Washington District of Columbia USA - The chairman of the U.S. House Transportation and Infrastructure Committee announced his opposition on Tuesday to Canadian Pacific's (CP) proposed railroad merger with Norfolk Southern Corporation (NS), dealing a fresh blow to the prospect of a deal.
 
"I do not believe it is in the best interests of the U.S. freight transportation system, railroad employees, rail shippers, and the shortline railroads," Representative Bill Shuster, a Pennsylvania Republican, said in a statement.
 
"I believe it is time for all parties to move on from hypothetical merger proposals," he said.
 
CP, which is Canada's second-largest railroad, disclosed in mid-November a $28-billion offer for NS.
 
The Calgary-based company has said a merger would result in savings of more than $1.8 billion annually.
 
Virginia-based NS has rebuffed those advances.
 
A number of Democratic lawmakers in Congress, including all the party's representatives from Illinois and Pennsylvania, have spoken out against a merger.
 
Some customers also oppose it, including package deliver companies FedEx Corporation and United Parcel Service Incorporated, out of fears the associated cost cuts would hurt rail service.
 
UPS is the largest customer of the major U.S. railroads.
 
Shuster's opposition could resonate with the U.S. Surface Transportation Board (STB), a federal rail regulator that has said it will not approve a major railroad merger shown not to be in the public interest.
 
CP and NS would have to agree to a merger prior to a review by the STB.
 
Shuster noted that CP had actively pursued a merger in the United States since 2014.
 
An earlier bid was rejected by CSX Corporation.
 
"A strong, healthy, and well-functioning freight rail system is critical to the movement of goods in this country," he said in his statement.
 
"However, CP's pursuit of a merger over the last two years has done nothing but create uncertainty in the rail industry, and there continues to be no clear path forward for such an arrangement."
 
A CP spokesman said in an email that a merger with NS would provide "better, faster, service for shippers" at a lower cost.
 
"The end result would be a single-line, transcontinental option, that improves market access and ensures the timely and efficient flow of freight," the spokesman said.
 
NS shares were down 1.8 percent in midday trading on the New York Stock Exchange, while CP shares were largely unchanged on the Toronto Stock Exchange.
 
David Morgan and Nick Carey.