UP and NS CEOs say expanded gateway pricing and CN deal strengthen merger case

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Summary · why it matters

Union Pacific and Norfolk Southern CEOs say the latest additions to their merger application further enhance competition. In a supplemental filing, the railroads doubled the number of shippers eligible for Committed Gateway Pricing and added bulk unit train moves, a change CEO Jim Vena said came from customer feedback. CEO Mark George noted the move goes beyond what any Class I merger has offered, and together with a new agreement giving CN access to Kansas City and UP’s Mexico gateway, it changes the competitive landscape. The filing also includes a mechanism for customers to seek reciprocal switching from the Surface Transportation Board if service deteriorates during integration. The CEOs argued the merger would create 88,000 single-line lanes, which they said are 27% less costly than interline moves and more likely to shift freight from truck to rail.

Impact on assets 3

Industrials▲ · 3 stocks
Union Pacific Corporation
UNP
▲ PositiveDemandrelevance

Expanded gateway pricing and bulk unit train moves are expected to attract more shippers.

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