Lutnick Says Rail Mergers Could Improve Freight Flow
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Commerce Secretary Howard Lutnick said he’d support consolidation as a means to make the U.S. freight rail industry more efficient, a potential boost for Union Pacific Corp.’s takeover of Norfolk Southern Corp.
The rail industry’s current system of interchanges in the middle of the country creates bottlenecks that should be alleviated, Lutnick said in a CNBC interview on Aug. 19.
“Whether that should be through a merger or in any other way, I’ll leave that to the regulators and the overseers,” Lutnick said. “But the concept of making it more efficient to get across the country is obviously something that we applaud.”
Union Pacific last month announced an agreement to purchase Norfolk Southern for about $72 billion in cash and stock. Combining Union Pacific’s network in Western states with Norfolk Southern’s East Coast tracks would create the first continuous transcontinental U.S. railroad, a tie-up the companies have said will enhance competition with the trucking industry and Canadian railroads.
(CNBC Television via YouTube)
The agreement is now set to be reviewed by the Surface Transportation Board, the rail agency’s economic regulator. U.S. rules require rail mergers to show that a deal would serve the public interest and enhance competition, a step beyond merger requirements applied to other industries. The companies aim to complete the deal by early 2027.
RELATED:Union Pacific-Norfolk Southern Merger Could Start Rail Trend
Lutnick said the review process wasn’t “my place to weigh in” and would let the agency and other parties do so themselves.
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