Raphael Stevens

The House Committee on Energy and Commerce asked Shein in a letter to share more information on its relationship with China and its data privacy protections as it moves closer to a U.S. IPO.
Shein is already facing intense scrutiny from public officials about its use of forced labor, but lawmakers are now drilling down on other aspects of Shein’s business.
Similar letters were sent to Temu, TikTok and Alibaba

A sign hangs outside the Shein warehouse in Whitestown, Indiana, on Nov. 29, 2023.
Scott Olson | Getty Images

The chair of a powerful House committee is drilling down on Shein’s data privacy practices and its relationship with the Chinese Communist Party as the fast-fashion giant moves closer to a U.S. initial public offering. 
Reps. Cathy McMorris Rodgers, a Washington Republican who leads the House’s Committee on Energy and Commerce, sent a letter to Shein on Wednesday asking about the user data it collects and the communications it has had with the Chinese government. Rep. Gus Bilirakis, R-Fla., who chairs the panel’s Subcommittee on Innovation, Data and Commerce, co-signed the letter.

The lawmakers sent similar missives to TikTok, Temu and Alibaba. 
“Media reports indicate that Chinese-owned e-commerce marketplaces are increasingly popular in the western world. This is a serious risk for e-commerce, consumer safety, and people’s data privacy and security,” the letter states. “The rise in popularity of apps and marketplaces like, TikTok, TaoBao, Pinduoduo, Temu, Alibaba, AliExpress, and Shein, has resulted in sharp public scrutiny regarding the business practices of these companies.” 
In response, a Shein spokesperson told CNBC it has received the committee’s letter “and will be providing a response.” 
Shein has received numerous letters from members of Congress and local lawmakers across the nation about the use of forced labor in its supply chain, and it is already facing intense scrutiny from public officials who are concerned the retailer is skirting U.S. laws. However, Wednesday’s letter from McMorris Rodgers and Bilirakis differs in both its focus and its bite. 
While the letter touched on Shein’s use of forced labor, it focused primarily on data privacy. Contrary to some of the other elected officials and committees scrutinizing Shein, the Energy and Commerce committee has more heft in its mandate to handle issues related to consumer protections and foreign commerce.

The letter asks Shein what data protection practices it requires from its third-party vendors and service providers and whether it collects biometric, genetic and other health data from users. The lawmakers also asked whether the company collects information on consumers’ religious and political beliefs. 
The letter questioned whether Shein agrees that genocide is occurring in China’s Xinjiang region, primarily against the Uyghur ethnic group, and if it can “unequivocally state” that its supply chain is free of forced labor. 
Earlier this year, when asked whether it stores U.S. data in China, Shein told CNBC that information is stored within Microsoft and Amazon’s cloud services “in data centers and regions located within the United States.”
However, lawmakers are still concerned that data on U.S. consumers can end up in the hands of the Chinese government. While Shein insists that it’s a global company that was founded in China, the bulk of its supply chain is based in the region, and it could be subject to Chinese law. 
“From 2014 to 2017, the Chinese Communist Party (CCP) passed several laws requiring all Chinese tech companies to allow CCP officials access to user data. Further, all Chinese tech companies must comply with the demands of the CCP, which in some cases is a ‘require[ment] to build [their] networks in such a way as where the Chinese government has access,'” the letter states. “Past violations by TikTok, and other Chinese-owned applications, to protect user data, and China’s record of accessing Americans’ information, undercuts any claim of data security.” Don’t miss these stories from CNBC PRO: More

Warner Bros. Discovery held early talks with Paramount Global this week to discuss a potential merger.
The discussions should be seen as a kickoff to the next chapters for Warner Bros. Discovery and Paramount Global.
The talks maybe lure Comcast’s NBCUniversal to the table, as well.

Let’s say you have a crush on two people and you find out one of them may like you back. Do you just start dating that person, or do you find out what the other person thinks, too?
That’s where Warner Bros. Discovery finds itself today. The company has held preliminary merger talks with Paramount Global, the media conglomerate controlled by Shari Redstone. Warner Bros. Discovery Chief Executive David Zaslav met with Paramount Global CEO Bob Bakish on Tuesday to discuss what a merger of the companies may look like, according to people familiar with the matter.

