The proposed merger between Union Pacific (UP) and Norfolk Southern (NS) railroads has generated quite a stir and some resistance while awaiting the Surface Transportation Board (STB) to decide its fate. Standard procedure for Class I railroads, the STB must determine such a transaction will be “in the public interest.” Plenty of indications suggest it will be.
Long-distance shipping destinations often require multiple rail carriers, which not only increase costs but can add complications to any journey. Bottlenecking at interchange points (locations where two or more railroads connect and exchange freight cars) can occur when traffic volumes exceed handling capacity, leading to cargo delivery delays. Miscommunication between carriers can cause railcar misplacement, sending it in the wrong direction.
Removing interchange points will facilitate direct routes, cutting rail lengths and carrier switching, which potentially shaves days off travel. By shortening distance and transit times the transcontinental railroad will improve shipment delivery speed, efficiency, and accuracy. Eliminating interchanges can also open new routes and expand intermodal services, offering a more comprehensive freight service to U.S. shippers.
Immobilized freight awaiting a transfer is also at risk. With a large percentage of cargo theft occurring in rail yards or other locations where freight changes hands, parked or delayed railcars create heist opportunities. Simply switching carriers is a liability. Removing these connection points can decrease the amount of freight stolen, which in 2024 exceeded $100 million.
The proposed merger will also improve overall safety through technological integration, elimination of interchange points, and the adoption of each company’s best safety practices and programs. Using UP and NS’ proven technologies “will further advance the ability to predict in-train forces and quickly assess potential mechanical and track defects.”
Claims that uniting the two railroads creates a monopoly narrowly defines the market in which they reside. Freight shipping goes beyond rail. All railroads must compete with other modes of transporting goods by land, air, and sea. Currently, trucking dominates the market by moving nearly 73 percent of all freight.
Shipping by rail has already been losing ground to the trucking industry, which has several advantages: flexibility, direct routes, point-to-point delivery, and wider reach. Providing a more competitive rail option, that could offer quicker and cheaper alternatives, benefits the market through increased competition.
Long-haul trucking averages $2.05 per mile; direct rail can offer closer to $0.85–$1.15 per mile, especially on lanes over 1,000 miles. Analysts predict a combined UP-NS network could lower rail rates by 5-10 percent in some routes which could also pressure trucking to adjust their service and pricing accordingly.
Transferring freight from trucks to rail cars reduces highway congestion, wear-and-tear on taxpayer funded roads, and global emissions. The U.S. Bureau of Transportation Statistics estimates a 1.2 percent annual increase in freight shipping through 2050. As shipping volumes rise, rail and trucking must adapt to best meet future needs.
Currently, the only coast to coast rail system in North America is foreign owned. A UP-NS merger will provide a competitor for the Canadian Pacific Kansas City Rail, potentially reclaiming U.S. freight volume and increasing American jobs.
The transportation division of the International Association of Sheet Metal, Air, Rail and Transportation Workers—the largest U.S. rail union—supports UP’s acquisition upon realizing, “We are protecting jobs, protecting families, and protecting the future of the U.S. supply chain.” Anticipating rail volume growth, there will also be additional employment opportunities in towns and cities across the combined rail network.
The merger also enjoys support from various sectors like agriculture, manufacturing, automotive, logistics, and even some trucking companies which expect improved efficiency, cost savings, and expanded service.
A streamlined transcontinental rail system that lowers shipping prices will reduce the costs of thousands of consumer goods, helping millions of households save money and squeeze more out of their budgets. Everything from groceries to electronics to automotive parts to everyday household products will be delivered more reliably at cheaper costs.
As global energy needs continue to soar, supply chain efficiency is vital to delivering oil, natural gas, and other petroleum products throughout the country and abroad. A simplified yet more integrated system will transport more of these goods to various markets desperately needing them to build and power their communities.
Moving freight more efficiently and affordably will keep American manufacturing competitive by powering industries, connecting communities, and delivering the materials used by households and businesses. It will keep America competitive in global markets that rely on fast and effective service.
America is at a crossroads. We must work to reshore and revitalize our manufacturing, strengthen domestic supply chains, and prioritize American workers to usher in a new industrial era that invigorates our economic vitality.
A UP-NS merger can lead the way.
Kristen Walker is an energy policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.theamericanconsumer.org or follow us on X @ConsumerPal.