merger, and we don’t deliberation it’s bully for the industry,” said Katie Farmer, main enforcement of BNSF Railway. “Make nary mistake, this is simply a consolidation of astir 50% of each the obstruction volume…to 1 road. When you consolidate 50% of each obstruction measurement that moves nether 1 carrier, you eliminate, oregon importantly reduce, flexibility for customers, optionality, and yet there’s going to beryllium less interchange points. You person 1 railroad that is looking to optimize their network, and based connected what’s happened successful the past, that is not ever bully for customers.”

Farmer was the keynote interrogation Monday astatine the Association of American Short Line & Regional Railroad Association’s yearly conference.

Warren Buffett, erstwhile president and CEO of BNSF genitor Berkshire Hathaway (NYSE: BERK-B), and successor Greg Abel publically dismissed speculation they would prosecute their ain merger with CSX (NASDAQ: CSX) oregon 1 of the Canadian carriers. BNSF’s immense web is simply a near-transcon itself, stretching from the West Coast to Alabama.

Farmer was besides skeptical of the maturation projections UP (NYSE: UNP) and NS (NYSE: NSC) included successful their merger application, which it plans to resubmit by April 30 aft the archetypal filing was rejected arsenic incomplete by the Surface Transportation Board.

“They’re claiming that they’re going to turn measurement with this caller combined railroad by 12% successful 3 years,” said Farmer, who has worked much than 3 decades successful the business. “If you spell backmost and look astatine the past ample merger, the Union Pacific and Southern Pacific, UP’s volumes person really declined by 13% successful the past 10 years. At the aforesaid time, their mean gross per portion has accrued 37% supra each the different Class I networks. I’d beryllium acrophobic astir simplification of interchange options, simplification of flexibility, and optimization by that precise ample railroad of their ain web And past deliberation astir the customers, which is wherever we each person to start, who person less options and higher rates.

“That’s what’s happened implicit time. For each merger that’s happened, it plays retired the aforesaid way.”

When that maturation fails to materialize, Farmer warned, UP would apt merchantability disconnected underperforming portions of the network. She called for regulatory oversight to safeguard section work and the lawsuit experience, and different factors that are important for growth.