“Crush” may actually be too strong here. This is not a case of both companies lusting for each other. It’s more of a partnership of necessity. Both companies don’t have a clear future competing for content in a streaming-dominated world where Apple, Amazon, Netflix and YouTube owner Google have far larger balance sheets. They just want to survive and boost their share price.
But maybe Warner Bros. Discovery would rather merge with Comcast’s NBCUniversal — if Comcast is open to it. There may be regulatory issues with NBCUniversal. It’s unclear whether officials would allow Universal and Warner Bros. to come together. This year, they’re the top two U.S. movie studios by revenue. While smaller than Warner Bros. or Universal, Paramount is still a top five studio most years.
Comcast also owns cable news channel MSNBC, which may or may not be a problem for regulators given that Warner Bros. Discovery owns CNN.
Deal structure will be important here. If Comcast spins out NBCUniversal to merge with Warner Bros. Discovery, it could theoretically give Zaslav debt-free earnings to strengthen the combined company’s balance sheet.

Bob Bakish, president and chief executive officer of Viacom, attends the fourth day of the annual Allen & Company Sun Valley Conference, July 11, 2023 in Sun Valley, Idaho. 
David A. Grogan | CNBC

That might be more enticing than taking on Paramount Global’s $15 billion of debt. Warner Bros. Discovery has nearly $45 billion of debt and has worked to bring down its leverage all year by boosting free cash flow. Buying Paramount Global might be viewed as starting over for Zaslav, who hasn’t made many friends in Hollywood with his intensive cutting of both jobs and content spending.

It’s also possible Comcast CEO Brian Roberts wants to hold on to NBCUniversal and isn’t interested in doubling down on legacy media right now. NBCUniversal isn’t in merger talks with anyone right now, according to a person familiar with the matter. Spokespeople for Comcast, Warner Bros. Discovery and Paramount Global all declined to comment.
Generally speaking, Comcast’s NBCUniversal has similar assets to Paramount Global. They both have broadcast networks: NBC for NBCUniversal and CBS for Paramount Global. They both own a slew of aging cable networks. NBCUniversal’s include Bravo, E! and USA. Paramount Global’s include Nickelodeon, MTV and Comedy Central. Both companies have subscale, money-losing streaming services. Paramount Global owns Paramount+ (and Showtime), and NBCUniversal has Peacock.
NBCUniversal probably isn’t a merger fit with Paramount Global, though. Both companies’ ownership of broadcast networks likely makes that deal a non-starter.
Opening discussions with Paramount Global should give Warner Bros. Discovery a read on where Comcast stands on dealmaking. Is Comcast OK with Paramount Global and Warner Bros. Discovery merging? Or does Roberts want to combine with Warner Bros. Discovery instead, leaving Paramount Global without an obvious dance partner? Would that lead Redstone to selling her stake in National Amusements and letting someone else, like David Ellison at Skydance, figure out the future for Paramount Global?
Those discussions have now begun. They will almost certainly heat up in the coming weeks and months. The starting gun has been fired. Welcome to 2024.
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. More

Warner Bros. Discovery and Paramount Global are in merger talks, sources told CNBC.
Paramount’s controlling shareholder, Shari Redstone, is reportedly eager for a deal partner.
Under CEO David Zaslav, Warner Bros. Discovery has positioned itself to be a buyer.

Warner Bros. Discovery and rival Paramount Global are in early merger talks, sources familiar with the matter told CNBC.
Warner Bros. Discovery CEO David Zaslav and Paramount CEO Bob Bakish met Tuesday to discuss the contours of a possible deal, said the sources, who declined to be named since the talks are private. The discussions are preliminary, and a deal may not materialize.

Warner Bros. Discovery and Paramount declined to comment.
The news comes as speculation about Paramount’s future heats up. Controlling shareholder Shari Redstone is reportedly eager to make a deal. Redstone controls Paramount through her company National Amusements. Recently, Redstone held talks with David Ellison’s Skydance, which is backed by Gerry Cardinale’s investment firm RedBird, according to people familiar with the matter.
Paramount, whose assets include its namesake movie studio as well as broadcast network CBS, is carrying a hefty debt load, as well.
Meanwhile, Warner Bros. Discovery, the result of a merger between Warner Media and Discovery, has been slashing costs and attacking its debt levels under Zaslav. The company has since said its streaming business has become profitable while other streamers, outside of leader Netflix, try to reverse losses.
Last month, Zaslav and Liberty Media’s John Malone, a Warner Bros. Discovery shareholder and board member, appeared to indicate that the company was preparing to become a buyer within the next year or two. The broader media industry is widely considered ripe for consolidation. Media executives are worried, however, that President Joe Biden’s administration could be hostile to a big media merger.

