<div class="phx-topic abstract-wrapper">The International Air Transport Association has called on governments to settle on a worldwide approach to market-based measures to help manage the 2 percent of global manmade carbon emissions produced by...</div>

The International Air Transport Association has called on governments to settle on a worldwide approach to market-based measures to help manage the 2 percent of global manmade carbon emissions produced by...

<div>The International Air Transport Association <a>has called on governments</a> to settle on a worldwide approach to market-based measures to help manage the 2 percent of global manmade carbon emissions produced by the aviation industry.IATA also stressed the need for governments and industry to agree on all four pillars of the aviation industry’s strategy on climate change: investment in new technology, more efficient operations, better infrastructure and positive economic measure or MBMs.“Governments are fully focused on the International Civil Aviation Organization to agree upon a global solution at their upcoming assembly,” said Tony Tyler, IATA’s director general and CEO, <a>speaking at...

The International Air Transport Association has called on governments to settle on a worldwide approach to market-based measures to help manage the 2 percent of global manmade carbon emissions produced by the aviation industry. IATA also stressed the need for governments and industry to agree on all four pillars of the aviation industry’s strategy on climate change: investment in new technology, more efficient operations, better infrastructure and positive economic measure or MBMs. “Governments are fully focused on the International Civil Aviation Organization to agree upon a global solution at their upcoming assembly,” said Tony Tyler, IATA’s director general and CEO, speaking at the Greener Skies Conference in Hong Kong. ICAO has identified three options: carbon offsetting, carbon offsetting with a revenue-generating component and a full global emissions trading scheme. “MBMs will be a temporary measure,” Tyler added. “The long-term solution for aviation’s carbon emissions requires progress on technology, operations and infrastructure.” He also cited the need for greater attention to the commercialization of sustainable biofuels and improvements in air traffic management.

Air Cargo Carriers News

IATA Says Aviation Needs Global Strategy to Reduce Emissions

<div class="phx-topic abstract-wrapper">Huge rail bottlenecks are being reported across the busy network, with carriers, forwarders and rail freight operators battling to keep cargo flowing as demand begins to build in an early start to peak season. </div>

Huge rail bottlenecks are being reported across the busy network, with carriers, forwarders and rail freight operators battling to keep cargo flowing as demand begins to build in an early start to peak season.

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<div class="phx-topic">Rail freight operations on Germany’s inland corridors are severely disrupted with delays from ongoing construction on key routes aggravated by a fire this week that closed a main line and a derailment in the Port of Hamburg. Huge rail bottlenecks are being reported across the busy network, with carriers, forwarders and rail freight operators battling to keep cargo flowing as demand begins to build in an early start to peak season. “Trains are accumulating in all directions – from north to south and from east to west – effectively leading to a blockage of the entire network,” rail operator Metrans said in a customer advisory. “As a result of this situation, we have been forced to temporarily park some train sets,” the subsidiary of Hamburg terminal operator HHLA added. “Rail traffic is experiencing significant delays, and in some sections it has come to a complete standstill.” Hapag-Lloyd spokesperson Nils Haupt described the situation as “critical,” with rail freight impacted by construction on the main Hamburg-Berlin and Hannover-Hamburg lines. Disruptions have been exacerbated by this week’s fire in Hannover and by a train that derailed at Hamburg’s Container Terminal Altenwerder. “On the detour routes, there are increasing status issues due to the overload,” Haupt told the Journal of Commerce. “As a result, train drivers exceed their allowed driving times, and trains simply cannot continue until the personnel has been replaced. The situation is extremely tense.” The many trains that are outside their schedules must be repositioned before they can return to a normal rhythm, but Haupt said the measure created further train cancellations and capacity shortages. “At present, the full operational impact and duration of the resulting restrictions cannot yet be reliably assessed,” Hapag-Lloyd said in an advisory. “However, further delays, congestion, terminal bottlenecks and disruptions to rail operations in and around the Port of Hamburg are to be expected.” <h3>Missed vessel connections </h3>Matthias Knicky, head of sea logistics in Germany for Kuehne + Nagel, said the forwarder was doing what it could to replan shipper transport and keep cargo moving. “Severe disruptions across the German rail network are currently creating scheduling unpredictability, resulting in missed vessel connections at ports and delays for our customers,” Knicky said. A Maersk spokesperson said ongoing work to modernize Germany’s rail infrastructure was constraining the available track capacity. Decades of underinvestment and overdevelopment of rail services has left Germany’s extensive rail system overloaded and prone to breakdowns. Some key transit corridors are running at 150% of their planned capacity, and broken rails, points failures and damaged overhead line equipment frequently stall trains. When a particular line is blocked, infrastructure managers typically reroute trains to open lines, but with several key northern routes affected in this week’s disruption, that option was difficult. “The situation is being seriously complicated by restrictions on the main diversion route between Hannover and Hamburg, which is currently serving as an alternative to the Berlin–Hamburg corridor,” according to the Metrans advisory. “The infrastructure manager is rerouting trains via diversion routes across northern Germany, with nighttime transit slots primarily allocated to freight trains,” it added. “However, it is becoming evident that these measures are insufficient.” Contact Greg Knowler at <a href="mailto:greg.knowler@spglobal.com">greg.knowler@spglobal.com</a>. </div>

