To express its concerns about the proposed Union Pacific-Norfolk Southern merger, Canadian Pacific Kansas City (CPKC) has established a page on its website stating its case against the possible combination and argues that the Canadian Pacific-Kansas City Southern transaction that created North American transnational CPKC was a “necessary merger.”
The CPKC web page expressing opposition to the merger states, in part:
“Union Pacific and Norfolk Southern propose to merge the largest Class I railroad in [the U.S.] with the fourth-largest. The two merging railroads already have extensive access to vast markets. The two railroads propose to combine to form the Union Pacific Transcontinental Railroad, or UP Transcon. The UP-NS mega-merger is unnecessary and will dominate rail transportation markets, reducing rail customer optionality in ways that cannot be undone. A UP Transcon will radically and permanently change the nation’s rail network.
“On its own, the combination of UP and NS at this time would pose unprecedented and far-reaching risks to customers, rail employees and the broader supply chain. A UP Transcon would control approximately 40% of the U.S. freight rail traffic and have unrivaled leverage that would reduce the bargaining power of rail customers. “These risks would be magnified by the inevitable follow-on rail industry consolidation.
“It doesn’t have to be this way. Collaboration among the railroads without mergers in high-density east-west transcontinental traffic lanes can achieve the kinds of benefits UP and NS say they are pursuing by merging.
“Today’s existing six Class I railroads provide the necessary capacity and operational fluidity to safely drive years of service improvement, volume growth, truck conversion and value creation for rail shippers supporting the national economy, and the capability to serve the economy’s transportation needs and the nation’s shippers well for years to come.
“The STB’s approval of the CPKC merger is not justification for the UP-NS proposal. The combination of CP and KCS was necessary to unlock investments, create new routes and offer new optionality to shippers. There, the two smallest Class 1 railroads combined to better compete with larger competitors that already had single-line routes. Even though CPKC remains the smallest Class I, it is investing heavily in its previously underutilized U.S. rail corridor to create more competition and capacity for the U.S. freight network.”
