That's another consolidation in North American railroading. https://www.nbcnews.com/business/bu...k-85-billion-mega-us-railroad-deal-rcna221701
Already crazy enough with CPKC going from Canada down to Mexico, and now an actual transcontinental railroad going east to west is already insane enough as is. But of course, we'll see what STB's verdict is gonna be if it succeeds or not, and that's gonna be a while untill then.
I'm not expecting many regulatory challenges under the current administration. The article mentions a BNSF-CSX merger might follow quickly after.
There have been speculations on that merger, doubt it's gonna happen, but doesn't mean merger talks is off the table from CSX (just no comments yet as usual). But best to get through one merger plan before thinking of another one that's gonna happen.
Mergers in the US railroad industry are not like those in markets with healthy competition, like automobiles, media or pharmaceuticals. About 80% of the railroad market is operated by monopolies, because the Class 1's each control large areas in which they are effectively the only supplier. Fifty years ago, there were 20 plus major railroads fighting for market share. Today there are just 5. So, if the number of Class 1 freight operators is reduced to 3, it wouldn't materially affect the amount of competition.
My mother actually mentioned a article to me which I unfortunately can't remember, but it was a former NS guy's thoughts on it I believe, and they echoed what was said above. Realistically UP & NS really don't compete much with each other, same could be said of BNSF & CSX for that matter. Simple fact is most of the US railroad scene doesn't have competition, and more often than not when there is choice it's a west/east duopoly. You get some competition between UP & BNSF, some between CSX & NS, and in a few places some smaller railroads may compete with the Class 1's. But the west roads stay on their side of the Mississippi, as do the eastern ones. Trying to argue monopoly status here would be like trying to stop a airline merger because they have a few tiny regional flights on the edges of their network where they compete with each other. From what I've gathered a bigger concern would be just merging the systems together more than anything.
It's hard to imagine that BNSF and CSX would acquiesce if a UP/NS merger became a reality. Plus you can expect a strong objection from the railroad unions to any further mergers in the industry.
I mean, in the 90's the BN and ATSF merger eventually led to the UP an SP merger, so it wouldnt be surprising if the UP and NS merger lead to a BNSF and CSX merger. The real loser in all of this is CN, who seems to be the odd one out in the recent mergers.
They kind of have to in that situation, you allow UP/NS suddenly they have a massive advantage on cross country transport. At that point either BNSF/CSX have to merger to put themselves at equal footing, or put themselves forever at a massive disadvantage. I also have a hard time believing there's compelling case for CSX/BNSF being a step too far, but UP/NS being fine, effectively both are kind of in the same positions. Either UP/NS gets denied and things remain as is, or we see a final consolidation down to the "Big 2". The only way I see a situation where I see a UP/NS merger happening and CSX/BNSF not is if the former goes badly and requires government take over of UP like they had to with Penn Central. At that point maybe you see both keep doing their thing while the government pulls off Conrail 2: Bigger, Longer & Uncut.
That's basically how i see it as well- BNSF/CSX really have to choice but to merge or just get totally crushed individually. No chance a PC/Conrail 2 happens- that was all about losing passenger customers to air travel and freight customers to trucks as technology evolved. I don't see any analog to that today- all the Class 1's are making tons of $, it's just about how it's all divided up. Less competition means we'll all pay a little more for everything, though.