Rail freight operations on Germany’s inland corridors are severely disrupted with delays from ongoing construction on key routes aggravated by a fire this week that closed a main line and a derailment in the Port of Hamburg. Huge rail bottlenecks are being reported across the busy network, with carriers, forwarders and rail freight operators battling to keep cargo flowing as demand begins to build in an early start to peak season. “Trains are accumulating in all directions – from north to south and from east to west – effectively leading to a blockage of the entire network,” rail operator Metrans said in a customer advisory. “As a result of this situation, we have been forced to temporarily park some train sets,” the subsidiary of Hamburg terminal operator HHLA added. “Rail traffic is experiencing significant delays, and in some sections it has come to a complete standstill.” Hapag-Lloyd spokesperson Nils Haupt described the situation as “critical,” with rail freight impacted by construction on the main Hamburg-Berlin and Hannover-Hamburg lines. Disruptions have been exacerbated by this week’s fire in Hannover and by a train that derailed at Hamburg’s Container Terminal Altenwerder. “On the detour routes, there are increasing status issues due to the overload,” Haupt told the Journal of Commerce. “As a result, train drivers exceed their allowed driving times, and trains simply cannot continue until the personnel has been replaced. The situation is extremely tense.” The many trains that are outside their schedules must be repositioned before they can return to a normal rhythm, but Haupt said the measure created further train cancellations and capacity shortages. “At present, the full operational impact and duration of the resulting restrictions cannot yet be reliably assessed,” Hapag-Lloyd said in an advisory. “However, further delays, congestion, terminal bottlenecks and disruptions to rail operations in and around the Port of Hamburg are to be expected.” Missed vessel connections Matthias Knicky, head of sea logistics in Germany for Kuehne + Nagel, said the forwarder was doing what it could to replan shipper transport and keep cargo moving. “Severe disruptions across the German rail network are currently creating scheduling unpredictability, resulting in missed vessel connections at ports and delays for our customers,” Knicky said. A Maersk spokesperson said ongoing work to modernize Germany’s rail infrastructure was constraining the available track capacity. Decades of underinvestment and overdevelopment of rail services has left Germany’s extensive rail system overloaded and prone to breakdowns. Some key transit corridors are running at 150% of their planned capacity, and broken rails, points failures and damaged overhead line equipment frequently stall trains. When a particular line is blocked, infrastructure managers typically reroute trains to open lines, but with several key northern routes affected in this week’s disruption, that option was difficult. “The situation is being seriously complicated by restrictions on the main diversion route between Hannover and Hamburg, which is currently serving as an alternative to the Berlin–Hamburg corridor,” according to the Metrans advisory. “The infrastructure manager is rerouting trains via diversion routes across northern Germany, with nighttime transit slots primarily allocated to freight trains,” it added. “However, it is becoming evident that these measures are insufficient.” Contact Greg Knowler at greg.knowler@spglobal.com .

Port News

Rail News

Container lines

International ports

Intermodal providers

Surface

Disrupted operations leave Germany’s northern rail network in chaos

<div class="phx-topic abstract-wrapper">Shareholder rights law firm Hagens Berman said it is continuing an investigation into whether the intermodal provider “misled investors about having prepared its financial statements consistent with relevant accounting rules.”</div>

Shareholder rights law firm Hagens Berman said it is continuing an investigation into whether the intermodal provider “misled investors about having prepared its financial statements consistent with relevant accounting rules.”