Warner Bros. Discovery is approaching the two-year anniversary of its 2022 merger. That’s a key benchmark for Reverse Morris Trust tax reasons. It means that Warner Bros. Discovery can do another significant deal two years after the close of the previous merger.
There’s also speculation within the industry that Warner Bros. Discovery could end up in merger talks with Comcast’s NBCUniversal.
Axios previously reported the Paramount-Warner Bros. Discovery talks. Warner Bros. Discovery’s stock fell more than 5% Wednesday after the news broke, while Paramount shares bounced a little off their lows.
— CNBC’s Drew Richardson contributed to this report.
Disclosure: NBCUniversal is the parent company of CNBC.Don’t miss these stories from CNBC PRO: More

General Mills and FedEx both cut revenue guidance for their fiscal years.
The companies cited softer demand from consumers.
General Mills saw “a slower-than-expected volume recovery in the second quarter amid a continued challenging consumer landscape.”

Limited Edition holiday breakfast cereal, Christmas Crunch in holiday shapes, Target store, Queens, New York. (Photo by: Lindsey Nicholson/UCG/Universal Images Group via Getty Images)
Lindsey Nicholson | Getty Images

Two big companies weighed in on persistent demand woes this week.
General Mills, which reported earnings Wednesday morning, said tepid demand and pricing pressures are compounding problems for the Dunkaroos and Bisquick maker. That echoed what FedEx said in its report after the bell Tuesday.

FedEx shares fell 12% on Wednesday, on pace for its worst day in 15 months, while General Mills’ stock slipped more than 3%.
And, just like FedEx, General Mills trimmed its full-year sales outlook. With two quarters remaining in the Cheerios producer’s fiscal year, the company now sees revenue down 1% to flat, compared with previous guidance of a 3% to 4% increase.
General Mills is also cutting the high end of its earnings guidance due to the lower demand forecast. It expects “a slower volume recovery in fiscal 2024, reflecting a more cautious consumer economic outlook.”
While General Mills reported its eighth consecutive quarterly earnings beat, revenue came up well short of estimates: $5.14 billion vs. $5.35 billion expected, according to LSEG, formerly known as Refinitiv. It was General Mills’ biggest revenue miss in eight years.
CEO Jeff Harmening said the company saw “a slower-than-expected volume recovery in the second quarter amid a continued challenging consumer landscape.”

Organic sales growth was an eyesore, unexpectedly contracting 2% versus Street estimates of 3.1% positive growth. Every business segment saw disappointing sales, from consumer food to pet food, from domestic to international.
Volumes fell 4% overall – led by a 5% drop in North America retail volumes. Pricing increases continued to decelerate, contributing just 3 percentage points to sales in the latest quarter.
The company has also been boosting promotions.
“We’re seeing consumers continue to display stronger-than-anticipated value-seeking behaviors across our key markets, and this dynamic is delaying volume recovery in our categories,” Harmening said in a call with analysts. More

CNBC spoke with 13 former and current media, sports and entertainment executives at major companies.
They each anonymously gave one significant or surprising prediction for 2024.
Several executives addressed the futures of Paramount Global, Warner Bros. Discovery, NBCUniversal and Disney CEO Bob Iger.

NYT Columnist Andrew Ross Sorkin and C.E.O. of The Walt Disney Company Bob Iger speak during the New York Times annual DealBook summit on November 29, 2023 in New York City. 
Michael M. Santiago | Getty Images

It’s the most wonderful time of the year! It’s the third annual anonymous media and entertainment executive predictions list!
In honor of the 12 days of Christmas, I asked 12 past and current executives at the world’s biggest media and entertainment companies for one industry-shaking prediction for 2024. And then I asked one more because this is the holiday season, and I was feeling generous. A baker’s dozen! Actually, I asked a few more, but some overlapped.

