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Marc Collazzo: Freight rail merger threatens Pennsylvania’s prosperity
Pennsylvania’s freight railway system contributes significantly to the state economy, transporting nearly 60 million tons in originated goods such as coal, petroleum and steel to outside buyers each year. With a strong supply chain system and extensive rail network, Pennsylvania boasts more railroads than any other state. Not only do these railways move critical goods for businesses across Pennsylvania, they extend our economic reach beyond state lines, keeping goods affordable for citizens across national markets.
But this system doesn’t stand alone. It relies on a tightly linked system of supply chains, manufacturers, and laborers, all of which would be at immediate risk under a major shift in operations.
Now, two of the nation’s largest freight railroads, Union Pacific and Norfolk Southern, announced their intent to merge. The deal would create a singular rail network that would control roughly 40 percent of all U.S. freight rail. This would be a merger of enormous scale – and it raises serious questions about how a near-monopoly could reshape Pennsylvania’s rail system and ultimately squeeze out the small players that keep our economy moving.
If not held to the highest standard, a merger of this size could cause ripple effects across local economies – a reality that inherently goes against the Administration’s commitment to maintaining affordability.
At a rally in Pennsylvania in December, President Donald Trump reiterated the importance of controlling costs and protecting wages for all Americans, stating that he has “no higher priority than making America affordable again.” But under this merger, one company could have outsized control over the entirety of the Pennsylvania rail system, giving them the power to single-handedly dictate shipping terms and increase costs, even at the expense of the manufacturers, laborers, and industries that rely on this system to operate.
This is especially critical in Pennsylvania where coal, petroleum and steel are primary commodities. Pennsylvania has built its economic reputation through reliable freight rail, but without meaningful competition, the manufacturers that produce these goods would lose the ability to negotiate fair shipping terms and costs. With no alternatives, they would be forced to absorb rising rates and push them down to consumers, resulting in high costs that could cause significant harm to Pennsylvania’s economy.
But the fallout wouldn’t stop here. The everyday Pennsylvanians who keep our freight rail moving would face immediate economic challenges.
Our coal industry – a cornerstone of the Pennsylvania economy –wouldn’t exist without our miners. But, when rail slows and rates rise, mines are forced to scale back production to compensate. At worst, railway workers who maintain tracks and keep freight moving could face layoffs under a consolidated system, putting Pennsylvanian families who rely on steady rail income for housing and daily living expenses at serious risk.
Union Pacific and Norfolk Southern will soon attempt to detail how their partnership would meet the Surface Transportation Board’s (STB) requirement to “enhance competition” or fortify affordability and job security in Pennsylvania. When the time comes for the companies file, I urge the STB to uphold this merger to the highest standards of competition and accountability.
Not all mergers are inherently bad, but changes to the railway system cannot come at the expense of the manufacturers and workers who made our economy what it is today. We must protect the people and businesses that built our economy and ensure that competition, innovation and affordability remain central to any business deal or approval.
Marc Collazzo is the Executive Director of the Fishtown Kensington Area Business Improvement District. Established in 2019, the Fishtown Kensington Business Improvement District began working to brand the Fishtown District as the ideal spot for entertainment, travel/vacations, dining, shopping, wellness, books, art, and music.
To me, this is Marley’s Ghost resurrected as the Penn Central merger of distant memory and destined to be the first ghost to visit the N+W. PC morphed into Conrail and Amtrac. That became Norfolk + Western in places not abandoned by rail services. It seems to me that the driving force behind this proposed merger of Union Pacific and Norfolk Western has much more to do with thwarting the BNSF than making eastern railroading more efficient and effective. In my opinion, merging the roads will result in a reduction in physical plant, particularly the Port of Philadelphia and in the west, Pittsburgh’s river traffic facilities. I personally do not see how the Union Pacific will add enough traffic to make much difference to the N+W’s carriage utilization. My opinion is that the only way to really vitalize the N+W traffic area is to upgrade the cargo handling facilities in the Port of Philadelphia, the Port of Baltimore and Pittsburgh area river traffic facilities. The key to everything is to increase cargo traffic to both ports, this would probably mean a reduction in cargo to the West Coast ports, not a situation that would please the Union Pacific.