<div class="phx-topic">The chief operating officer and chief financial officer of intermodal provider Hub Group have left the company as it continues reconciling a $77 million accounting error that has drawn scrutiny from regulators and shareholder attorneys. Hub Group’s lead director Peter McNitt and audit committee chair Gary Yablon said the board views the integrity of the company’s financial statements as critical to its future. McNitt said the company’s audit committee conducted a full review of Hub Group’s finances. “We are taking corrective actions, including enhancing our financial reporting processes and making changes to the company’s leadership team,” he said in a statement Thursday. “We will continue to prioritize finalizing our financial statements and becoming current with the filing of our periodic reports with the SEC.” The changes to Hub’s leadership team resulted in the departures of COO Brian Meents and CFO Kevin Beth, the company said. Hub first disclosed accounting irregularities in February, when Beth told investors an error had resulted in an understatement of purchased transportation expenses and accounts payable during the first nine months of 2025. But the full scope of the issue became clearer May 12, when the company filed a Form 8-K with the US Securities and Exchange Commission disclosing that prior financial statements could no longer be relied upon. In that filing, Hub Group said its 2023 and 2024 annual financial statements “should no longer be relied upon” and that it “expects to conclude it did not maintain effective disclosure controls and procedures and internal control over financial reporting” during both years. The company said Meents and Beth will remain available in consulting roles following their departures. Hub Group also announced that Todd Heeter will immediately become interim CFO and treasurer for at least six months, with the term subject to extension while the company conducts a nationwide search for a permanent CFO. The COO position is being eliminated, with those responsibilities reassigned elsewhere within the company. Heeter founded the Heeter Group, which provides corporate financial leadership services, including CFO and chief accounting officer roles for public and private companies. Hub Group noted that Heeter has previously served in interim CFO and senior financial leadership positions. <h3>Law firm investigating </h3>Despite the accounting disclosures, shareholder scrutiny and executive shakeup, Hub Group said it remains financially sound and positioned for growth. “We remain focused on executing our strategy and serving our customers,” Hub CEO Phil Yeager said in the statement. “In the second quarter of 2026 to date, we executed a successful bid season and saw balanced demand trends and stronger pricing as well as increased opportunity for over-the-road conversion.” Yeager said the company also secured significant new business in logistics, while brokerage volumes reflected efforts to improve profitability and increase revenue per load. Hub plans to file its 2025 annual report, including restated results for the affected periods, on or before Sept. 14, the deadline to regain compliance with Nasdaq filing requirements. The company also plans to file first-quarter 2026 results by that date. Hub, meanwhile, could face litigation related to its financial disclosures. Shareholder rights law firm Hagens Berman, based in San Francisco, said it is continuing an investigation into whether the company “misled investors about having prepared its financial statements consistent with relevant accounting rules.” “Now that we know that Hub Group’s admitted improper accounting goes all the way back to fiscal 2023, we’re investigating whether the company may have...understated expenses and monitoring what additional financial statement accounts may have been misstated,” said Reed Kathrein, the Hagens Berman partner leading the firm’s investigation. The law firm said Hub Group’s stock price has declined $14.71 per share, or 28%, since Feb. 5, when the company first disclosed the accounting issues, erasing roughly $890 million in market capitalization. The firm also called on potential whistleblowers with non-public information about Hub Group to come forward and consider participating in the SEC whistleblower program. Contact Dan Ronan at <a href="mailto:contactdanronan@gmail.com">contactdanronan@gmail.com</a>. </div>

The chief operating officer and chief financial officer of intermodal provider Hub Group have left the company as it continues reconciling a $77 million accounting error that has drawn scrutiny from regulators and shareholder attorneys. Hub Group’s lead director Peter McNitt and audit committee chair Gary Yablon said the board views the integrity of the company’s financial statements as critical to its future. McNitt said the company’s audit committee conducted a full review of Hub Group’s finances. “We are taking corrective actions, including enhancing our financial reporting processes and making changes to the company’s leadership team,” he said in a statement Thursday. “We will continue to prioritize finalizing our financial statements and becoming current with the filing of our periodic reports with the SEC.” The changes to Hub’s leadership team resulted in the departures of COO Brian Meents and CFO Kevin Beth, the company said. Hub first disclosed accounting irregularities in February, when Beth told investors an error had resulted in an understatement of purchased transportation expenses and accounts payable during the first nine months of 2025. But the full scope of the issue became clearer May 12, when the company filed a Form 8-K with the US Securities and Exchange Commission disclosing that prior financial statements could no longer be relied upon. In that filing, Hub Group said its 2023 and 2024 annual financial statements “should no longer be relied upon” and that it “expects to conclude it did not maintain effective disclosure controls and procedures and internal control over financial reporting” during both years. The company said Meents and Beth will remain available in consulting roles following their departures. Hub Group also announced that Todd Heeter will immediately become interim CFO and treasurer for at least six months, with the term subject to extension while the company conducts a nationwide search for a permanent CFO. The COO position is being eliminated, with those responsibilities reassigned elsewhere within the company. Heeter founded the Heeter Group, which provides corporate financial leadership services, including CFO and chief accounting officer roles for public and private companies. Hub Group noted that Heeter has previously served in interim CFO and senior financial leadership positions. Law firm investigating Despite the accounting disclosures, shareholder scrutiny and executive shakeup, Hub Group said it remains financially sound and positioned for growth. “We remain focused on executing our strategy and serving our customers,” Hub CEO Phil Yeager said in the statement. “In the second quarter of 2026 to date, we executed a successful bid season and saw balanced demand trends and stronger pricing as well as increased opportunity for over-the-road conversion.” Yeager said the company also secured significant new business in logistics, while brokerage volumes reflected efforts to improve profitability and increase revenue per load. Hub plans to file its 2025 annual report, including restated results for the affected periods, on or before Sept. 14, the deadline to regain compliance with Nasdaq filing requirements. The company also plans to file first-quarter 2026 results by that date. Hub, meanwhile, could face litigation related to its financial disclosures. Shareholder rights law firm Hagens Berman, based in San Francisco, said it is continuing an investigation into whether the company “misled investors about having prepared its financial statements consistent with relevant accounting rules.” “Now that we know that Hub Group’s admitted improper accounting goes all the way back to fiscal 2023, we’re investigating whether the company may have...understated expenses and monitoring what additional financial statement accounts may have been misstated,” said Reed Kathrein, the Hagens Berman partner leading the firm’s investigation. The law firm said Hub Group’s stock price has declined $14.71 per share, or 28%, since Feb. 5, when the company first disclosed the accounting issues, erasing roughly $890 million in market capitalization. The firm also called on potential whistleblowers with non-public information about Hub Group to come forward and consider participating in the SEC whistleblower program. Contact Dan Ronan at contactdanronan@gmail.com .

