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Comment by polarbear67 | Hacker News Reader

What's the argument for the Union Pacific and Norfolk Southern merger [1]? Any rational admin would shoot down the merger immediately as this will create a massive monopoly.

[1] https://www.reuters.com/world/us/union-pacific-talks-advance...

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Perhaps a monopoly is the way for the rail, preferably state-owned.

Generally I'm heavily against both monopolies and state-controlled companies, but railways seem to be a corner-case where all the downsides and inefficiencies are outweighted by a nation-wide system that actually works.

the tracks should be state-owned, just like public roads, and then train operators should pay for use. (or you could let them use it for free like roads)

that way the state can give priority to passenger rail, and prioritize maintenance and building of rails according to the needs of the people.

it also makes much smaller train operators possible and compete on the same routes.

They share essentially zero miles of track or routes. A move only creates a monopoly if it reduces consumer choice.

No freight customer is deciding "Oh I can either ship from LA to Seattle, or Miami to DC." They are shipping from one fixed location to a different fixed location. These railroads merging does not reduce their choices or give the combined entity more leverage.

> They are shipping from one fixed location to a different fixed location. These railroads merging does not reduce their choices or give the combined entity more leverage.

If someone on the US west coast wants to ship to the US east (or vice versa) they can pit UP against BNSF, and then NS against CSX. There are a few pairs up because of the two negotiating points:

* UP-NS

* UP-CSX

* BNSF-NS

* BNSP-CSX

If the merger goes through you're now at:

* merged-UPNS

* BNSF-CSX

Do you think UPNS will give a cheaper price for a 'half-trip' and you go to their competitor the other half?

You don't think BNSF/CN/CP aren't looking at CSX right now?

That is a big assumption on your part that east coast ports don't compete with west coast ports

How about monopsony?

> What's the argument for the Union Pacific and Norfolk Southern merger [1]?

'Cost savings through synergies which will be passed down to customers.'

(And certainly not shareholders and suits making more money.)

Consolidation reduces competition and increases margins. The rest of the market and the people are sacrificed at the altar of shareholder value.

NS and UP do not meaningfully compete today, their networks have very little overlap.

The two compete reciprocally: business can either enter their system or a competitor's for the parts of the rail network that they control, which means bartering power. A single nationwide system would have fewer incentives to compete on pricing.

The rail industry has been trying to complete and end to end lashup merger since the 50's - had that been allowed in the 50's we might not have needed to spend billions on Conrail in the 70's and 80's.

A different regulatory attitude in the 50's, not just towards M&A but rates and routes, and mandatory services, would have prevented the bailouts we had to do in the aftermath of the Penn Central. Nearly every Class I carrier was in poor financial shape by the time the industry was deregulated in the late 70's, much of the 'capacity crunch' we have today in the rail industry is related to the contraction the industry went thru in that period, where they shed assets and lines in an attempt to resize their cost structure to the amount of revenue they were allowed to realize from their route networks.

Okay. That’s a very different argument than the original one: we’ve gone from “it wouldn’t be a competitive risk” to “the reduction in competition would have made midcentury rail profitable such that Conrail wouldn’t have been necessary.” But that presumes a change in bartering power and operating efficiency that can only come in a less competitive rail market.

Back then it would have given them a competitive advantage over their peers because of faster end to end performance.

Other than some of your head office folks (accounting, HR, etc) there wasnt much of a greater operating efficiency to be gained, nor do I think they would have gotten significantly lower costs (but for maybe fuel) by squeezing their vendors either.

I think that rationale holds true today too.

When we allowed the UP-SP and BN-SF lashups, we created two western colossuses, if we still had four roads in the west, and had they encouraged east/west mergers at that time, things would be better off today.

Monopoly? No. Union Pacific plus Norfolk Southern would have a monopoly on single-line end-to-end rail service in the US, true, but that's the kind of thing that you can get a "monopoly" in. BNSF and CSX interchange with each other, after all. And BNSF and CSX could (and almost certainly would) merge in response. So there's no monopoly argument.

Which doesn't mean that a rational regulator would not turn it down anyway. But rational regulators may not be running the show at the moment. UP sees that there may be an opportunity during the Trump administration. (Note "may" - nobody knows whether there is an opportunity, but there is more of a chance than there was under Biden.)

> Monopoly? No.

How about oligopoly then.

If UP/NS happens, we're down from six to five Class Is (ignoring Amtrak):

* https://en.wikipedia.org/wiki/List_of_U.S._Class_I_railroads

Then BNSF/CSX? Or CN or CP go after CSX? That's four.

Do we start seeing the acquiring of Class IIs?

A regulated monopoly might be appropriate for something like a railroad. It doesn't really make sense for competing railroads to all run their own tracks between the same destinations. We give monopolies to utilities for this reason.

Or maybe all trackage should be government-owned, like streets and highways are. Then any operator can pay a toll and run their trains on any tracks. Traffic coordination is left as an exercise for the reader.

It's already an oligopoly. Most cities only have one or two. Of the few cities that have three or four (Chicago, say), the merger would reduce that by one.

Let's say you want to ship from Denver to Atlanta. In Denver, you hand your stuff over to either Union Pacific or BNSF. In Atlanta, you receive it from either NS or CSX. You only have two options in Denver, and only two in Atlanta. The merger doesn't change that at all.

> It's already an oligopoly.

So reducing competition to move further over on the oligopoly spectrum is good how?

why bother going through the performative charade of quoting four words of their post just to respond with something that so flagrantly betrays, charitably, your not having read what they said at all or, less charitably, willfully misconstruing it because you happen to disagree. maybe i'm just the simpleton you are pretending to be with the snarky faux folksy affect, but... "moving further over on the intellectually honest to arrogantly disingenuous spectrum is good how?"

what's worse is that the "more of a bad thing is prima facie worse" argument is so facile that it strains credulity to believe that even you think that it's actually true. i think we would all agree that, ceteris paribus, higher food prices are bad, for example, but i doubt anyone would mistake that for a reason to never do anything that might raise the price of food. the irony of it all is that you managed to turn siding with conventional wisdom-- usually a good bet, by definition-- into a no-upside proposition: either you are right but for the wrong reason-- a pyrrhic victory-- or not just wrong, but arrogantly so.

can we just leave the grandstanding and begging the question to our elected representatives during congressional hearings on C-SPAN where it belongs?

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