Industry Merger Talks: UP Will Continue to Act in Customers' and Shareholders' Best Interests
OMAHA, NEB., DECEMBER 17, 2015
As media reports continue on the proposed Canadian Pacific and Norfolk Southern merger, Union Pacific maintains its opposition to rail industry mergers in the current environment. That said, UP is monitoring the situation very closely, and, as conditions evolve, will continue to do what the company believes to be in the best interests of UP, its customers and shareholders.
The railroad believes the regulatory hurdles for future consolidation would be significant. The Surface Transportation Board (STB) has made it clear that future combinations would need to enhance competition – not just maintain it – and improve operations for customers. The STB also must analyze the broader effects of a merger, including whether it would trigger additional consolidation in the industry.
Many complicated implications could result from industry consolidation. An example of one potential implication is so-called open access, which would require railroads to let competitors use their tracks or switch cars for them. This would restrict capital investment, affect railroad jobs and allow government regulators to set rail rates and service conditions, all of which could have negative consequences on the U.S. economy and UP's customers.
Another aspect gaining attention in the CP-NS media coverage is Chicago rail congestion. A single merger could actually increase congestion in Chicago if the merging parties used shared assets to preference their own traffic. The railroads have made great strides to increase network fluidity in Chicago without a merger by revising the Chicago Planning Group congestion alert plan from being consensus-based to metrics-based. The railroads also established a joint operations center in Chicago in which CP elected not to participate.
Union Pacific provides customers with the industry's best freight transportation value and continues to believe the company has tremendous opportunity to generate strong returns by leveraging the strengths of UP's own diverse franchise.
ABOUT UNION PACIFIC
Union Pacific Railroad is the principal operating company of Union Pacific Corporation (NYSE: UNP). One of America's most recognized companies, Union Pacific Railroad connects 23 states in the western two-thirds of the country by rail, providing a critical link in the global supply chain. From 2005-2014, Union Pacific invested more than $31 billion in its network and operations to support America's transportation infrastructure. The railroad's diversified business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. Union Pacific serves many of the fastest-growing U.S. population centers, operates from all major West Coast and Gulf Coast ports to eastern gateways, connects with Canada's rail systems and is the only railroad serving all six major Mexico gateways. Union Pacific provides value to its roughly 10,000 customers by delivering products in a safe, reliable, fuel-efficient and environmentally responsible manner.
Union Pacific Investor contact: Mike Staffenbeal at 402-544-4227.
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