From the Editor: Norfolk Southern and Union Pacific: A tale of two multiyear journeys

This month’s cover story — a detailing of the operational and cultural transformation that’s been in the works at Norfolk Southern Railway the past year — was reported and written (expertly) by my colleague Jeff Stagl before the initial public rumblings that NS and Union Pacific Railroad were talking merger. By July 29, the two Class Is made it official, announcing they reached an agreement.

The deal — which UP-NS had been discussing for a few months prior to last month’s rumblings, according to Bloomberg — is expected to result in $2.75 billion in annualized synergies and economies. It also would create the first U.S. transcontinental railroad network.

UP-NS told the Surface Transportation Board they intend to file the merger application on or before Jan. 29, 2026. At the earliest, the deal would be consummated in early 2027.

“The key thing here is this would be first deal to take effect under the [2001] merger rules, which require this merger to enhance competition,” independent transportation analyst Tony Hatch said July 29 on the Bloomberg Surveillance Podcast.

What constitutes competitive enhancement, though, is anything but clear.

“It makes it a little scary: How do you satisfy an undefined clause?” said Hatch, who also is the program consultant for Progressive Railroading’s annual RailTrends® conference, “[UP-NS] think they have the keys to the kingdom. If they do, and they don’t have to give up too much to achieve $2.75 billion in synergies and economies, it’s a great deal. However, if they have to give away the store, as we’ve seen in previous merger attempts, if that $2.75 billion gets whittled down because of what they give to each community ... then maybe it’s not so great.”

‘Everybody will be looking for something’

Communities will weigh in on the deal and seek concessions. So will shippers, railroads and other interested parties. There will be “many stakeholders coming with a plate and a fork and then, in their back pockets, a sharp knife. Everybody will be looking for something,” Hatch told Bloomberg.

I’m sure UP strategists factored all that (or however much of it they’re willing to concede) into the plan. I’m also sure they feel good about the way they’ve defined and quantified “enhanced competition.”

“In general, if these guys do what they say they’re going to do — and I do believe, from an intermodal perspective, if you take 24 hours out of an interchange, not only is that faster, but more importantly, every time you remove a touch point, [you improve] reliability,” Hatch said. “This should, if it goes well, enhance that.”

It’ll be a while before we know how well it’s going, and for whom.

In the meantime, expect NS to keep moving forward with its own transformation, which essentially is about getting better at this thing called railroading in this evolving day and age. As NS President and CEO Mark George told Stagl: “It’ll be a multiyear journey, but one that’s already yielding results in terms of service consistency, customer satisfaction and cultural alignment.”