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May 2026
By Jeff Stagl, Managing Editor
While promoting the proposed Union Pacific Railroad-Norfolk Southern Railway merger since it was announced in mid-2025, Jim Vena has talked to many shippers, Class I competitors, associations, politicians, media members, employees, and other various stakeholders and observers.
By far, UP’s president and CEO has found the merger’s benefits and the Class Is’ reasons for combining are best interpreted by non-rail industry constituents.
“They understand it better than some people who have been railroaders for 50 years. I’ve actually heard some good questions from people outside the rail industry,” Vena says. “They have no bias and just listen to the facts.”
And to UP and NS, the facts are compelling. The $85 billion merger would create the first single-line transcontinental railroad in the United States, connecting end-to-end networks to forge a seamless system stretching from the Atlantic to the Pacific oceans. The more than 50,000-mile railroad — to be named Union Pacific Railroad — would connect 43 states and more than 100 ports.
UP and NS stress that the merged railroad will:
“America has been short-changed, with manufacturers and customers not being able to access a seamless railroad across the country, which can compete better against trucks,” says Vena. “This is not fiction. And the price to use it will be less because there will be no interchanges involving two or more other railroads.”
But there are many — from labor unions to rail shippers and shipper groups to politicians to Class I competitors to other railroads — that believe UP and NS don’t have their facts straight.
Among the opposers’ claims, the merger will: create a behemoth railroad with unprecedented market power that controls more than 40% of the U.S. freight-rail market; threaten rail-to-rail competition; reduce rates to squeeze out competition, then raise prices; push employees harder and worsen working conditions; destabilize the supply chain; prompt more Class I consolidation; cause short-term disruptions in the transportation marketplace; and buck the Surface Transportation Board’s (STB) “new” merger rules issued in 2001 that require mergers to not just preserve competition but also enhance it.
For example, several shipper groups claim the merger could establish a monopoly or duopoly, further reduce their members’ already limited bargaining leverage, erode service quality — especially for captive rail shippers — and create bottlenecks.
The debate between merger supporters and opposers soon will kick into a higher gear now that NS and UP submitted their revised merger application to the STB at April’s end. The board previously rejected the initial application on Jan. 16 because it was deemed incomplete for not including certain information required under STB regulations.
The board has 30 days to accept or reject the revised application. If it’s accepted, the clock then will start on the STB conducting a thorough formal review, which could take a while.
In the meantime, UP and NS plan to continue their outreach efforts to push the merger message, obtain more feedback from shippers, employees, community members and other stakeholders, and develop detailed implementation and service transition plans to be ready to merge if the STB approves the transaction. They also expect to address concerns and concession requests that arise during the STB review process.
The major point UP and NS are trying to convey is that the merger largely is about being better positioned to foster growth. Both Class Is are operating well in terms of service and safety, and have established consistent, reliable and resilient service, which has created a foundation for each railroad to grow, said NS President and CEO Mark George during a keynote address April 14 at the American Short Line and Regional Railroad Association’s (ASLRRA) annual meeting in Minneapolis.
But the level of growth each is seeking — especially from highway diversions — hasn’t been attained yet despite good service performance, he said.
“It hasn’t really happened, even in the most recent years of 2024 and 2025. And really, that’s what led us to the [merger] conversation we’ve had with UP,” George said.
For a long period of time, all classes of commodities other than intermodal have been down. But over the past 20 years, the overall economy has actually been growing, George said.
“So, where the heck is this stuff moving? The reality is it’s been moving to the highway,” he said. “When you look at what’s gone on over time, we have lost market share to the highway as an industry. Shippers have built out truck pads and started to shift more of their volume to the highway.”
Since the marketplace has made its preference clear, single-line service is a necessity, George said. UP and NS currently account for less than 11% of the U.S. transportation market on a ton-mile basis.
Single-line service outperforms interline service in every meaningful way, with higher market share, better reliability and more cost-effective rail service for shippers, UP and NS say.
According to a study conducted by management consulting firm Oliver Wyman, interline merchandise traffic moving between 1,000 and 1,500 miles costs on average 35% more than a comparable single-line move. When single-line service is available, the share of freight traveling by rail versus the highway is roughly two to three times greater than interline service.
“We’ve been frozen in time since 2000 as a network in the East that between us and CSX is basically east of the Mississippi, and in the West, you’ve got UP and BNSF. So, we’re fragmented,” George said. “This is a structural industry problem. What this merger is really meant to address is to unlock this clunky interchange in the center of the country and connect our networks as one.”
UP and NS plan to spend more than $2 billion on integration costs, with about $1 billion spent on technology and $1 billion invested in capacity and commercial facilities throughout the combined network. They expect to exploit how their combined networks would be more complementary than overlapping.
