(Reuters) -CSX and Berkshire Hathaway-owned BNSF on Friday announced new coast-to-coast services to boost freight connectivity in the United States.
Shares of CSX fell about 6% after the announcement, but are up about 5% so far this year.
The new routes will link Southern California with Charlotte, North Carolina, and Jacksonville, Florida.
The move comes after reports emerged last month of a potential deal between the two railroad operators that would counter a rival transcontinental merger between Union Pacific and Norfolk Southern.
Union Pacific launched a similar domestic intermodal service earlier this month, connecting Southern California’s Inland Empire with the Chicago area.
CSX is also under activist pressure from Ancora, which is pushing for a merger or leadership change, and Toms Capital Investment Management’s request to meet with the railroad operator’s board.
Better intermodal volumes helped CSX top analyst estimates for second-quarter profit in July.
Railroad operators have always eyed linking the U.S. Atlantic and Pacific Coasts by rail and this is especially true now, when the industry is struggling with labor constraints and higher operational expenses.
Any merger, however, would be subject to approval from the Surface Transportation Board over concerns of pricing power and consolidation within the industry.
(Reporting by Nathan Gomes in Bengaluru, additional reporting by Abhinav Parmar; Editing by Pooja Desai)
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