Quite a few of last year’s predictions were accurate. Disney Chief Executive Bob Iger did extend his contract. Christine McCarthy stepped down as Disney’s chief financial officer. Paramount Global hasn’t sold, but controlling shareholder Shari Redstone is now in talks to sell National Amusements. Google’s YouTube acquired the National Football League’s “Sunday Ticket” package.
Some weren’t as good. The media industry didn’t bounce back from recession as well as one executive hoped. Netflix didn’t merge with another company. Apple didn’t ban TikTok from its app store.
Alas, hope springs eternal with a new year.
Executive 1: Comcast will spin off NBCUniversal and merge it with Warner Bros. Discovery
Warner Bros. Discovery is approaching the two-year anniversary of its 2022 merger, when Discovery combined with WarnerMedia. That deadline is important for Reverse Morris Trust tax reasons. Without getting into the boring details, the important part is Warner Bros. Discovery can do another significant deal two years after the close of Discovery and WarnerMedia.

David Zaslav speaks onstage during The New York Times Dealbook Summit 2023 at Jazz at Lincoln Center on November 29, 2023 in New York City.
Slaven Vlasic | Getty Images

One executive targeted NBCUniversal as the most likely acquirer of Warner Bros. Discovery. This executive predicted Comcast CEO Brian Roberts would spin off NBCUniversal so that the new company would trade separately. But, Comcast (and Roberts) would keep a controlling stake of the ownership of the new entity.

A second executive suggested a more expansive scenario. Comcast will keep its theme parks business but sell the rest of the company in exchange for WBD common shares.  Comcast will get a premium for the remainder of NBCUniversal in exchange for Roberts giving up his voting shares. Warner Bros. Discovery CEO David Zaslav runs the combined company, with NBCUniversal film chief Donna Langley staying on to run an expanded studio.
Executive 2: Bob Iger will, again, extend his contract as Disney CEO
Earlier this year, Disney CEO Bob Iger renewed his contract through 2026. Iger has said he actually plans to walk away from Disney forever when his contract is done. Iger has extended his contract as CEO to avoid retirement on five different occasions. Of course, when Iger left at the end of 2021, he said the same thing.
This executive predicted “fool me five times, shame on me.” Disney has many strategic problems that don’t have easy answers, such as figuring out how ESPN’s business fits in a direct-to-consumer world and how to wind down its legacy TV cable networks. Those problems demand a leader with a steady hand who understands the industry. Is there a better leader of Disney than Bob Iger? The Disney board has decided, over and over again, that there is not. Why would this time be any different?
Executive 3: Nelson Peltz and Jay Rasulo will win their campaign to join the Disney board

Nelson Peltz, founder and chief executive officer of Trian Fund Management, during the Future Investment Initiative (FII) Institute Priority Summit in Miami, Florida, on Thursday, March 30, 2023.
Marco Bello | Bloomberg | Getty Images

One thing that may prevent Iger from extending his contract is if Nelson Peltz and Jay Rasulo get board seats. Last week, activist investor Peltz and former Disney Chief Financial Officer Rasulo criticized Disney’s failed succession planning as part of a statement announcing their intentions to run for Disney’s board of directors when nominees are selected next year.
“In our view, Disney’s board has failed to fulfill its essential responsibilities – overseeing the development of an effective strategy, planning for orderly succession, aligning executive pay with performance, and ensuring accountability for operational execution,” Peltz said in the statement.
This executive predicted Peltz and Rasulo will win their campaign and both join the board. A second person guessed only Rasulo will get a spot — perhaps via a settlement before a vote.
Executive 4: Iger will name Dana Walden his successor as Disney CEO

Dana Walden
Jason Laveris | Filmmagic | Getty Images

If Iger does leave, he and the Disney board will need to name a successor. I reported in September that Iger plans to name a successor in early 2025 and give that person about 20 months to prepare for the role. If so, an announcement could come in late 2024. This executive predicted it will be Co-chairman of Disney Entertainment Dana Walden who gets the nod. Iger will again move to a chairman role when Walden takes over as CEO, just as he did with Bob Chapek in 2020.
A second person threw out a different name to keep an eye on: Andrew Wilson, the CEO of Electronic Arts. This may seem out of left field, but here’s some inside baseball for you — the same executive to mention Wilson correctly predicted Iger would return as Disney CEO in 2022. Then last year, the person said Chris Licht wouldn’t last the year as CNN’s CEO and McCarthy would depart as Disney’s CFO. Three for three! So, maybe pay attention.