Transport, Trade and Regulation News

Hub Group COO, CFO leave company after $77 million accounting error

<div class="phx-topic abstract-wrapper">A Canadian bitcoin miner that faced customs delays bringing specialty cooling towers into the US from China alleges Zim and the Port of Houston charged unfair per-diem fees.</div>

A Canadian bitcoin miner that faced customs delays bringing specialty cooling towers into the US from China alleges Zim and the Port of Houston charged unfair per-diem fees.

<div class="phx-topic">A Canadian firm that brought containers from China specially designed to cool bitcoin mining machines is suing Zim Integrated Shipping Services and the Port of Houston for excessive per-diem charges after US Customs and Border Protection (CBP) held the containers three months past their free time. Toronto-based Sunnyside Digital and its Delaware-registered entity Down Quark Systems filed the complaint last week with the Federal Maritime Commission(FMC). The complaint alleges Zim has already charged the company $5,880 in demurrage on its containers, while the Port of Houston Authority as terminal operator charge assessed $917,458 in extended dwell fees for the containers. Along with restitution of those charges, Sunnyside Digital is asking the FMC to investigate and restrain Zim from pursuing another $7 million in demurrage it is trying to collect from Sunnyside. Zim has also filed a federal lawsuit against Sunnyside seeking another $708,153 in terminal storage charges. <h3>‘Bespoke’ containers </h3>The containers themselves were not standard dry containers, the complaint said. Rather, they were “bespoke, highly specialized/modified containers” built to serve as cooling systems for bitcoin mining machines. Sunnyside argued in the complaint that because these were not standard dry containers, they “do not fall within” the scope of Zim’s published tariff. Sunnyside also argued Houston’s <a href="https://www.joc.com/article/houston-to-start-charging-long-dwell-fee-from-feb-1-5224463">excessive dwell fee</a> did not adhere to the FMC’s incentive principle for prompting the timely removal of cargo. Sunnyside said the 147 containers from Shanghai were loaded on the 11,923-TEU Zim Canada on March 17, 2025, and reached Houston about a month later on Good Friday. Due to the holiday, Sunnyside had four days of free time starting the following Monday. However, between April 21 and 23, CBP said it would inspect nine of the containers, while putting a hold on the rest until the inspection was completed. Sunnyside said between April 23 and May 6, CBP provided no information about “the basis for the hold or inspection of the containers.” On May 7, CBP issued a formal notice of detention for the containers to Sunnyside. About a month later, Sunnyside said CBP would only release the containers if Sunnyside agreed to a different valuation and tariff classification for the cargo. Sunnyside submitted a bond to CBP on July 31 to release the containers. Customs holds and the resulting demurrage fees from ocean carriers and marine terminals have been an issue for some shippers. In 2023, the FMC’s National Shipper Advisory had <a href="https://www.joc.com/article/shipper-group-wants-more-fmc-action-on-dwell-fees-erds-5220538">sought for the agency to determine</a> that shippers should only be billed a portion of per-diem fees resulting from government holds. But the agency has yet to craft a rule addressing the issue. Contact Michael Angell at <a href="mailto:michael.angell@spglobal.com">michael.angell@spglobal.com</a>. </div>

