Union Pacific's $85B Norfolk Southern merger gains backing from LA port and carriers, promising faster transit and lower costs.
Union Pacific Railroad has secured support from the Port of Los Angeles and ocean carriers Ocean Network Express (ONE) and SM Lines for its proposed $85 billion acquisition of Norfolk Southern Railway. The backing is based on anticipated faster transit times and reduced drayage costs, as reported by New York's Journal of Commerce.
The Port and the carriers submitted letters of support included in Union Pacific's extensive 7,000-page application to the US Surface Transportation Board. ONE highlighted that the merger could reduce transit schedules by several days, thereby enhancing reliability and service continuity for customers.
SM Lines emphasized that the deal would create intermodal options for shippers who are not currently utilizing rail services. Gene Seroka, executive director of the Port of Los Angeles, pointed out the advantages for US exporters, noting that a unified network would expand reach and improve speed-to-market.
Union Pacific estimates that the merger would eliminate approximately 67,000 long-haul drays annually, including routes from Chicago to Detroit and Toledo, as well as Memphis to Huntsville, resulting in annual savings of $112.8 million for shippers. Analysts suggest that single-line service could transfer all such traffic to extended rail hauls, thereby reducing door-to-door costs.
The application also anticipates significant reductions in cross-town drayage in Chicago, where over 500 daily truck interchanges could be removed, leading to the elimination of more than 100,000 hauls each year. Nationwide, 82 intermodal routes would keep containers on rail for the entire journey.
Union Pacific and Norfolk Southern estimate that 250,000 annual rail lifts currently dedicated to cross-town drayage in cities like Chicago, Kansas City, St. Louis, and Memphis would be eliminated, saving about $12 million and freeing up crane capacity. However, some drayage will still be necessary due to the presence of multiple Class I railroads in those cities.
