U.S. Commerce Secretary Howard Lutnick said he supports improved rail freight transportation that will come with Union Pacific’s proposed acquisition of Norfolk Southern.
“Whether that should be through a merger or any other way, I’ll leave that to the regulators and overseers,” Lutnick said in an interview this week on CNBC. “But the concept of making it more efficient to get across the country is obviously something that we applaud.”
The merger, if approved, would create the first true transcontinental freight railroad, a $260 billion colossus with 50,000 route-miles in 43 states.
The railroads (NYSE: UNP, NSC) in promoting the consolidation have pointed out that a unified system would eliminate bottlenecks at some locations, such as Chicago and New Orleans, where trains change hands on their journeys across the country. They say single-line movement could shave one to two days’ transit time between endpoints, though some railroad insiders estimate that time savings could add up to as much as six days.
Thousands of shippers have lined up against the merger, which they say will further further reduce rail competition. Unions have also come out against the deal, fearing job losses in the consolidation process.
Union Pacific and Norfolk Southern expect to file the proposed details of the transaction by January.
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