Union Pacific CEO tells customers they will benefit from merger

SCHAUMBURG, Ill. – You could say that Jim Vena’s latest salvo in the war of words over the proposed Union Pacific-Norfolk Southern merger was downright Shakespearean.

Which is to say that the Union Pacific CEO thinks the other Class I railroads doth protest too much.

“If your competitor was doing something stupid, what would you do?” Vena said during an entertaining but often digressive talk Thursday to open the second day of the Midwest Association of Rail Shippers winter meeting. “I know what I would do and hopefully you’re all the same … You would shut up and let them do it. Because at the end of the day they’re going to screw up and you’re going to have a better place in the marketplace and win more business.

“The reason the railroads are so up in arms is they have a new competitor. They have a competitor that’s going to be faster, going to be able to move products seamlessly in a better way, and that competitor is going to drive them to compete at a higher level. … So bottom line is you would only complain, and complain as hard as they are without true facts, if you thought that your competitors have something that’s going to give them an upper hand.”

Vena’s appearance came the day after CEOs Keith Creel of CPKC (NYSE: CP) and Katie Farmer of BNSF (NYSE: BRK-B) took aim at the merger with NS (NYSE: NSC) on a number of fronts. That apparently left enough of a mark that UP felt compelled to issue a press release as Vena spoke, saying the company “set the record straight” at the meeting.

Vena sprinkled responses to some of their contentions throughout his talk:

“I’ve heard people talk about [how] we haven’t been able to grow as an industry. I don’t like talking about the rest of them. They can worry about their own freaking business. I’ll tell you this much: In 2025, we grew 100,000 carloads more just with the railroad that we have.”
“I’ve heard them say that Union Pacific (NYSE: UNP) has increased prices 17% over the last five or 10 years. Well, against inflation running at 30%, son of a gun. I called our chief marketing officer and said, what the hell are you doing? You need to increase prices more than that.”
On other railroads’ filings with the Surface Transportation Board arguing the merger application is incomplete: “We’ve put in exactly what the STB asked us to put in, and that’s real important for us. And listen, if they want more information on something, we’ll give it to them. Some of the things that the lawyers try to find that they want us to give are things that are not necessary. It’s like the piece of paper that talks about what our limits are if we want to walk away from the deal. What the hell does that have to do with it? If it’s competitive, it’s competitive.” [CN (NYSE: CNI), CPKC, and CSX (NASDAQ: CSX) all said this was grounds for the STB to reject the application as incomplete.

He also explained why the railroad believes it can convert 2 million truckloads of traffic to rail.

“Fifty percent of our business at Union Pacific is premium business. That is absolutely truck competitive. We compete against trucks for that 50% of the business every day. And we think and our experts that put in over 5,000 pages of information in our application — plus 2,000 pages of people that supported us — they think the opportunity is there for us to grow that business.”

Mostly, though, he touted the benefits he said the merger will bring. It will decrease the number of touches to move a car, he said. As an example, he used a shipment moving from North Platte, Neb., to Conway, Pa., which would no longer require switching by UP in Chicago or NS in Elkhart, Ind.

“There are 10,000 movements a day that we can absolutely do it this way, let alone what we’re going to grow,” he said. “That’s what we’re offering our customers. And I don’t know about all of you. If I’m a customer and you can get your product to market quicker, you can carry less inventory, you can have less ownership in cars or the amount of money that you spend on rail cars. You get to have one bill. You get to deal with one railroad. You get to deal with one customer service center. We think that that’s a win for you.”

And, he said, such movements will have financial benefits. Because of merger-related operational efficiencies, UP’s cost structure will be reduced and, as a result, “we’re going to have an opportunity to not price as much.”

Ultimately, he boiled down UP’s case for the merger to a quick summary near the end of his talk.

“We needed to have the railroad running financially, operationally at the right level, which we’ve done. We are the most efficient railroad in North America. That’s fact. We have the highest level of service of anybody in the industry. That’s fact. We have the capability to be able to open marketplaces for customers that they don’t have today, because we’re going to make it less complicated. That’s fact. And we want to compete against the world, and have our customers … win in the marketplace.

“You win, we win. That’s what it’s all about.”

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