Holiday Cheer, Railroad Style

You’ve just got to hand it to those railroad folks: Just about the time that a lot of us are suffering from the frayed nerves and short tempers that go along with the end-of-the-year festivities, they pull a prank that is obviously designed to bring peals of healing laughter from shippers and government regulators, and men and women of good cheer, everywhere.

Last week’s announcement that the Burlington Northern Santa Fe Corp., owner of the second-largest U.S. railroad, and Canadian National Railway Corp., operator of Canada’s biggest railroad, want to join forces and create North America’s largest rail carrier couldn’t come at a better time to draw laughs.

After all, shippers are still suffering from the effects of the last two major railroad mergers: the carving up of Conrail between Norfolk Southern Corp. and CSX Corp., and the Union Pacific Corp.’s horrendous botching of its acquisition of the Southern Pacific, which brought the U.S. freight system to its knees in 1997.

And like the executives in those deals, the masterminds behind this one are trumpeting how this new, $19 billion rail behemoth will rush to profitability by taking freight away from the continent’s trucking companies. This was the same clarion call heard from UP as well as NS and CSX, before those mergers ended up diverting more freight to the highways than trucking could move. If we have too many more of these rail mergers, the U.S. as well as Canadian governments are going to have to build special highways just to handle the freight that falls off the rails.

Probably the group least amused by the BNSF-CN announcement was those party-poopers, the nation’s shippers.

“So many rail customers are still reeling from poor service, and they can only see this as another kick in the gut,” said Ed Emmett, president of the National Industrial Transportation League, the nation’s largest shippers’ association.

Emmett’s group seems to think that railroads should worry more about improving their service than working to become the biggest carrier in the ever-smaller fraternity of railroading.

Government regulators don’t seem too thrilled about the prospects of having to handle another rail merger, either. The Surface Transportation Board still hasn’t recovered from the criticism leveled at it for approving the last two mergers.

Perhaps only trucking sees the real humor in these events, and understands what a great market opportunity the railroads may soon provide to truckers. Happy Holidays.