The proposed merger between Union Pacific and Norfolk Southern has raised significant concerns among shippers and industry stakeholders. If approved by the Surface Transportation Board (STB), this merger would create the first transcontinental railroad in the United States, connecting over 50,000 route miles across 43 states and approximately 100 ports. Proponents of the merger argue that it would streamline operations and reduce shipping costs by minimizing handoffs and delays.
Concerns have emerged from various quarters about the potential implications of such a merger. The Rail Customer Coalition (RCC) has expressed apprehension that consolidating two major freight carriers could diminish competition. In a letter to the STB, the coalition pointed out that the existing Class I railroads already control around 90% of freight traffic. The letter highlighted that reducing the number of these major carriers could lead to less competitive options for shippers, particularly for those who are dependent on rail for transport.
Danielle Zanzalari, an assistant professor of economics at Seton Hall University, countered some of these concerns in an email to Supply Chain Dive. She stated, “The RCC’s letter overstates the competitive risk. Union Pacific and Norfolk Southern have very little network overlap, so the merger wouldn’t reduce options for shippers.” Despite this, the RCC remains focused on the broader implications of further consolidation in the rail sector.
The letter from U.S. Senators Tammy Baldwin and Roger Marshall echoes similar worries about the merger. They noted that since the 1950s, the number of Class I freight railroads in the U.S. has decreased dramatically from over 100 to just six. The senators emphasized the importance of maintaining competitive options in a critical transportation sector, especially as the nation works to bolster manufacturing, secure supply chains, and address inflation.
The STB is expected to receive a formal merger application from Union Pacific and Norfolk Southern on or before January 29, 2026. The railroads entered into a merger agreement in July 2023 and aim to complete the transaction by 2027. As the process unfolds, both supporters and critics will be closely monitoring the potential impact of this merger on the rail industry and the broader economy.
While the anticipated benefits of a unified national rail service are significant, the concerns regarding reduced competition and the historical context of past rail mergers underscore the complexities surrounding this proposed consolidation.