Maybe i am missing something but what gain is left to shippers with a final round of mergers? Simplified billing i guess and single rates not much in the way of crew savings. Please enlighten me.
It will probably be several years before any more mega-mergers develop beyond the rumor stage. Legal, political and economic issues all need to be addressed before serious talks even begin.
What’s that old saying? You have to break up before you can make up.
It’s my view that, yes, there may indeed be more mergers coming, but all will be contingent on forcing the mergees to allow competitive access over some of their lines in which rail captivity is most pronouned. If UP wants to merge with CSX or CP, then they’ll have to allow a BNSF or KCS access into Southern Idaho and/or the I-15 corridor. If BNSF wants to merge with NS or CN, they’ll have to allow UP or a DM&E/MRL access to the Northern Tier lines, etc.
There is no way the STB will allow any more mergers without the competitive caveats. They are already under tremendous pressure to explain why they ignored the competitive caveats when okaying the BN+SF merger, and they will not make that mistake again.
Shippers have not pushed for mergers although they have supported mergers proposed by rail managements. The current group of Class I CEO are not interested in another last round of mergers. The risks are very high with a new untested regulatory landscape and owners being frightend by mergers. Investors remember the hit they took on CSXT, NS and UP stock with their last roudn of mergers.
Of course the world changes. If there are another round of major mergers customers served by only one railroad by get some kind of goverment mandated access to a second railroad. The CN and BNSF were willing to throw this chip on the table when the attempted to merge ten years ago. If this is done it could follow the model used in Canada for several years. The CN, CP and their customers seem to be comfortable with the way this system has worked out.
if anything there is alot to gain.
A Canada to Mexico line via the US and West coast to East coast line plus better acsess from city to city
I think there is more to loose than to gain. Both Eastern and both Western carriers have close to complete geographic coverage. They interchange with each other mostly at Chicago and the Mississippi River gateways. There is no reason for preference as to connection across the river on traffic to competitive points.
If one West merges with one East they will do all possible to hold the traffic in their system at those interchanges. That will force the other pair, merged or not to do the same. The question is what is the net difference. Without detailed waybill data it is difficult to tell but I doubt there is much.
In addition there are the shippers to be considered. If they see a loss of competitive routes, which they will, they will tend to opposition. That could take the form of NO NO NO, or of demands for trackage rights by competitors, or in the extreeme open access. The issie is not reduction in competition at a location, the so called 2 to 1 issue becuase there will be none if it is a transcontinental merger, but is the ability of the merged system to hold traffic on the system at the previous interchange points.
Mac
I have seen the data for five years ago and their was no net advantage for us. Since we were a major player I would expect the same to hold true for our rivals and connections. Also you are correct about the hassels with interchange points. After a merger the origin and destination carrier would be fighting about who gets the long haul. These kind of intra-railroad fights do not add any value to the customer but gets him to thinking of ways to dump the railroad with trucks, barges, swap outs, decentialization, etc.
Bob:
Do you know if most rates today are joint rates (revenue split between the carriers) or combination of rates (individual rates for each carrier)?
ed
In my experience with petrochemicals and petroleum the rates were made as combinations but published as through contract rates. I would very careful with extrapolating the process used in these comodities to intermodal, autos, coal, consumer products, ag. products, etc. Each business has their own set of issues with different capital requirments for cars and facilities and different types of rail, intermodal, market and product competition.