“We’re confident that we’re going to capture all of this volume. It’s why we offer the union jobs-for-life guarantees,” George said. “We think we can break this cycle of lower and fewer headcount on a shrinking railroad and actually start to grow our headcount.”
UP and NS have given their merger plan a lot of thought and analyzed a host of things before they crafted it, says Vena. The partners are convinced the merged railroad with fewer handoffs would mean fewer opportunities for delays while expediting customers’ shipments, and a larger pool of crews and locomotives would mean better operational resilience and faster recovery.
“I think we did a good job,” Vena says.
But there are many who believe otherwise. For example, CN claims the traffic diversion study conducted by UP and NS for the merger is inaccurate.
“UP’s model credits them with traffic they never had, hiding nearly half the real impact of this merger from regulators, communities and the public. We’re not asking UP to use a different model. We’re asking them to use real numbers,” CN officials said in an emailed statement. “When a route carried zero traffic, the model should start from zero, not from a fiction. We are confident the STB will see the shortfall of their analysis, as they did with their application.”
However, the traffic study included in the STB filings was conducted by the same expert CN used for its Iowa Northern Railway merger and applies the same methodology, UP officials claim. It provides a reliable estimate of the traffic the combined railroad expects to attract by offering a more competitive, more efficient single-line service, they said.
Meanwhile, BNSF President and CEO Katie Farmer believes the merger should be judged on a higher standard as to whether it meets the public interest and enhances competition.
For example, when Canadian Pacific and Kansas City Southern combined as CPKC a few years ago, BNSF lost traffic in the Laredo gateway between the United States and Mexico.
“It went from 10,000 a month to zero. Customers lost another option,” Farmer said April 13 during a presentation at the ASLRRA’s annual conference.
BNSF is part of a new Stop the Rail Merger Coalition formed last month among competing Class Is, shippers, labor unions and other rail industry stakeholders that oppose the merger. The coalition also includes the American Chemistry Council, American Farm Bureau Federation, Teamsters Rail Conference, CPKC, Alliance for Chemical Distribution, National Industrial Transportation League and Vinyl Institute.
Among claims by other Class I competitors: the merged railroad eventually will charge higher rates.
“I have been surprised by some of the things our competitors are saying about the merger, such as that we will raise prices. That’s not factual,” Vena says.
If the merged railroad did increase rates, that would actually be good for those competitors because they could charge lower prices, he says. The other Class Is are seeking certain advantages — and ones they don’t have to pay for — through the merger process, and UP and NS are more than willing to talk to those competitors about how each party could gain some advantage they don’t have now, Vena says.
As more points are brought up by Class I competitors about the merger, there has been “some surreal logic” about it, he believes.
“But we care more about what people who pay the bills say,” Vena says.
But UP and NS would be better served by showing more care about the clearness of their merger case, some observers say.
“Will it really enhance competition? That has not been addressed at all,” says Tony Hatch, an independent transportation industry analyst, Progressive Railroading columnist and RailTrends® program consultant. “They talk about diverting trucks. Maybe we will see if it’s addressed in the next application. It could be a fatal error, we don’t know.”
Other things that stakeholders and observers don’t know: what the combined company actually will look like, or what its revenue, expenses, deals, concessions and other factors will be, he says.
“We don’t know what ‘it’ is, so how can we really evaluate it?” Hatch posited.
Many opposers have used the “big bad railroad” as an argument for protesting the merger. Hatch can understand that stance.
“You’re talking about 40% market share. That’s pretty powerful,” he says. “It strikes some fear.”
As for the merger’s prospects of passing regulatory muster? It’s really a “jump ball,” Hatch believes.
“Rejection is not a zero chance,” he says, adding that the STB approving it as “an unscathed” merger seems highly unlikely.
In addition, there’s a chance that approving the merger eventually could lead to more regulation.
UP and NS believe there’s something key the STB should avoid while evaluating their combination: the merger meltdowns of the past. Both Class Is are well-run and not struggling such as the old Southern Pacific and Union Pacific railroads, technology is vastly better today and connecting end-to-end networks is easier than consolidating them, UP and NS say.
But previous mergers definitely are in play, Hatch argues.
“Look at the SP-UP lessons learned,” he says. “[And today], CPKC still has not hit its volume target. But that could be because of other factors, like trade wars and recessions, etc.”
For AllianceBernstein LP Senior Analyst David Vernon, the STB’s consideration of the merger really boils down to one question: Is giving shippers access to one single-line railroad an enhancement to the rail industry?
“If you look at it through this lens, it will enhance competition, I get it. A single line railroad can provide better service than service provided by multiple railroads,” says Vernon, who serves as both a vice president and senior analyst at AllianceBernstein. “For the STB, they have to prove it will enhance competition. And the STB doesn’t care if it takes trucks off the highways.”