Andrew Wilson
Michael Newberg | CNBC

Executive 5: Disney will buy Candle Media and Kevin Mayer will position himself as a leading internal candidate to take over for Iger
One last Disney succession prediction! This person predicted Disney would acquire the privately held Candle Media to acquire Moonbug Entertainment, the owner of CoComelon. Disney would then attempt to sell the remainder of Candle Media’s assets at firesale prices, the executive predicted.

In February 2020, as Disney’s head of streaming, Kevin Mayer, was in the line of succession for CEO. But Mayer, seen here on Sept. 29, 2022, and colleagues were stunned when Iger announced Bob Chapek would replace Iger immediately.
Bryan van der Beek | Bloomberg | Getty Images

Candle Media is co-run by two former Disney executives, Kevin Mayer and Tom Staggs. This person’s guess is Mayer will return to Disney in a senior operating role to position himself as Iger’s top successor candidate while Staggs would leave the company.
Executive 6: NBA rights will go to Disney, Warner Bros. Discovery and Apple

Boston Celtics forward Jayson Tatum (0) attempts a basket in front of Golden State Warriors forward Draymond Green (23) in the second half during game three of the 2022 NBA Finals at TD Garden.
Kyle Terada | USA Today Sports

One of the most closely watched media stories of 2024 will be what the National Basketball Association decides to do with its media rights. I reported in October that the NBA ideally wants three media partners with different packages of games.
Disney and Warner Bros. Discovery are the incumbents. Both want to maintain carriage relationships with the NBA, though both companies have also stressed they will be financial disciplined. The league is also looking for a robust streaming option. This is where Apple would fit in. (For what it’s worth, a second executive said he didn’t think Apple would even make a bid for NBA rights and thought NBCUniversal’s Peacock might end up with them.)
Executive 7: The College Football Playoff won’t get the rights fee increase it wants as ESPN will be the only significant bidder
Other than the NBA, the CFP may be the next most important rights deal to be renewed next year. The CFP’s current 12-year deal with ESPN expires after the 2025 playoff.
At that time, the college football playoffs will expand from four teams to 12. That may sound enticing as a new live sports behemoth, but this executive guesses that potential bidders Amazon and Apple will balk at the price CFP wants for the games. ESPN is desperate for live rights as it prepares a direct-to-consumer service and will renew the package, this executive predicts.
Executive 8: Local broadcast stations take most local NBA, NHL and MLB sports rights away from regional sports networks

Alec Martinez #23 of the Vegas Golden Knights celebrates with the Stanley Cup after a 9-3 victory against the Florida Panthers in Game Five of the 2023 NHL Stanley Cup Final at T-Mobile Arena on June 13, 2023 in Las Vegas, Nevada. 
Zak Krill | National Hockey League | Getty Images

Sticking with the sports theme, the regional sports network business may or may not be collapsing. Broadcast stations groups have been in talks with the NBA, NHL and MLB for much of the year about picking up local games if certain RSNs fail.
Poaching teams from Diamond Sports Group, which filed for bankruptcy earlier this year and carries the games of more than 40 professional sports teams, has been the primary target thus far for companies such as EW Scripps and Gray Television. Scripps now carries games from the NHL’s Las Vegas Golden Knights and Arizona Coyotes. Gray reached a deal to broadcast the NBA’s Phoenix Suns earlier this year.
The Wall Street Journal reported that Amazon in talks to invest in Diamond Sports Group to keep the company afloat while potentially using Prime Video as a landing home for streaming rights.
This executive said he believes the broadcast station groups will emerge as the primary winner of rights as leagues will push for the expanded reach of broadcast TV while cable subscribers dwindle.
Executive 9: Warner Bros. Discovery’s Max, Netflix and Disney will offer the first significant streaming bundle
Media pundits on CNBC love to say that subscription streaming will eventually be bundled in something that kind of looks like (and is priced like) traditional cable TV.
But years into the streaming wars, this hasn’t happened. No one has emerged as the dominant aggregator. No bundle of many services exists. It’s complicated to get media companies on board to agree to what something like that would look like.
This executive said 2024 will be the year companies finally get serious about bundling, predicting Disney would agree to bundle its trio of streaming services (Disney+, Hulu and ESPN+) with Max and Netflix to offer a selection of streaming services — at a discount — that rivals cable TV.
A second executive noted that such a discount will probably need to be championed by an anchor distributor. This executive’s guess is that it will be Amazon. He also predicted Paramount Global’s Paramount+ and Warner Bros. Discovery’s Max will be a part of the first streaming bundle that Amazon offers.
Executive 10: RedBird Capital will acquire Paramount Global and name Jeff Zucker CEO

