If American manufacturing were a towering tree, the chemical industry would be its roots. From the clothes we wear to the electronics we use, nearly every manufactured product relies on chemical inputs. Yet this vital foundation now faces a potential storm—the wave of railroad mergers sweeping the industry. Chris Jahn, President and CEO of the American Chemistry Council (ACC), warns that the proposed Union Pacific (UP) and Norfolk Southern (NS) merger shows no promise of enhancing competition. Instead, it risks further degrading rail service quality while increasing shipping costs for manufacturers—ultimately undermining America's economic competitiveness. Is this concern premature, or an imminent crisis?
ACC's Stance: Core Concerns About Railroad Consolidation
The American Chemistry Council represents the heart of U.S. chemical manufacturing, with members spanning from basic chemicals to specialty products. Regarding the UP-NS merger proposal, ACC maintains a clear position: unless the deal demonstrably improves rail competition and service quality, the council will oppose it. This stance stems from decades of observing railroad consolidation.
Over forty years, America's rail industry has shrunk from 23 major carriers to just six, with four Class I railroads now controlling 90% of freight traffic. Each merger brought service declines. Today, three-quarters of ACC member facilities exist as "rail captives"—dependent on single carriers with no transportation alternatives. Without competition, these companies' shipping costs have skyrocketed 240% over fifteen years, while those with competitive options still saw 24% increases—far outpacing inflation.
ACC emphasizes that chemicals form manufacturing's foundation. Deteriorating rail service and rising costs would ripple through supply chains, ultimately burdening consumers. The council urges regulators—particularly the Surface Transportation Board (STB)—to scrutinize whether this merger truly benefits competition rather than cementing monopoly power.
Fragile Networks: The Illusion of Service Improvements
While STB metrics suggest adequate rail service, Jahn notes this reflects reduced freight volumes rather than systemic improvement. America's rail network remains vulnerable to weather disruptions and demand surges, as COVID-era bottlenecks demonstrated. More troubling, railroads seem focused on cost-cutting rather than capacity growth. ACC projects chemical shipping needs may require 100,000 additional railcars by the mid-2030s—yet current systems struggle with existing volumes.
Scale Matters: Why UP-NS Differs From CP-KCS
Unlike the recent Canadian Pacific-Kansas City Southern merger, UP-NS would create a transcontinental giant controlling nearly half of U.S. rail freight. Canadian Pacific Kansas City CEO Keith Creel warns such mergers historically cause service disruptions—sometimes catastrophic. The UP-NS proposal's unprecedented scale magnifies these risks.
Pricing Power: How Rail Costs Undermine Competitiveness
Rail expenses significantly impact U.S. manufacturing competitiveness. Though America ranks second globally in chemical production, China outproduces it three-to-fourfold—partly due to inefficient rail networks. Beyond base rates, railroads levy fuel surcharges, demurrage fees, and empty-car charges—extracting nearly $3 billion in storage fees during 2021 alone. With safer rail transport moving four trucks' worth per car, chemical firms prefer trains but face unsustainable cost pressures.
ACC's Strategy: Advocacy and Public Awareness
ACC launched a seven-figure campaign educating policymakers and the public about merger risks to manufacturing, agriculture, and energy sectors. The council argues Wall Street—not Main Street—drives consolidation. Approval could pressure CSX and BNSF to merge, potentially leaving just two national carriers—a scenario ACC believes would harm economic growth.
Regulatory Uncertainty: STB Leadership Vacancies
The Surface Transportation Board's oversight role faces uncertainty after President Trump removed member Robert Primus, a staunch freight-rail advocate who pushed for faster decisions and shipper protections. ACC urges filling vacancies with officials committed to STB's congressional mandate: ensuring competitive, reliable rail service.
Missed Opportunities: Reciprocal Switching's Potential
Reciprocal switching—letting shippers transfer cargo between rival railroads—could boost competition. Though STB adopted rules in April 2024, courts overturned them by July. ACC highlights Canada's successful reciprocal system, where railroads accept switching without service degradation. The council believes similar reforms could improve U.S. rail competition better than mergers.
Conclusion: Protecting Manufacturing's Foundation
ACC's concerns transcend chemical producers, addressing broader manufacturing competitiveness. Rail efficiency and costs directly impact supply chains and global market positions. The council will continue advocating against mergers while promoting solutions like reciprocal switching—measures needed to maintain America's industrial leadership and economic prosperity.