A Canadian firm that brought containers from China specially designed to cool bitcoin mining machines is suing Zim Integrated Shipping Services and the Port of Houston for excessive per-diem charges after US Customs and Border Protection (CBP) held the containers three months past their free time. Toronto-based Sunnyside Digital and its Delaware-registered entity Down Quark Systems filed the complaint last week with the Federal Maritime Commission(FMC). The complaint alleges Zim has already charged the company $5,880 in demurrage on its containers, while the Port of Houston Authority as terminal operator charge assessed $917,458 in extended dwell fees for the containers. Along with restitution of those charges, Sunnyside Digital is asking the FMC to investigate and restrain Zim from pursuing another $7 million in demurrage it is trying to collect from Sunnyside. Zim has also filed a federal lawsuit against Sunnyside seeking another $708,153 in terminal storage charges. ‘Bespoke’ containers The containers themselves were not standard dry containers, the complaint said. Rather, they were “bespoke, highly specialized/modified containers” built to serve as cooling systems for bitcoin mining machines. Sunnyside argued in the complaint that because these were not standard dry containers, they “do not fall within” the scope of Zim’s published tariff. Sunnyside also argued Houston’s excessive dwell fee did not adhere to the FMC’s incentive principle for prompting the timely removal of cargo. Sunnyside said the 147 containers from Shanghai were loaded on the 11,923-TEU Zim Canada on March 17, 2025, and reached Houston about a month later on Good Friday. Due to the holiday, Sunnyside had four days of free time starting the following Monday. However, between April 21 and 23, CBP said it would inspect nine of the containers, while putting a hold on the rest until the inspection was completed. Sunnyside said between April 23 and May 6, CBP provided no information about “the basis for the hold or inspection of the containers.” On May 7, CBP issued a formal notice of detention for the containers to Sunnyside. About a month later, Sunnyside said CBP would only release the containers if Sunnyside agreed to a different valuation and tariff classification for the cargo. Sunnyside submitted a bond to CBP on July 31 to release the containers. Customs holds and the resulting demurrage fees from ocean carriers and marine terminals have been an issue for some shippers. In 2023, the FMC’s National Shipper Advisory had sought for the agency to determine that shippers should only be billed a portion of per-diem fees resulting from government holds. But the agency has yet to craft a rule addressing the issue. Contact Michael Angell at michael.angell@spglobal.com .

North American ports

Maritime

Bitcoin miner hits Zim, Houston with FMC lawsuit on delayed boxes

<div class="phx-topic abstract-wrapper">Rather than single objections against the proposed transcontinental railroad, time is the real threat to this deal, writes analyst Paul Tonsager. </div>

Rather than single objections against the proposed transcontinental railroad, time is the real threat to this deal, writes analyst Paul Tonsager.

<div class="phx-topic">On May 28, <a href="https://www.joc.com/article/stb-accepts-upns-paperwork-buts-holds-on-merger-decision-6228099">the Surface Transportation Board (STB) accepted</a> the amended Union Pacific (UP) and Norfolk Southern (NS) merger application. This was the April refiling, submitted after the Board rejected the railroads’ first attempt in January. UP and NS will call the acceptance a milestone. It is the least important thing the Board did that day. The same decision held the entire proceeding in abeyance. No merits schedule. No environmental review. The Board ordered the railroads to supplement nine areas of the filing by July 27, and it will not start the review clock until it has that material and is satisfied with it. <div class="wrapper-narrow float-right-element"><img src="/images/phoenix/6228199_0.1.jpg"></img></div>Clearing completeness means the filing was good enough to keep, not good enough to approve. The Board said in the same decision that several parts of the application are unclear or underdeveloped. So here is where this now stands, and it is not where the railroads wanted to be. The Board did two things it did not have to pair: it kept the application alive and refused to set a date for judging it. Discovery continues, so UP and NS keep working ... but working does not mean advancing. The Board is moving the chains, and, two filings in, the railroads still have not picked up a first down. That makes time the real threat to this deal, ahead of any single objection the opponents are raising. The Board did not need to find a fatal flaw. Keeping the calendar open is enough. The wait is not neutral. The railroads carry the cost of an $85 billion transaction sitting in limbo, while the opposition uses that time to organize its filings and line up allies in Congress. Competitors keep taking real freight in real time, with CPKC selling the single-line service the merged carrier does not yet exist to counter. Everybody waits, but nobody waits equally. The deal’s own structure makes the delay bite harder. There is no voting trust, so Norfolk Southern shareholders are not cashed out early. Instead, they wait for full STB approval to be paid, which puts the entire timeline on their backs. The agreement’s outside date of Jan. 28, 2028, extends automatically if the review runs long. Sounds like a safety valve? Well, it is the trap. The deal has no clean expiration and no forcing event. It does not die on a deadline but erodes; it creates a combination that is now likelier to fail from exhaustion than from a flat “no.” The case for benefits decays on the same clock. The payoff the railroads are selling — led by 2.1 million truckloads moved off the highway — is modeled from a close date. Every quarter that close slips right, the present value of those benefits falls. As a result, delay weakens the central exhibit the Board is supposed to weigh. On substance, the sharpest signal in the decision is a small one. The Board asked for the applicants’ workpapers as a standalone supplemental item, which, in plain terms, means it could not reproduce the railroads’ own numbers from what they filed. That is a pointed thing for a regulator to put in writing about a benefits case. The Board also pulled the St. Louis and Kansas City terminals into one request alongside the TTX railcar pool, on gateways and car supply — a sign it sees neutral access to shared infrastructure as a single unresolved question rather than a set of separate fixes. For shippers, the takeaway is direct. Do not build around an early close. The initial target the railroads set by the first half of 2027 is now unreachable. The safe assumption now is later and open-ended. If your routing or rate strategy assumes a combined UP-NS network by 2027, rebuild it without that assumption. I support this merger, <a href="https://www.joc.com/article/strategic-vision-of-up-ns-merger-must-meet-operational-reality-6139519">I have said so in this publication</a> and elsewhere. The transcontinental thesis is sound, truck conversion is real, and single-line service creates genuine value. That is exactly why the execution should worry supporters more than critics. The merits fight is winnable on the record. The July 27 supplement is the third attempt at a record this Board will act on. The first application was rejected outright; the second cleared completeness and was still parked, because the Board found too much of it underdeveloped to judge; and there is no clever third version. The Board has told the railroads twice what it needs, and anyone who has watched this agency knew the list before the first application was filed. So give it to them, put the real numbers and the methodology behind them on the record, and stop trying to win on anything but substance. Every month spent deciding what to hold back is a month the clock takes off the merits case that can actually carry it. The author holds no equity in either carrier and represents no Class I railroad in this transaction. Paul Tonsager has held executive roles at Maersk, CN Rail, CN Worldwide, Coyote (RXO) and Patriot Rail. He is the founder of Integrated Multimodal Solutions LLC and author of the Substack newsletter Signals &amp; Switches. Contact him at <a href="mailto:paul.tonsager@multimodalsolutions.io">paul.tonsager@multimodalsolutions.io</a>. </div>

