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What's the argument for the Union Pacific and Norfolk Southern merger [1]? Any rational admin would shoot down the merger immediately as this will create a mass

What's the argument for the Union Pacific and Norfolk Southern merger [1]? Any rational admin would shoot down the merger immediately as this will create a massive monopoly. [1] https://www.reuters.com/world/us/union-pacific-talks-advance-regulator-readies-historic-rail-merger-review-2025-07-24/ https://www.reuters.com/world/us/union-pacific-talks-advance...

bpodgursky 1y ago
They share essentially zero miles of track or routes. A move only creates a monopoly if it reduces consumer choice. No freight customer is deciding "Oh I can either ship from LA to Seattle, or Miami to DC." They are shipping from one fixed location to a different fixed location. These railroads merging does not reduce their choices or give the combined entity more leverage.
- liveoneggs 1y ago
  That is a big assumption on your part that east coast ports don't compete with west coast ports
- lokar 1y ago
  How about monopsony?
- throw0101c 1y ago
  > They are shipping from one fixed location to a different fixed location. These railroads merging does not reduce their choices or give the combined entity more leverage. If someone on the US west coast wants to ship to the US east (or vice versa) they can pit UP against BNSF, and then NS against CSX. There are a few pairs up because of the two negotiating points: * UP-NS * UP-CSX * BNSF-NS * BNSP-CSX If the merger goes through you're now at: * merged-UPNS * BNSF-CSX Do you think UPNS will give a cheaper price for a 'half-trip' and you go to their competitor the other half? You don't think BNSF/CN/CP aren't looking at CSX right now?
AnimalMuppet 1y ago
Monopoly? No. Union Pacific plus Norfolk Southern would have a monopoly on single-line end-to-end rail service in the US, true, but that's the kind of thing that you can get a "monopoly" in. BNSF and CSX interchange with each other, after all. And BNSF and CSX could (and almost certainly would) merge in response. So there's no monopoly argument. Which doesn't mean that a rational regulator would not turn it down anyway. But rational regulators may not be running the show at the moment. UP sees that there may be an opportunity during the Trump administration. (Note "may" - nobody knows whether there is an opportunity, but there is more of a chance than there was under Biden.)
- throw0101c 1y ago
  > Monopoly? No. How about oligopoly then. If UP/NS happens, we're down from six to five Class Is (ignoring Amtrak): * https://en.wikipedia.org/wiki/List_of_U.S._Class_I_railroads https://en.wikipedia.org/wiki/List_of_U.S._Class_I_railroads Then BNSF/CSX? Or CN or CP go after CSX? That's four. Do we start seeing the acquiring of Class IIs?
  - AnimalMuppet 1y ago
    It's already an oligopoly. Most cities only have one or two. Of the few cities that have three or four (Chicago, say), the merger would reduce that by one. Let's say you want to ship from Denver to Atlanta. In Denver, you hand your stuff over to either Union Pacific or BNSF. In Atlanta, you receive it from either NS or CSX. You only have two options in Denver, and only two in Atlanta. The merger doesn't change that at all.
    - throw0101c 1y ago
      > It's already an oligopoly. So reducing competition to move further over on the oligopoly spectrum is good how?
      - keeganpoppen 1y ago
        why bother going through the performative charade of quoting four words of their post just to respond with something that so flagrantly betrays, charitably, your not having read what they said at all or, less charitably, willfully misconstruing it because you happen to disagree. maybe i'm just the simpleton you are pretending to be with the snarky faux folksy affect, but... "moving further over on the intellectually honest to arrogantly disingenuous spectrum is good how?" what's worse is that the "more of a bad thing is prima facie worse" argument is so facile that it strains credulity to believe that even you think that it's actually true. i think we would all agree that, ceteris paribus, higher food prices are bad, for example, but i doubt anyone would mistake that for a reason to never do anything that might raise the price of food. the irony of it all is that you managed to turn siding with conventional wisdom-- usually a good bet, by definition-- into a no-upside proposition: either you are right but for the wrong reason-- a pyrrhic victory-- or not just wrong, but arrogantly so. can we just leave the grandstanding and begging the question to our elected representatives during congressional hearings on C-SPAN where it belongs?
throw0101c 1y ago
> What's the argument for the Union Pacific and Norfolk Southern merger [1]? 'Cost savings through synergies which will be passed down to customers.' (And certainly not shareholders and suits making more money.)
Spooky23 1y ago
Consolidation reduces competition and increases margins. The rest of the market and the people are sacrificed at the altar of shareholder value.
- Aloha 1y ago
  NS and UP do not meaningfully compete today, their networks have very little overlap.
  - woodruffw 1y ago
    The two compete reciprocally: business can either enter their system or a competitor's for the parts of the rail network that they control, which means bartering power. A single nationwide system would have fewer incentives to compete on pricing.
    - Aloha 1y ago
      The rail industry has been trying to complete and end to end lashup merger since the 50's - had that been allowed in the 50's we might not have needed to spend billions on Conrail in the 70's and 80's. A different regulatory attitude in the 50's, not just towards M&A but rates and routes, and mandatory services, would have prevented the bailouts we had to do in the aftermath of the Penn Central. Nearly every Class I carrier was in poor financial shape by the time the industry was deregulated in the late 70's, much of the 'capacity crunch' we have today in the rail industry is related to the contraction the industry went thru in that period, where they shed assets and lines in an attempt to resize their cost structure to the amount of revenue they were allowed to realize from their route networks.
      - woodruffw 1y ago
        Okay. That’s a very different argument than the original one: we’ve gone from “it wouldn’t be a competitive risk” to “the reduction in competition would have made midcentury rail profitable such that Conrail wouldn’t have been necessary.” But that presumes a change in bartering power and operating efficiency that can only come in a less competitive rail market.
alexey-salmin 1y ago
Perhaps a monopoly is the way for the rail, preferably state-owned. Generally I'm heavily against both monopolies and state-controlled companies, but railways seem to be a corner-case where all the downsides and inefficiencies are outweighted by a nation-wide system that actually works.
- em-bee 1y ago
  the tracks should be state-owned, just like public roads, and then train operators should pay for use. (or you could let them use it for free like roads) that way the state can give priority to passenger rail, and prioritize maintenance and building of rails according to the needs of the people. it also makes much smaller train operators possible and compete on the same routes.

