Top Rail Customer UPS Requests 2-Year Halt to Industry Mergers

WASHINGTON — United Parcel Service Inc., the biggest single customer of U.S. railroads, asked federal regulators Wednesday for a two-year moratorium on further rail mergers.

UPS told a Surface Transportation Board hearing on the future of the industry that past mergers had failed to deliver cheaper rates as promised and typically disrupted service for two to three years.

The hearing was prompted by the planned merger of Canadian National Railway Co. and Burlington Northern Santa Fe Corp. into North America’s largest rail network.

There are fears that the merger could plunge the remaining railroads into a final round of consolidations while the industry is still recovering from two huge 1990s mergers.

“Unfortunately, the congestion did not remain isolated among the individual merging railroads, but spread across the entire rail network,” UPS Vice President Arnold Wellman said.

The three-member board is trying to decide whether further mergers are appropriate and, if so, when and with what conditions.

The 1996 merger of Union Pacific Corp. and Southern Pacific Rail Corp. led to bottlenecks across the merged company’s system in 1997.

The purchase and division of Conrail Inc. by Norfolk Southern Corp. and CSX Corp. in the East saw widespread delays last year despite extensive planning to avoid a repeat of Union Pacific’s experience.