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Trump: Merger of Union Pacific and Norfolk Southern sounds good

Donald Trump, the president of the United States, said that he thought it was a good idea to merge Union Pacific and Norfolk Southern for $85 billion. The Union Pacific CEO Jim Vena and President Trump met in the Oval Office last week to discuss the railroad’s plan to buy out Norfolk Southern.

Trump told reporters Friday in the Oval Office that "Union Pacific is an excellent railroad." The announcement in July of the merger of two of the major U.S. railroad operators shocked the market, which was already highly concentrated. Under the Biden administration's aggressive antitrust policies, such a proposal was unthinkable.

Trump's backing could speed up the review process in an agreement that is facing opposition from rivals, and pushback by shippers worried about reduced competition.

If approved, the tie-up could transform the U.S. rail freight industry, creating the first coast to coast single-line network. It would streamline operations and eliminate interchange delays at key hubs such as Chicago.

Union Pacific is the dominant freight rail carrier in Western United States. Norfolk Southern, on the other hand, is the leading carrier in Eastern United States. Together they make up two of the major U.S. class I railroads along with BNSF Railway, CSX Corp, and BNSF. Warren Buffett's Berkshire Hathaway, which owns BNSF Railway sent a strong message last month against more consolidation, and said he wasn't interested in buying another railway.

BNSF and CSX are the two major U.S. railroads that do not operate a transcontinental network.

Last week, the White House announced that it would nominate Surface Transportation Board member Michelle Schultz to a second term, and Richard Kloster, a transportation consultant who runs a private company, for an open seat in the agency. Last month, the White House fired Surface Transportation Board Member Robert Primus. Primus was appointed by former President Joe Biden.

(source: Reuters)