CSX Transportation on April 16, 2024 completed retrofits on its first hydrogen-powered locomotive, shown here in this undated photo. The work was done at CSX’s Huntington shops and involved retrofitting an existing locomotive with a kit supplied by the Canada-based Canadian Pacific Kansas City railroad company.
While Norfolk Southern Corp. has agreed to be acquired by Union Pacific, creating the first transcontinental railroad company, CSX is not an attractive acquisition target for the remaining two Class I (major) railroads operating in the United States: Canadian National Railway and CPKC.
After the Union Pacific-Norfolk Southern announcement, CSX and BNSF said they have agreed to a plan to speed up the process of transferring shipments that require customers to use both railroads, reducing the travel time by days. The agreement is not a merger or an acquisition.
Could Huntington be affected by a CSX merger?
Union Pacific and Norfolk Southern announced their agreement at the end of July. That began speculation that CSX would be a merger target. Corporate mergers often result in consolidations of local operations. Chief among those in the Huntington area would be the locomotive shops between the CSX tracks and Fifth Avenue in Huntington’s Highlawn neighborhood.
CSX Transportation on April 16, 2024 completed retrofits on its first hydrogen-powered locomotive, shown here in this undated photo. The work was done at CSX’s Huntington shops and involved retrofitting an existing locomotive with a kit supplied by the Canada-based Canadian Pacific Kansas City railroad company.
Courtesy photo
Huntington is where repairs and overhauls of locomotives occur by taking them down to the wheels and frame and rebuilding them. In recent years, it has been where CSX has built its experimental hydrogen-powered locomotive.
Huntington Mayor Patrick Farrell was asked if talk of CSX being acquired by BNSF or another railroad caused him concern for local jobs.
Farrell was at the West Virginia Chamber of Commerce Business Summit this week and could not be contacted directly to ask whether he has concerns about CSX's operations in Huntington in light of the partnership with BNSF instead of a merger. His communications director, Evan Lee, issued the following statement on Farrell's behalf.
“CSX’s Huntington Locomotive Shop is unlike anywhere else in the country. The electricians, boilermakers, and pipefitters here bring a depth of experience that makes this one of only a handful of heavy repair depots in the nation. It has been a cornerstone of railroading for generations, and whatever changes the industry may go through, I am confident the work being done in Huntington will remain vital to keeping America’s trains running."
On Monday, Becky Quick of CNBC said she had just talked with Warren Buffett, whose Berkshire Hathaway conglomerate owns BNSF.
“Berkshire Hathaway is not in the market to buy a train company right now. That is what I heard from Mr. Buffett himself,†she reported.
Quick said BNSF prefers to cooperate with other railroads to produce the same synergies they would have if they were combined into one company.
CPKC: No more mergers needed
The sentiment of not needing a merger was shared in a statement released Tuesday by CPKC, which was formed in a 2023 a merger of Canadian Pacific Railway and Kansas City Southern. The statement said CPKC “is not interested in participating in immediate rail industry consolidation, despite the suggestions by some that it take part."
The statement added, “CPKC strongly feels, given what the existing competitive landscape has shown it can deliver, any major rail merger poses unique and unprecedented risks to customers, rail employees and the broader supply chain. Those risks would be exacerbated by the inevitable follow-on consolidation.â€
Keith Creel, CPKC president and CEO, said the company believes a transcontinental merger would restructuring the industry and would result in a "disproportionately large railway whose size and scope would require others to take action."
"This will likely result in an unnecessary wave of railway mergers that today is not the best way to support American businesses nor the public interest, and has the potential to create more issues than it solves," Creel said.
Trump and the STB
The proposed merger between Norfolk Southern and BNSF must still be approved by the federal Surface Transportation Board. BNSF said it plans to submit the application for approval later this year. The last time two Class I railroads merged, the STB approval process took about two years to complete. There result was what is now CPKC.
The STB is authorized to have five members. At the beginning of this week,it had four. At midweek, it had three. Robert Primus, who was nominated to the STB by then-President Donald Trump in late 2020 and confirmed in 2021 when Joe Biden was president, said he received an email from the White House on Wednesday night terminating his membership on the board. Primus was one of two Democrats on the board. His removal gives the STB a 2-1 Republican majority as the BNSF-NS decision process nears.
According to the Wall Street Journal, Primus was the only STB member who voted against the merger of Canadian Pacific and Kansas City Southern, which was approved in 2023. Primus told the Journal he will continue to function as an STB member, and if he is prevented from doing so, he will seek legal options.
The Journal quoted a White House statement Thursday saying, “Robert Primus does not align with the President’s America First Agenda†and “The Administration intends to nominate new, more qualified members to the Surface Transportation Board in short order.â€
Jim Ross is development and opinion editor of The Herald-Dispatch. He is a former business reporter and editor. Among his many coverage responsibilities in the past was transportation.