Former CNN Worldwide President Jeff Zucker speaks before the screening of First Lady Michelle Obama’s new CNN Film, We Will Rise: Michelle Obamas Mission to Educate Girls Around the World on October 11, 2016.
Cheriss May | NurPhoto | Getty Images

Private equity firm RedBird Capital, founded by Gerry Cardinale, has been stockpiling executive talent, including two former NBCUniversal heads in Jeff Zucker and Jeff Shell, who begins work at the private equity firm in early 2024.
This executive made the bold call that RedBird won’t just acquire Shari Redstone’s National Amusements but all of Paramount Global, backed by a consortium of outside funding, including money from David Ellison and BDT Capital, the merchant bank run by Byron Trott that backed Redstone earlier this year.
Zucker could then run Paramount Global and do the dirty work of deciding what part of the company he wants to run and what to sell. Still, this executive said Zucker would keep most of the assets and attempt to prove the company was undervalued as a publicly traded entity.
Executive 11: CNN will let go of one of its top anchors as it redirects money to digital
No matter how great CNN makes its programming, the cable news giant probably can’t defeat the bigger secular forces of declining cable subscribers. That will mean less money coming in the door for new CEO Mark Thompson, who plans on investing more in digital.
This executive predicted CNN won’t be able to up its digital spending without cutting back on a declining linear TV business — and that will mean letting go of at least one of its big-name anchors to save cash.
The move will usher in a new era at CNN, where star anchors are no longer the focus of the company.
Executive 12: Linda Yaccarino won’t last the year as CEO of X

Linda Yaccarino, CEO, X/Twitter speaks onstage during Vox Media’s 2023 Code Conference at The Ritz-Carlton, Laguna Niguel on September 27, 2023 in Dana Point, California. 
Jerod Harris | Getty Images Entertainment | Getty Images

Former NBCUniversal advertising chief Linda Yaccarino joined X as its new CEO in 2023, but the fit at the company seems to make less and less sense by the day as advertisers flee.
Yaccarino suffered through an awkward interview with CNBC’s Julia Boorstin earlier this year when Boorstin asked her if she was a CEO “in name only” and was only at the company to do owner Elon Musk’s bidding.
This executive predicted Yaccarino would either lose patience or find her job increasingly pointless and leave the company in 2024.
Executive 13: No movie will top $1 billion at the box office all year

The Minions
Jason LaVeris | FilmMagic | Getty Images

For the first time in more than 15 years, not counting 2020’s pandemic shutdown, no movie will top $1 billion at the box office, this executive predicted. (This year, “Barbie” and “The Super Mario Bros. Movie” each easily cleared $1 billion, while “Oppenheimer” came in just shy at around $950 million.) Universal’s “Despicable Me 4” has the best chance, this person said. But predicting only “Despicable Me 4” would top $1 billion isn’t as bold, and you only live once … anonymously.
Happy holidays!
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.
WATCH: It’s very hard to see any strategic buyers of Paramount Global, says LightShed’s Greenfield More

State of Freight

Union Pacific tells CNBC $200 million a day in freight moves through El Paso and Eagle Pass rail lines and represents 45% of cross-border Union Pacific business.
The U.S. Customs and Border Protection announced rail operations would be halted at El Paso and Eagle Pass, Texas, beginning Monday in light of the surge of migrants crossing the border.
Freight railroad operators including Union-Pacific and BNSF dispute government figures on migrants found on trains and warn there is not enough capacity at their other four gateways to reroute trade. 

