Commerce associations representing chemical producers — whose provide chains are depending on railroads — have been among the many most outspoken critics of the proposed Union Pacific-Norfolk Southern merger.
However this week the biggest producer of polyvinyl chloride within the U.S. instructed federal regulators that it helps the transcontinental merger.
“As a solely served buyer, Union Pacific (NYSE: UNP) transports 100% of our rail visitors from every of our three manufacturing areas,” Shintech President Yasuhikoh Saitoh wrote in a letter to the Floor Transportation Board. “We depend on them to move our merchandise safely, reliably, and effectively and we additionally rely upon them to supply aggressive pricing that permits us to win enterprise each domestically and globally in order that we are able to proceed to develop.”
Saitoh praised UP for investing in its Gulf Coast carload community, together with expanded storage-in-transit yards close to its vegetation in Louisiana and Texas, and mentioned the merged railroad’s skill to supply single-line service to jap locations could be a bonus.
“The proposed Union Pacific and Norfolk Southern ( NYSE: NSC) merger is essential to us. The jap U.S. is certainly one of our largest vacation spot markets and we’re enthusiastic in regards to the synergies to be gained via reaching these markets on a single railroad,” Saitoh wrote. “A single line railroad will enhance velocity, scale back prices, improve competitors and enhance the USA provide chain. Union Pacific has a historical past of constantly offering transportation options that improve our competitiveness and assist continued funding in our enterprise.”
The Houston-based firm is the U.S. arm of Japanese chemical producer Shin-Etsu. It has vegetation in Plaquemine and Addis, La., and Freeport, Texas. The PVC the corporate produces is utilized in a spread of merchandise, together with pipes, flooring, medical units, and packaging.
Considerations for brief strains
Individually, a longtime railroad government instructed the STB that the mixed UP-NS system would have a damaging affect on the brief line railroads which have been driving progress in carload visitors.
The merger “poses severe hurt for brief strains and their rail clients” as a result of an expanded UP would possess an excessive amount of market energy, George Avery Grimes instructed the board in a 23-page submitting.
He urged the board to remove “synthetic market boundaries,” together with paper boundaries and dealing with agreements that restrict brief line interchange choices, and to undertake an inexpensive service commonplace.
“UP’s filings on this docket recommend elevated density and capability constraints, and its asymmetry of energy extends to the competitors for capability between high-priority PSR operations and lower-priority native companies. An inexpensive service commonplace designed by the Board would assist anchor the definition of Enhanced Competitors, steadiness shipper wants with the realities of railroad operations, and be sure that banished synthetic market levers can not return within the type of service penalties for shippers served by brief strains interchanging with an built-in post-merger UP,” Grimes wrote.
Grimes, who labored at Missouri Pacific, Union Pacific, and Kansas Metropolis Southern and held positions at brief line holding firms OmniTRAX and Patriot Rail, holds a doctorate in railroad engineering, economics, and finance.
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