Originally published at: Ports warn intermodal in the crosshairs of rail merger - FreightWaves
U.S. ports urge strict evaluation by Surface Transportation Board of proposed transcontinental rail merger, cautioning on impact to the supply chain and economy.
The National Association of Waterfront Employers (NAWE) raises concerns about the potential effects of the Union Pacific–Norfolk Southern merger on port competitiveness and intermodal rail service. While portions of NAWE’s letter highlight legitimate issues in the U.S. freight environment, the overall argument misdiagnoses the problem, overstates the risks, and understates the structural dynamics at play.
A national freight system cannot be evaluated solely through the lens of port market share. The STB must consider the broader network geometry, long-haul economics, and the role of rail in a highway-dominated freight system distorted by forty years of policy imbalance.
I. NAWE’s Concerns Reflect Regional Market Fears, Not National Freight Realities
NAWE’s central argument is that a UP–NS merger could “reduce competition” and jeopardize port access. This framing treats intermodal as a zero-sum contest between ports, ignoring the larger forces shaping inland cargo flows:
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Steamship lines, not railroads, determine port competitiveness.
Vessel rotations, alliance routing, berth availability, and global network economics dictate which ports receive discretionary cargo—not the existence of a unified rail network. -
High-volume West Coast ports already dominate IPI rail because of geography and density, not because of mergers.
Ports like LA/LB move 60%+ of imports inland by rail because the volumes justify the service. That will not change solely due to UP–NS consolidation. -
East Coast and Gulf ports face their own structural constraints.
Draft depth, berth length, maritime labor agreements, and road access limits all shape competitiveness. These issues are unrelated to the merger and cannot be solved by preventing network evolution.
II. NAWE Correctly Identifies Regulatory Gaps — But Draws the Wrong Conclusions
NAWE is correct that:
- TOFC/COFC exemptions limit port recourse
- Intermodal service is largely unregulated
- Railroads invest less in on-dock infrastructure than ports would prefer
However, NAWE overlooks the far more consequential imbalance: Trucking receives over $40 billion annually in taxpayer subsidy due to underpriced highway use.
This imbalance depresses IPI rail demand, weakens inland rail economics, and reduces the incentive for railroads to invest heavily in port-facing capital.
The ports want railroads to invest more, yet ignore the macroeconomic forces that favor trucking and erode rail ROI. This omission is fundamental.
III. The UP–NS Merger Does Not Reduce Port Options — It Rationalizes Inland Flows
A single-line network reduces:
- Chicago handoffs
- Terminal dwell
- Crew-change friction
- Rubber-tire crosstown dray
Ports benefit from:
- Shorter inland transit times
- Lower variability
- Reduced congestion risk
- More stable allocation of equipment pools
For many port regions, the merger increases—not decreases—service reliability.
IV. NAWE’s Fear of “Only Two Transcontinental Railroads” Ignores Today’s Reality
Today, the intermodal market is dominated by:
- BNSF–J.B. Hunt Quantum
- UP–UPS/FedEx/Schneider/Swift
- CSX–UP/BNSF tendered lanes
- CPKC as a Mexico-centric, Chicago-centric network
Effectively, the U.S. already has:
- Two Western long-haul intermodal providers
- Two Eastern providers
The merger would not suddenly reduce diversity. It would simply convert an informal patchwork of alliances into a coherent, single-line system that mirrors global best practices.
V. NAWE Overstates Port Vulnerability to a Revived Landbridge
NAWE suggests a UP–NS network could revive West Coast share at the expense of East Coast ports. That fear is overstated:
- East Coast ports hold strong advantages for all-water services.
- Panama and Suez rotations align with East Coast importers.
- Mid-Atlantic and Southeast population centers favor Atlantic port routings.
Even a revived landbridge will not overturn these structural advantages.
VI. The Real Issue: Ports Want Rail Investment Without Addressing National Freight Economics
Ports ask railroads to:
- Invest in on-dock infrastructure
- Increase inland access
- Expand IPI capacity
But ports do not acknowledge:
- Railroads receive no equivalent to port grant funding
- Highway underpricing suppresses IPI rail demand
- Precision Scheduled Railroading drained railroad flexibility
NAWE wants more service from a system operating at an economic disadvantage relative to trucking. That is unrealistic.
VII. NAWE’s Concerns Are Understandable but Misaligned with National Interest
The national rail network must evolve. Chicago must be rationalized. Inland corridors must be modernized. The UP–NS merger accelerates these outcomes.
NAWE’s concerns reflect:
- Regional competition fears
- A desire to preserve current port positioning
- Frustration with intermodal exemptions
But none of these justify blocking or delaying network-scale improvements essential to national freight fluidity.
The STB should:
- Acknowledge port concerns
- Impose targeted conditions where appropriate
- ■■■■■■ arguments that seek to freeze the freight system in its current inefficient form
Ports matter. But the U.S. freight network is larger than any single port or port region.
A UP–NS single-line system is not a threat to ports. It is a necessary evolution of the national network, long overdue, and aligned with the country’s broader economic and infrastructure interests.