Lutnick Says Rail Mergers Could Improve Freight Flow

Commerce Secretary Howard Lutnick expressed his support for consolidation in the U.S. freight rail industry to improve efficiency, particularly in light of Union Pacific Corp.'s proposed $72 billion acquisition of Norfolk Southern Corp. He highlighted the current bottlenecks created by the rail industry's interchange system and advocated for making cross-country transport more streamlined. The merger would connect Union Pacific's western network with Norfolk Southern's eastern routes, potentially creating a continuous transcontinental railroad, which both companies argue could boost competition against trucking and Canadian rail services.

The deal is currently under review by the Surface Transportation Board, which is tasked with ensuring that rail mergers align with public interests and enhance competition — a more stringent standard than that for other sectors. While Lutnick refrained from commenting on the review process itself, he called the move toward efficiency commendable.

From a transportation perspective, the consolidation of railroads can indeed lead to significant operational improvements and cost reductions, as it may eliminate redundant routes and enhance service reliability. However, it is crucial to balance these benefits with the potential for reduced competition and increased pricing power among the remaining rail operators. Effective regulation and oversight will be essential to ensure that the merger serves the best interests of both consumers and the industry as a whole.