On May 28, the Surface Transportation Board (STB) accepted the amended Union Pacific (UP) and Norfolk Southern (NS) merger application. This was the April refiling, submitted after the Board rejected the railroads’ first attempt in January. UP and NS will call the acceptance a milestone. It is the least important thing the Board did that day. The same decision held the entire proceeding in abeyance. No merits schedule. No environmental review. The Board ordered the railroads to supplement nine areas of the filing by July 27, and it will not start the review clock until it has that material and is satisfied with it. Clearing completeness means the filing was good enough to keep, not good enough to approve. The Board said in the same decision that several parts of the application are unclear or underdeveloped. So here is where this now stands, and it is not where the railroads wanted to be. The Board did two things it did not have to pair: it kept the application alive and refused to set a date for judging it. Discovery continues, so UP and NS keep working ... but working does not mean advancing. The Board is moving the chains, and, two filings in, the railroads still have not picked up a first down. That makes time the real threat to this deal, ahead of any single objection the opponents are raising. The Board did not need to find a fatal flaw. Keeping the calendar open is enough. The wait is not neutral. The railroads carry the cost of an $85 billion transaction sitting in limbo, while the opposition uses that time to organize its filings and line up allies in Congress. Competitors keep taking real freight in real time, with CPKC selling the single-line service the merged carrier does not yet exist to counter. Everybody waits, but nobody waits equally. The deal’s own structure makes the delay bite harder. There is no voting trust, so Norfolk Southern shareholders are not cashed out early. Instead, they wait for full STB approval to be paid, which puts the entire timeline on their backs. The agreement’s outside date of Jan. 28, 2028, extends automatically if the review runs long. Sounds like a safety valve? Well, it is the trap. The deal has no clean expiration and no forcing event. It does not die on a deadline but erodes; it creates a combination that is now likelier to fail from exhaustion than from a flat “no.” The case for benefits decays on the same clock. The payoff the railroads are selling — led by 2.1 million truckloads moved off the highway — is modeled from a close date. Every quarter that close slips right, the present value of those benefits falls. As a result, delay weakens the central exhibit the Board is supposed to weigh. On substance, the sharpest signal in the decision is a small one. The Board asked for the applicants’ workpapers as a standalone supplemental item, which, in plain terms, means it could not reproduce the railroads’ own numbers from what they filed. That is a pointed thing for a regulator to put in writing about a benefits case. The Board also pulled the St. Louis and Kansas City terminals into one request alongside the TTX railcar pool, on gateways and car supply — a sign it sees neutral access to shared infrastructure as a single unresolved question rather than a set of separate fixes. For shippers, the takeaway is direct. Do not build around an early close. The initial target the railroads set by the first half of 2027 is now unreachable. The safe assumption now is later and open-ended. If your routing or rate strategy assumes a combined UP-NS network by 2027, rebuild it without that assumption. I support this merger, I have said so in this publication and elsewhere. The transcontinental thesis is sound, truck conversion is real, and single-line service creates genuine value. That is exactly why the execution should worry supporters more than critics. The merits fight is winnable on the record. The July 27 supplement is the third attempt at a record this Board will act on. The first application was rejected outright; the second cleared completeness and was still parked, because the Board found too much of it underdeveloped to judge; and there is no clever third version. The Board has told the railroads twice what it needs, and anyone who has watched this agency knew the list before the first application was filed. So give it to them, put the real numbers and the methodology behind them on the record, and stop trying to win on anything but substance. Every month spent deciding what to hold back is a month the clock takes off the merits case that can actually carry it. The author holds no equity in either carrier and represents no Class I railroad in this transaction. Paul Tonsager has held executive roles at Maersk, CN Rail, CN Worldwide, Coyote (RXO) and Patriot Rail. He is the founder of Integrated Multimodal Solutions LLC and author of the Substack newsletter Signals & Switches. Contact him at paul.tonsager@multimodalsolutions.io .

