AILSA CHANG, HOST:
Two of the largest railroads in North America have announced today that they plan to merge. Union Pacific wants to buy Norfolk Southern. If the deal gets past federal regulators, it would create the first freight railroad to stretch from coast to coast in the U.S. Frank Morris of member station KCUR has been reporting on this story and joins us now from Kansas City. Hi, Frank.
FRANK MORRIS, BYLINE: Hi. How you doing?
CHANG: Good. OK, so yeah, there have been other railroad mergers throughout the years, but Union Pacific is - what? - the country's largest freight operator, and Norfolk Southern is the fourth largest railroad. So just give people an idea of how big of a deal this deal is.
MORRIS: Yeah, it's pretty huge. I mean, Union Pacific is one of the two huge railroads that serve the western side of the country, and it wants to buy Norfolk Southern, one of the two giant railroads that serve the eastern side of the country. It'd be an $85 billion deal if it goes through. And that would create something that's been a long time coming in the U.S. - a real transcontinental freight railroad, according to analyst Tony Hatch.
TONY HATCH: You know, a 200-year-old industry, this is the first time an American railroad can go from the Atlantic to the Pacific and back again. This links, you know, larger population centers - you know, LA to New York, Dallas to Atlanta, Boston to Denver, etc. So it's a very big deal.
CHANG: A very big deal - OK, so these two giant railroads want to form an even more giant railroad. What's in it for the rest of us, you think? Like, cheaper goods? What?
MORRIS: Well, it's hard to say. I mean, shipping can be a big part of the cost of those goods, but railroads involved say this merger won't drive up prices. From a railroad perspective, the hope is that it'll improve shipping efficiency. Airlines - if airlines operated like railroads, right now, if you wanted to fly from New York to LA, you'd have to pay one carrier - Delta, maybe - to take you to some point in the middle of the country, like Kansas City, stop, and then transfer to another carrier to finish the trip. These transfers, as we know, cause headaches and waste time. It's the same with freight rail.
Bill Vantuono, editor of Railway Age, says transcontinental freight railroad could knock a day or two off what might normally be a weeklong trip. And he says the merger would clear up inefficiencies that make freight rail more competitive.
BILL VANTUONO: A customer would contact a railroad for a rate, and it might take two or three weeks to get that rate. Well, that's inefficient. That doesn't work. The customer is going to say, well, I'm not going to ship by rail. I'm going to put it on a truck.
MORRIS: Vantuono expects two other big railroads - BNSF, operating mainly on the western side of the country, and CSX operating in the east - to try to merge next.
CHANG: Well, let me ask you, Frank. I mean, if the idea of a transcontinental freight railroad makes so much sense, why didn't they do this sooner?
MORRIS: Yeah. Railroads are heavily regulated to keep them from turning into monopolies like they did in the 1800s. The Surface Transportation Board governs railroad mergers and tends to look at them very skeptically. But a few years ago, it loosened a rule requiring mergers to make the rail system more competitive. Now regulators look at the effect the merger would have on the entire shipping system, including trucks and barges, not just rail.
Also, President Trump is about to appoint a new member to the Surface Transportation Board, so the climate for mergers is looking up. That said, it's going to take at least two years to go through the process of scrutinizing this merger. Unions are going to weigh in. Big corporations that depend on rail shipping will, too. And then it'll take another couple of years after that for the railroads to get the kinks worked out if the deal is approved.
CHANG: That is Frank Morris from KCUR. Thank you, Frank.
MORRIS: Thank you, Ailsa.
(SOUNDBITE OF TAY IWAR SONG, "REFLECTION STATION") Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.