FedEx Opposes CP-Norfolk Merger, Adding to Backlash Against Deal

FedEx Corp. told U.S. rail regulators it’s against Canadian Pacific Railway Ltd.’s proposed merger with Norfolk Southern Corp., adding to a long list of shippers opposing the deal.

In a letter to the Surface Transportation Board, the freight unit of FedEx said railroad consolidation would lead to worse service and higher transportation prices. Norfolk Southern has rejected three offers from Canadian Pacific, which continues to call for talks.

“FedEx Freight believes a merger would lead to diminished service as well as higher shipping costs,” the company said in the letter dated Feb. 25.

Canadian Pacific Chief Executive Officer Hunter Harrison has said a tie-up would create a transcontinental railroad that would be more efficient and benefit shippers. Norfolk Southern said the deal can’t win regulatory approval and would hurt service.

Both railroads have used letters from customers in an effort to line up support for their positions. United Parcel Service Inc., the world’s largest package-delivery company, said in a Feb. 9 missive to regulators that the tie-up would hurt freight rail shippers. FedEx echoed its rival’s concerns.

“FedEx Freight is concerned with what the landscape of the railroad industry would be following any potential merger and encourages the Surface Transportation Board to take a cautionary approach in reviewing any consolidation of Class I railroads,” the company said in the letter.

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