The new merger rules the STB issued a quarter-century ago were more about “stop me before I kill again” so railroads didn’t enter additional troublesome mergers, he says.
“Will the STB do it differently now?” Vernon wonders.
He found it interesting that when he attended a conference recently and asked the three STB members how the rail industry could grow since it was losing market share, their answers were exactly the same.
“Service, service, service,” Vernon says.
AllianceBernstein estimates the combined UP-NS would account for 47% of industry carloads, 44% of revenue ton-miles, 48% of gross ton-miles and 49% of revenue, with the majority of revenue growth driven by long-haul truck diversions.
The regulatory/statutory test is not if the merger creates the largest railroad, but rather on which specific lanes would shippers lose alternatives and could targeted access remedies restore competition, AllianceBernstein analysts wrote in a recent report.
“Size is not itself a regulatory concern; the STB’s statutory mandate is to analyze competitive harm at the origin–destination level and impose remedies only where alternatives are eliminated,” the report states. “The regulator’s job ... is to make sure shippers on individual routes still have choices. As long as those alternatives exist, letting railroads get bigger makes the whole system more efficient.”
And if the merger ultimately is approved, what choices will BNSF and CSX have to ensure they can still competently compete? BNSF owner Berkshire Hathaway Inc. has publicly stated the company has no interest in merging with CSX.
“They are saying ‘no’ now, not at this price. But we will see how it plays out,” says Vernon. “The clock favors Berkshire moving slowly.”
As for CSX, that Class I “has gone into hibernation,” and is cutting back and trimming costs, he says. For example, CSX has sold off its fleet of corporate jets and is reducing operations at Barr Yard in Chicago. The railroad has relocated switching work at the yard to the Belt Railway Co. of Chicago and Indiana Harbor Belt Railroad.
The reduced operations at Barr Yard as part of the company’s ongoing effort to improve operations across the network, CSX officials said in an emailed statement.
“By leveraging established partner switching capacity and simplifying processes, we are creating a more direct and efficient network flow. The goal is to improve efficiency, reduce transit times and provide more reliable service,” they said. “We are closely monitoring performance as these changes are implemented to ensure minimal disruption and deliver maximum benefits to our customers and the communities we serve.”
Then there is the question of how the merger might affect short lines. ASLRRA leaders are concerned about the merged railroad having fewer handoffs and the association plans to engage with the STB about its stance.
But things won’t change with short lines and UP’s and NS’ relationships with small railroads will stay the same, says UP’s Vena.
“Short lines are better at local service and will see that things actually will get better for them. As we get more business, they will get some of the growth,” he says. “Only about 1% of short lines say the amount of business they will get will be less.”
With so much to consider and weigh, how long might it take the STB to review the merger? That’s difficult to pinpoint.
UP and NS leaders believe it should take the board a year or so to issue a decision.
“This will go on through the review cycle and deliberation cycle for at least a year. Hopefully, it’s only a year, but it could go on longer than that,” said NS’ George.
Hatch says he’d “bet the over” on that projection and predicts a decision won’t be forthcoming until late 2027 or early 2028.
George is upbeat that the new merger application will be accepted this time by the STB. It will confirm what UP and NS said in the original application on the logic of the deal and the benefits that a single-line transcontinental railroad will bring to the nation and shippers, he said April 24 during NS’ Q1 earnings conference.
“We will have a much stronger set of data that makes the case even stronger,” George said. “I feel better than I did even five months ago, when I felt really good.”
For now, UP and NS expect to continue crafting a detailed integration plan so the combined railroad, if approved, is set up well to hit the ground running from the start. From safety and technology to workforce and culture, the approach is deliberate, phased and designed to protect service while ratcheting up performance, George said at the ASLRRA meeting.
“We’re going to do this in a very measured way and we’re putting a lot of thought into this. We are studying the mistakes of the past,” he said. “We’re also studying the successes that CPKC has had. They had some bumps, but by and large they did a brilliant job when you think about it.”
Ultimately, the merger isn’t about consolidation, it’s about reinvigoration to compete and grow for decades to come, UP and NS leaders say. A fundamentally different approach is needed that reimagines how freight rail operates in the United States, they believe.
More than 500 customers have written letters of support for the merger. And a number of leading voices in antitrust law, supply-chain economics and agricultural policy back the combination.
So, there are many stakeholders who concur there’s a need for the larger and more efficient railroad, Vena says.
“Intermodal customers see the benefits, they see it’s seamless. And merchandise customers see the benefits,” he says. “Customers are getting more efficient, and we need to do the same to grow.”
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