Railroad merger will be good for taxpayers and roads. Here’s why | Opinion
Anyone who has driven on America’s highways knows the story: potholes, cracked pavement and endless construction zones. Billions of tax dollars are spent every year just to maintain our roads, but they always seem one step behind. What most motorists don’t realize is that much of the damage comes from heavy trucks — and how little trucking companies pay to repair it.
According to federal estimates, a single fully loaded 18-wheeler can inflict pavement damage equivalent to that of nearly 10,000 passenger cars. Yet fuel taxes and highway user fees collected from trucking companies cover only a fraction of the wear and tear they cause. The rest is subsidized by taxpayers, who shoulder the cost of constant repaving and bridge repairs.
Of course, trucking has an important place in our economy, and ships, freight rail and trucking work together as the backbone of America’s supply chain. But it makes sense to rely on freight rail as much as possible, since the rail network is a dedicated system and is maintained by the rail companies themselves. It’s safer for everyone to move as much freight as possible over rail.
The recently proposed merger of Union Pacific and Norfolk Southern represents an opportunity to improve our roads and our supply chains at the same time. By creating a more efficient, coast-to-coast rail network, the merger would allow railroads to capture more freight that currently travels by truck — relieving taxpayers of billions of dollars in hidden subsidies for road repair.
Combining Union Pacific’s railroad, which spans much of the western U.S., with Norfolk Southern’s network in the east, would create the country’s first transcontinental rail company, stretching from coast to coast. For shippers, that would mean single-line pricing rather than dealing with various operators across separate rail networks to get from point A to point B. It also would allow for faster delivery thanks to the elimination of interchanges and lower costs.
Unlike truck companies, railroads build and maintain their own infrastructure. Every mile of track, every bridge and every switching yard is built and maintained with private capital. When freight shifts from trucks to trains, taxpayers benefit twice: fewer dollars are spent fixing battered highways, and more freight is carried by a system that requires no public dollars.
The potential savings for taxpayers are not theoretical. Trucks have been estimated to create about 40% of the damage on our nation’s roads despite being responsible for as little as 10% of miles driven. A study by the North Carolina Department of Transportation found that trucks with four or more axles underpay by 37% to 92% for the infrastructure damage they cause. State budgets from Texas to Pennsylvania show the same pattern: road maintenance costs far outpace what trucking fees bring in. Every additional ton of freight shifted to rail represents pavement preserved and taxpayer dollars saved.
To be sure, critics of the merger will warn of a monopoly, as they always do when industries consolidate. But that misses the real competitive landscape. In addition to competing with other railroads, rail competes vigorously with trucks, which dominate American freight today. Trucks control roughly 70% of domestic freight volume — subsidized in part by taxpayer-funded roads. Allowing railroads to offer a stronger alternative isn’t anti-competitive; it’s pro-market. It creates stronger competition for taxpayer-subsidized trucking.
At its heart, this merger is a test of whether the Trump administration trusts the free market to deliver solutions. Union Pacific and Norfolk Southern are not asking taxpayers to fund their merger. They are not asking for subsidies, grants, or carve-outs. They are investing their own capital to create a system that reduces public costs, strengthens supply chains, and keeps America competitive.
If policymakers are serious about preserving America’s battered roads, as well as strengthening our supply chain infrastructure, the choice is obvious. Let the free market work, and let railroads take more freight off the highways.
Tom Giovanetti is president of the Institute for Policy Innovation, a conservative, free-market public policy research organization based in Dallas.
