NASHVILLE, TENN. (RFD NEWS) — Ag shippers are still watching the proposed merger between Norfolk Southern and Union Pacific.
Mike Steenhoek of the Soy Transportation Coalition says emotions run high on both sides of the deal, with supporters saying a combined railroad could create better opportunities for shippers.
“One of the fundamental realities that is widely acknowledged within supply chains is that whenever you have a handoff going from one railroad to the next or going from trucking to rail or going from trucking to barge, whatever the handoff is, there’s a cost associated with that.
He says limiting handoffs between transportation providers could improve efficiency and reduce costs.
“Freight doesn’t like to be treated like a baton in a track and field relay race. The more you can limit handoffs, the more efficient that service is and usually the more economical that service is. So, there are a lot of agricultural shippers who do subscribe to that.”
But on the other side, some worry the merger could leave customers with fewer choices and less leverage in the marketplace.
“For a railroad customer, it’s in our best interest to have as many transportation providers and railroad companies competing for our business. That’s good for us,” Steenhoek says, noting that having multiple transportation providers competing for business benefits railroad customers.
“When all of a sudden you have the prospect of reducing the number of transportation providers competing for your business, what that usually results in is an increase in rates, a decline in service. And so, hence there’s a lot of growing concern being expressed by railroad customers within agriculture and elsewhere.”
The merger now sits before the U.S. Surface Transportation Board for review, but a decision is not expected until next summer.
