Rail Merger Promises: “Where’s the Beef?” | FreightWaves Today

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6}#fwtv_rMWfHkWCVE. fwtv-panel p{margin:0 0 12px}#fwtv_rMWfHkWCVE. fwtv-transcript p{margin:0 0 12px}SummaryView TranscriptPaul Tonsager, CEO & Founder of Integrated Multi-Modal Solutions, questions the ambitious claims of the recent rail merger applications, asking “Where’s the beef?” in terms of specifics for truckload diversions.

He discusses the long-term growth stagnation in freight, the immediate opportunities for railroads, and the complex dynamics of intermodal relationships. Discover why industry veterans are skeptical about big merger promises and what it means for the future of rail and trucking.

A settlement between CN and Union Pacific has injected new momentum into what is being described as one of the largest mergers in transportation history — the proposed Norfolk Southern-UP combination — but a veteran railroader and former Maersk procurement head says the deal’s core freight-diversion promise remains unsubstantiated.

Paul Tonsiger, CEO and founder of Integrated Multimodal Solutions, who spent 25 years at CN and its predecessor Illinois Central Railroad, said the CN agreement repositioned a railroad that had been sidelined in the broader merger conversation. Until the settlement, Tonsiger said, CN “was frankly irrelevant in the conversations that were going on.”

In one move, the railroad regained strategic standing. He flagged one underreported asset the deal unlocks: CN’s Elgin, Joliet and Eastern Railway, acquired roughly 15 years ago, which would give UP a bypass route around Chicago, reducing dwell and improving network fluidity for intermodal traffic. “Where’s the beef?

I mean, I still haven’t seen any specifics — maybe I’m wrong, maybe they’re out there — but I haven’t seen any specifics like, you know, from Chicago to Kansas City or Oklahoma City to Atlanta, I’m going to take these specific truckloads off and these are the customers I’m going to work with to do it.” The merger application cites a diversion of 2.

2 million truck moves, a figure Tonsiger called skeptically vague. He argued that the railroads have yet to publish lane-level detail showing which shippers, corridors, and volumes underpin that number.

He noted the figure is roughly equivalent to the annual truckload volume of a carrier the size of Knight-Swift, which he said puts the claim in context as a relatively modest shift in overall freight flows. Tonsiger also pushed back on the notion that collaboration agreements among existing railroads can substitute for consolidation.

Drawing on his time as head of procurement at Maersk — where BNSF and CSX were the primary rail carriers — he said past interline arrangements between carriers such as IC, WC, and CN fell apart over pricing and customer ownership disputes.

He argued a merged UP-NS network could instead approach a steamship line directly and offer end-to-end solutions, for example moving cargo from Norfolk to Kansas City or Norfolk to Minneapolis, in ways the current fragmented structure does not support.

On the question of who ultimately controls intermodal freight relationships, Tonsiger was direct: it is not the railroads. “The railroads are wholesalers,” he said, noting that their direct customers are large intermodal marketing companies and ocean carriers such as Schneider, J. B.

Hunt, Maersk, CMA, and Evergreen — not the beneficial cargo owners such as Home Depot or Walmart. That structure, he said, means railroads have limited direct leverage over volume growth and must rely on IMCs and steamship lines to translate network improvements into actual shipments.

The Surface Transportation Board will have final authority over the merger, and Tonsiger expressed confidence in the STB’s process, noting that — unlike regulatory reviews in other countries — the decision rests with a small number of board members rather than the Treasury Department or Justice Department.

He said the merger process has already dragged on for roughly a year and urged the parties to accelerate. “The ball needs to move forward,” he said, adding that he expects the latest CN-related filing to shift the STB calculus, even if the full significance of the settlement may be “being promoted more than it actually means