North-American rail

Benefits of UP-NS merger erode on approval delay: analyst

<div class="phx-topic abstract-wrapper">The agency said there needs to be additional information submitted concerning the environmental impact of the merger. </div>

The agency said there needs to be additional information submitted concerning the environmental impact of the merger.

<div class="phx-topic">The US Surface Transportation Board (STB) Thursday unanimously voted to accept Union Pacific Railroad’s (UP’s) revised application to acquire Norfolk Southern Railway (NS) but held off from giving a final blessing. Instead, the STB put a final decision in abeyance, because the agency said there needs to be additional information submitted concerning the environmental impact of the merger. The STB gave Union Pacific until July 26 to submit that material. The decision allows the process to go forward, but it is potentially another delay in the regulatory review of the proposed $85 billion transaction. The decision does not kill the deal but signals that regulators still do not believe the companies have provided enough information to allow a formal review of the proposed merger to begin, <a href="https://www.joc.com/article/stb-rejects-up-ns-merger-application-as-incomplete-6154074">much like they wrote in January</a>. “Today, the Board finds that Applicants have provided sufficient information to satisfy the completeness requirements for a major merger application.  Given the fairly narrow procedural question of completeness, issues raised by commenters do not warrant rejecting the revised application,” the STB wrote in its decision. Still, the STB’s decision might end the proposed marriage due to the costs associated with the deal. Previously, UP and NS disclosed that each was spending between $40 million and $60 million per quarter on merger-related expenses; eventually, shareholders might decide the costs are too much to continue. “However, the Board finds that there are several aspects of the revised application that are unclear or underdeveloped and require supplementation at this stage of the proceeding so that the Board may have the information necessary to thoroughly evaluate — and the public has an adequate opportunity to comment on — whether the transaction is in the public interest.” While not a rejection, the ruling is a setback because UP and NS thought the revised application fixed everything that was deemed deficient in January. The revised filing updated truck-to-rail conversions and attempted to address concerns over two entities — Kansas City Terminal Railway and the Terminal Railroad Association of St. Louis — which control switching and operations across those cities. Both groups are jointly owned by Class I railroads. It also disclosed Schedule 5.8 of the merger agreement, the document that defines which regulatory conditions would be onerous enough for the companies to walk away from the deal. Nevertheless, regulators effectively sided with opponents who argued the revised application remained too vague on market concentration, traffic diversions and control of jointly-owned rail assets. UP and NS said <a href="https://www.joc.com/article/ups-revised-filing-for-ns-merger-boosts-number-of-freight-conversions-6212318">the merger would shift 2.1 million truckloads from highways to rail each year</a> and save shippers an estimated $3.5 billion annually. UP and NS also say the combined railroad would create 88,000 new county-to-county lanes for single-line rail service and convert 10,000 existing interline lanes into single-line routes.  Opponents argued that those figures are too optimistic and not sufficiently supported. Their central claim is that UP and NS are overstating how much freight would move from truck to rail while understating how much traffic would simply be diverted from rival railroads. In its statement announcing the decision, the STB indicated it may be losing patience with Union Pacific, but it appears willing to give the parties 60 days to resolve the questions. Both railroads said the agency’s decision gives them a path forward to an eventual approval and merger. <h3>Decision time for UP, NS </h3>In a May 22 filing to the STB, state attorneys general from Florida, Iowa, Kansas, Montana, North Dakota and South Dakota argued that the application still failed to address how the combined UP and NS would control about half of US Class I freight rail traffic. The attorneys general also said the companies had not adequately analyzed whether the deal could trigger another round of Class I consolidation or provided enough detail on Kansas City, St. Louis, or a joint equipment pool of intermodal railcars called TTX. For UP and NS, the ruling turns what had been expected to be a procedural move into another test of the merger’s viability. The two railroads must now decide whether to submit additional information, providing more detail on the competitive and operational issues opponents have raised. Or they can decide to walk away from the deal. The calendar may also become a factor. As it stands, a decision from the STB was not likely until late 2027, but an additional delay would likely push attempts to rescue the deal into 2028, an election year. Democrats on Capitol Hill have already voiced their opposition to the merger because they believe it would create a virtual monopoly and harm union labor. Contact Ari Ashe at <a href="mailto:ari.ashe@spglobal.com">ari.ashe@spglobal.com</a>. Special Correspondent Dan Ronan contributed to this report. </div>

