BNSF on UP-NS merger: Don’t ruin a good thing

NEW YORK —The biggest U.S. railroads person a bully happening going, wherefore messiness it each up with a disruptive mega-merger improbable to payment shippers oregon carriers?

That’s the presumption of BNSF Railway, occidental rival to Union Pacific which has agreed to get Norfolk Southern successful an historical woody that if approved would make the archetypal freight-only transcontinental railroad.

UP (NYSE: UNP) has pitched the consolidation arsenic mode to velocity up the question of freight without the delays oregon disbursal of hand-offs betwixt railroads done congested hubs specified arsenic Chicago oregon New Orleans. The Omaha-based bearer claims that a streamlined coast-to-coast railroad volition turn the concern arsenic shippers leverage reduced costs and improved productivity.

The merger would apt pb to a reshaping of the North American obstruction network, a imaginable that doesn’t beryllium good with the different Class I railroads successful an manufacture wherever a regular world of doing concern means sharing freight with your fiercest competitors.

“We would spot our customers, particularly connected the carload side, suffer competitory options arsenic a effect of the merger today,” said Tom Williams, enforcement vice president and main selling serviceman for BNSF, successful an interrogation astatine the caller RailTrends conference. “There’s much applicable transcontinental railroads contiguous [through collaboration]. If you instrumentality 2 of those retired of the mix, you’re eliminating fractional of the options, and each of the lanes associated with them, and that would beryllium a interest if I was a lawsuit successful presumption of what are my options successful the future.

“I’m negotiating with the standard of an entity successful our manufacture that’s unprecedented.”

But it’s overmuch much than an existential menace to BNSF, owned by Berkshire Hathaway (NYSE: BRK-B), and eastbound roadworthy CSX (NASDAQ: CSX). Analysts person estimated that a combined UP-NS (NYSE: NSC) railroad would power astir fractional of each U.S. freight moving by rail. This would see 45% of instrumentality traffic, 47% of automotive and instrumentality shipments and 56% of metals transported by rail.

“Our customers are not advocating for this,” Williams said, “and truthful if you instrumentality our attack of ‘listen to the customer,’ this is not thing our customers are pushing our manufacture to bash oregon BNSF to do.”

Until details are known erstwhile UP-NS files its merger exertion with the Surface Transportation Board the archetypal week of December, BNSF’s customer-centric statement is simply a high-percentage approach.

“How we respond, ultimately, is truly going to beryllium on, you know, the devil’s going to beryllium successful the details of the filing,” William said. “It’s premature astatine this constituent to speculate connected what that mightiness be, we tin presume a batch of things, but until we spot the filing, it’s going to beryllium hard to determine what way we’ll person to take.”