WASHINGTON - A recent railroad-chemical industries agreement on the merger of two major rail carriers contains no incentive to keep shipping costs down for the plastics industry on the Texas Gulf Coast, according to the Society of the Plastics Industry Inc. Washington-based SPI said April 29 it continues to oppose the merger of the Union Pacific and Southern Pacific railroads, citing what it claims will be a reduction of rail transport competition in the United States' chief petrochemical processing region.
Concerned about the merger since its formal filing with the federal Surface Transportation Board in November, SPI refrained from outright condemnation of the deal until March.
The matter must be approved by STB, the federal agency charged with review of railroad ownership, rate and trackage following the January abolition of the Interstate Commerce Commission. STB is expected to vote on the merger July 3 and issue a written decision in August.
Besides the specter of rising costs for plastics that might result from the merger, SPI President Larry Thomas said April 29 that the April 18 settlement between the UP/SP railroads and the Chemical Manufacturers Association ``does not go far enough in addressing the very real cost and service concerns of the plastics industry.''
CMA, which presented Union Pacific Corp.'s management with a list of demands March 28, removed objections to the merger April 18.
Thomas said the settlement does not dissipate the domination of the plastics industry that such a merger would allow. A combined UP/SP would have access to 90 percent of the plastics resin-making industry in the United States, SPI claimed.
If approved, the UP/SP merger would leave only the combined Burlington Northern/Santa Fe Railroad as a rail competitor of any stature in that region.
CMA's action on behalf of its members ``doesn't stop individual [member] companies [and associations] from making their own settlements'' with the railroad, said CMA spokesman Tom Gilroy.