The US Surface Transportation Board (STB) Thursday unanimously voted to accept Union Pacific Railroad’s (UP’s) revised application to acquire Norfolk Southern Railway (NS) but held off from giving a final blessing. Instead, the STB put a final decision in abeyance, because the agency said there needs to be additional information submitted concerning the environmental impact of the merger. The STB gave Union Pacific until July 26 to submit that material. The decision allows the process to go forward, but it is potentially another delay in the regulatory review of the proposed $85 billion transaction. The decision does not kill the deal but signals that regulators still do not believe the companies have provided enough information to allow a formal review of the proposed merger to begin, much like they wrote in January . “Today, the Board finds that Applicants have provided sufficient information to satisfy the completeness requirements for a major merger application.  Given the fairly narrow procedural question of completeness, issues raised by commenters do not warrant rejecting the revised application,” the STB wrote in its decision. Still, the STB’s decision might end the proposed marriage due to the costs associated with the deal. Previously, UP and NS disclosed that each was spending between $40 million and $60 million per quarter on merger-related expenses; eventually, shareholders might decide the costs are too much to continue. “However, the Board finds that there are several aspects of the revised application that are unclear or underdeveloped and require supplementation at this stage of the proceeding so that the Board may have the information necessary to thoroughly evaluate — and the public has an adequate opportunity to comment on — whether the transaction is in the public interest.” While not a rejection, the ruling is a setback because UP and NS thought the revised application fixed everything that was deemed deficient in January. The revised filing updated truck-to-rail conversions and attempted to address concerns over two entities — Kansas City Terminal Railway and the Terminal Railroad Association of St. Louis — which control switching and operations across those cities. Both groups are jointly owned by Class I railroads. It also disclosed Schedule 5.8 of the merger agreement, the document that defines which regulatory conditions would be onerous enough for the companies to walk away from the deal. Nevertheless, regulators effectively sided with opponents who argued the revised application remained too vague on market concentration, traffic diversions and control of jointly-owned rail assets. UP and NS said the merger would shift 2.1 million truckloads from highways to rail each year and save shippers an estimated $3.5 billion annually. UP and NS also say the combined railroad would create 88,000 new county-to-county lanes for single-line rail service and convert 10,000 existing interline lanes into single-line routes.  Opponents argued that those figures are too optimistic and not sufficiently supported. Their central claim is that UP and NS are overstating how much freight would move from truck to rail while understating how much traffic would simply be diverted from rival railroads. In its statement announcing the decision, the STB indicated it may be losing patience with Union Pacific, but it appears willing to give the parties 60 days to resolve the questions. Both railroads said the agency’s decision gives them a path forward to an eventual approval and merger. Decision time for UP, NS In a May 22 filing to the STB, state attorneys general from Florida, Iowa, Kansas, Montana, North Dakota and South Dakota argued that the application still failed to address how the combined UP and NS would control about half of US Class I freight rail traffic. The attorneys general also said the companies had not adequately analyzed whether the deal could trigger another round of Class I consolidation or provided enough detail on Kansas City, St. Louis, or a joint equipment pool of intermodal railcars called TTX. For UP and NS, the ruling turns what had been expected to be a procedural move into another test of the merger’s viability. The two railroads must now decide whether to submit additional information, providing more detail on the competitive and operational issues opponents have raised. Or they can decide to walk away from the deal. The calendar may also become a factor. As it stands, a decision from the STB was not likely until late 2027, but an additional delay would likely push attempts to rescue the deal into 2028, an election year. Democrats on Capitol Hill have already voiced their opposition to the merger because they believe it would create a virtual monopoly and harm union labor. Contact Ari Ashe at ari.ashe@spglobal.com . Special Correspondent Dan Ronan contributed to this report.

STB accepts UP/NS paperwork, puts holds on merger decision

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