bpodgursky 1y ago

They share essentially zero miles of track or routes. A move only creates a monopoly if it reduces consumer choice. No freight customer is deciding "Oh I can either ship from LA to Seattle, or Miami to DC." They are shipping from one fixed location to a different fixed location. These railroads merging does not reduce their choices or give the combined entity more leverage.

liveoneggs 1y ago
That is a big assumption on your part that east coast ports don't compete with west coast ports
lokar 1y ago
How about monopsony?
throw0101c 1y ago
> They are shipping from one fixed location to a different fixed location. These railroads merging does not reduce their choices or give the combined entity more leverage. If someone on the US west coast wants to ship to the US east (or vice versa) they can pit UP against BNSF, and then NS against CSX. There are a few pairs up because of the two negotiating points: * UP-NS * UP-CSX * BNSF-NS * BNSP-CSX If the merger goes through you're now at: * merged-UPNS * BNSF-CSX Do you think UPNS will give a cheaper price for a 'half-trip' and you go to their competitor the other half? You don't think BNSF/CN/CP aren't looking at CSX right now?

AnimalMuppet 1y ago

Monopoly? No. Union Pacific plus Norfolk Southern would have a monopoly on single-line end-to-end rail service in the US, true, but that's the kind of thing that you can get a "monopoly" in. BNSF and CSX interchange with each other, after all. And BNSF and CSX could (and almost certainly would) merge in response. So there's no monopoly argument. Which doesn't mean that a rational regulator would not turn it down anyway. But rational regulators may not be running the show at the moment. UP sees that there may be an opportunity during the Trump administration. (Note "may" - nobody knows whether there is an opportunity, but there is more of a chance than there was under Biden.)

