STB URGED TO DECLARE MORATORIUM ON RAIL MERGERS
The U.S. Surface Transportation Board’s opening day of hearings on future rail policy saw an outpouring of opposition to the proposed Canadian National-Burlington Northern Santa Fe merger.
Competing Class I rail carriers and two U.S. senators urged the STB to declare a moratorium on rail mergers in general to give the nation and the industry time to recover from previous rail mergers.
Executives from CSX Corp., Norfolk Southern and Union Pacific warned that shipper and financial community confidence in the rail industry is at an all-time low, and approving the CN-BNSF merger would heighten calls for re-regulation.
Sen. Jay Rockefeller, D-W.Va., sponsor of legislation calling for rail industry reforms, said he has lost confidence in the nation’s rail system, and that shippers and the investment community is not ready for yet another rail merger. He also supports the Justice Department, along with the STB, having a say in future mergers.
Sen. Byron Dorgan, D-N.D., also urged for merger moratorium.
The National Industrial Transportation League, while not officially opposing the CN-BNSF merger, said a survey of shippers found that 70 to 90 percent of shippers said rail service was the same or worse than it was before the recent spate of mergers. About half said rates increased, the NIT League said.
“Ultimate success of the railroads will not be the result of mergers,” said Ed Emmett, NIT League’s president. “To simply merge two large stagnant railroads merely produces one larger stagnant railroad.”
Robert D. Krebs, chairman of BNSF, said that service improved and rates fell by 20 percent, after the 1994 merger of BN and SF. Krebs urged the board to act quickly on the merger. “Both companies are ready,” he said.
Paul Tellier, chairman of CN, said market demands necessitate the merger, while moratorium on mergers would create “very serious uncertainty” in the financial community.