NBC NEWS — Pictured: Border Patrol Agents arrest 8 suspected illegals in Maverick County, near Eagle Pass, TX, as they try to ride a freight train into the United States from Mexico on February 27, 2007 — Photo by: Al Henkel/NBC NewsWire
Nbc Newswire | Nbcuniversal | Getty Images

Major railroads Union-Pacific and BNSF, a subsidiary of Berkshire Hathaway, are urging the reopening of El Paso and Eagle Pass crossings so their freight can pass. Since the closure of these key Texas border crossings earlier this week in a battle over illegal immigration and a surge of migrants, almost half a billion dollars in trade has been halted.
Union Pacific says $200 million worth of trade moves in and out of these crossings a day. The U.S. Customs and Border Protection announced rail operations would be halted at El Paso and Eagle Pass, Texas beginning Monday in light of the surge of migrants crossing the border. Collectively both railroads operate 24 trains daily at these crossings.

BNSF told CNBC it was still working on an estimate of the economic impact amid a fluid situation.
These two border crossings represent 45% of Union Pacific’s cross-border business. Union Pacific has said for every day that the border is closed, the company is forced to embargo customers’ goods on more than 60 trains, or nearly 4,500 rail cars, with an equivalent of goods being held in Mexico. It is also a labor issue for the rail, with employees unable to work and no timeline available for when they may be able to return to the job, Union-Pacific said. BNSF also cited issues for employees who provide daily service on trains that cross the border, as well as what it described as significant downstream impacts on employees across its freight system, with affected trains typically traveling throughout a 32,500-mile network.
According to Bureau of Transportation Statistics data, El Paso and Eagle Pass accounted for $33.95 billion, or 35.8%, of all cross-border rail traffic from November 2022-October 2023.
Government officials tell CNBC the closure is a safety and security issue for the migrants, citing cases of dismemberment, death and unaccompanied children riding the rails. Numbers provided range from 500 to 1,000 at a time, and the migrants pose a significant challenge to CBP and the safety of the migrants.
Both railroads refute these numbers.

“Very few migrants cross into the U.S. on trains,” Union Pacific said in a statement. “During this massive surge, only five people have attempted to come into the U.S. on Union Pacific trains in the last five weeks.”
The company said Union Pacific Police and its employees work in partnership with U.S. Customs and Border Protection to ensure all trains are screened.
In a statement to CNBC, a spokesman for BNSF said, “Through our efforts, we have experienced very few people attempting to cross the border on trains at both ports of entry.”
Both BNSF and Union Pacific say they have security and technology such as X-rays to detect illicit cargo and people.
The closures have sparked an outcry from the grain and chemical industries that use the rail to move their product.
Neil Bradley, executive vice president and chief policy officer, for the U.S. Chamber of Commerce, has said while the crisis at the border must be addressed, halting the legal movement of commerce will do nothing to secure the border.
“Shutting down rail traffic through Eagle Pass and El Paso will inflict significant economic harm not only upon American businesses, but also the farmers, factory workers, and millions of other law-abiding Americans whose jobs depend on the efficient movement of goods,” Bradley said. “We urge the administration to reverse course and reopen the rail passages.”
Key products that move through these crossings include agricultural products, automotive parts, finished vehicles, chemicals, consumer goods, and more.
For the agricultural sector in particular, at risk is up to nearly two-thirds of all U.S. agricultural exports to Mexico, which move via rail. According to an agricultural trade group representing many U.S. growers which urged the government to end the border closures, Mexico was the second-largest export market in 2022 with $28.5 billion in sales, and each day the crossings are closed results in an estimated one million bushels of grain exports lost. 
“Each additional day of closures results in rail carriers having to idle trains or reroute them in illogical ways to try and serve customers, all of which adds friction within the supply chain. We are aware of grain trains sitting at origin in at least six states that are unable to move, and we expect this number to grow,” the group wrote in a letter to Alejandro Mayorkas, the Secretary of the Department of Homeland Security, on Wednesday.
There is one interconnected North American rail network, rather than separate U.S. and Mexican rail networks, according to the Association of American Railroads. “Every day the border remains closed unleashes a cascade of delay across operations on both sides of the border, impacting customers and ultimately consumers,” AAR president and CEO Ian Jefferies said in a statement. “The urgency of reopening these crossings and restoring rail service between the two nations cannot be overstated.” More