throw0101c 1y ago
> Monopoly? No. How about oligopoly then. If UP/NS happens, we're down from six to five Class Is (ignoring Amtrak): * https://en.wikipedia.org/wiki/List_of_U.S._Class_I_railroads https://en.wikipedia.org/wiki/List_of_U.S._Class_I_railroads Then BNSF/CSX? Or CN or CP go after CSX? That's four. Do we start seeing the acquiring of Class IIs?
- AnimalMuppet 1y ago
  It's already an oligopoly. Most cities only have one or two. Of the few cities that have three or four (Chicago, say), the merger would reduce that by one. Let's say you want to ship from Denver to Atlanta. In Denver, you hand your stuff over to either Union Pacific or BNSF. In Atlanta, you receive it from either NS or CSX. You only have two options in Denver, and only two in Atlanta. The merger doesn't change that at all.
  - throw0101c 1y ago
    > It's already an oligopoly. So reducing competition to move further over on the oligopoly spectrum is good how?
    - keeganpoppen 1y ago
      why bother going through the performative charade of quoting four words of their post just to respond with something that so flagrantly betrays, charitably, your not having read what they said at all or, less charitably, willfully misconstruing it because you happen to disagree. maybe i'm just the simpleton you are pretending to be with the snarky faux folksy affect, but... "moving further over on the intellectually honest to arrogantly disingenuous spectrum is good how?" what's worse is that the "more of a bad thing is prima facie worse" argument is so facile that it strains credulity to believe that even you think that it's actually true. i think we would all agree that, ceteris paribus, higher food prices are bad, for example, but i doubt anyone would mistake that for a reason to never do anything that might raise the price of food. the irony of it all is that you managed to turn siding with conventional wisdom-- usually a good bet, by definition-- into a no-upside proposition: either you are right but for the wrong reason-- a pyrrhic victory-- or not just wrong, but arrogantly so. can we just leave the grandstanding and begging the question to our elected representatives during congressional hearings on C-SPAN where it belongs?

throw0101c 1y ago

> What's the argument for the Union Pacific and Norfolk Southern merger [1]? 'Cost savings through synergies which will be passed down to customers.' (And certainly not shareholders and suits making more money.)

Spooky23 1y ago

Consolidation reduces competition and increases margins. The rest of the market and the people are sacrificed at the altar of shareholder value.

Aloha 1y ago
NS and UP do not meaningfully compete today, their networks have very little overlap.
- woodruffw 1y ago
  The two compete reciprocally: business can either enter their system or a competitor's for the parts of the rail network that they control, which means bartering power. A single nationwide system would have fewer incentives to compete on pricing.
  - Aloha 1y ago
    The rail industry has been trying to complete and end to end lashup merger since the 50's - had that been allowed in the 50's we might not have needed to spend billions on Conrail in the 70's and 80's. A different regulatory attitude in the 50's, not just towards M&A but rates and routes, and mandatory services, would have prevented the bailouts we had to do in the aftermath of the Penn Central. Nearly every Class I carrier was in poor financial shape by the time the industry was deregulated in the late 70's, much of the 'capacity crunch' we have today in the rail industry is related to the contraction the industry went thru in that period, where they shed assets and lines in an attempt to resize their cost structure to the amount of revenue they were allowed to realize from their route networks.
    - woodruffw 1y ago
      Okay. That’s a very different argument than the original one: we’ve gone from “it wouldn’t be a competitive risk” to “the reduction in competition would have made midcentury rail profitable such that Conrail wouldn’t have been necessary.” But that presumes a change in bartering power and operating efficiency that can only come in a less competitive rail market.

alexey-salmin 1y ago

Perhaps a monopoly is the way for the rail, preferably state-owned. Generally I'm heavily against both monopolies and state-controlled companies, but railways seem to be a corner-case where all the downsides and inefficiencies are outweighted by a nation-wide system that actually works.

em-bee 1y ago
the tracks should be state-owned, just like public roads, and then train operators should pay for use. (or you could let them use it for free like roads) that way the state can give priority to passenger rail, and prioritize maintenance and building of rails according to the needs of the people. it also makes much smaller train operators possible and compete on the same routes.