UPS Oposes CP-NS Merger

 

UPS' thumbs-down has dealt a severe blow to CP's $28 billion bid to acquire U.S. eastern railroad NS. UPS Inc. is the largest transport company in the U.S. and one of the nation's biggest users of intermodal services.

 

UPS has asked the Surface Transportation Board (STB) to reject the proposal on grounds that it will lead to diminished service levels and higher costs. UPS also warned that the acquisition would result in a spree of rail-industry consolidation that would impair intermodal service reliability even more.

 

UPS - which says it moves 3,000 trailers and containers on the rail network every business day - has become the latest shipper to oppose the CP-NS merger.

 

UPS' concerns, raised in a letter to the Board, are no different from those already voiced by competing railroads, shipper groups, and members of Congress. However, UPS' size, influence in the marketplace and within official Washington, and reputation as arguably the industry's premier operator could carry enormous weight with regulators.

 

 Despite UPS' opposition, CP still plans to pursue the merger, according to Martin Cej, a spokesman for the Calgary, Alberta-based railroad. On Tuesday, CP disclosed that it would introduce a nonbinding resolution later this year at NS' annual meeting that would call for NS' board to discuss the deal with CP.