As the possibility of a coast-to-coast rail network emerges on America's transportation map, this represents not just a corporate strategy adjustment but a potential reshaping of the nation's economic arteries. Union Pacific (UP) and Norfolk Southern (NS), two Class I railroads, are pursuing a merger that would create a transcontinental rail line spanning from the Atlantic to the Pacific. While receiving overwhelming shareholder approval, the proposed merger has drawn intense scrutiny from competitors, freight customers, regulators, and Congress alike. How might this reshape U.S. rail transportation? What long-term economic impacts could it create?
Overwhelming Shareholder Approval
According to statements from both companies, shareholders voted nearly unanimously in favor of the merger. Union Pacific reported that 99.5% of voting shareholders approved issuing new stock to complete the transaction, while Norfolk Southern announced 99% shareholder support. These results demonstrate strong confidence in the merger's potential value and synergies.
Union Pacific CEO Jim Vena stated: "We appreciate our shareholders' support, which marks a crucial step toward building America's first coast-to-coast railroad. Our shareholders recognize the value and understand this merger will unlock new opportunities to enhance service, drive growth, and foster innovation."
Norfolk Southern President and CEO Mark George similarly emphasized that shareholder approval represents a key milestone in creating a transcontinental network, noting that combining complementary systems would create multiplier effects for all stakeholders. "This merger preserves union jobs, improves safety, and delivers faster, more reliable transit times," George said.
Regulatory Hurdles Ahead
Despite shareholder approval, the merger's fate ultimately rests with the Surface Transportation Board (STB), which must determine whether the transaction serves the public interest without harming competition. Unconfirmed reports suggest the companies may file their application with the STB around December 1, initiating months of intense regulatory scrutiny.
Potential Benefits
The railroads argue the merger would deliver significant advantages. Vena noted that single-line service between UP and NS would create new routes and expand national transportation corridors, making rail freight more cost-effective for shippers. By eliminating transfer points, goods would move faster with greater reliability while reducing per-mile braking costs—making rail more competitive against trucks.
Key potential benefits include:
- Enhanced efficiency: Integrated networks would enable more direct routes, reducing transfers and transit times
- Expanded coverage: A coast-to-coast network would offer broader market access and diversified shipping options
- Stronger competitiveness: Improved service and lower costs could help recapture freight from trucking
- Economic growth: More efficient rail transport could reduce business logistics costs and boost productivity
Competitive Concerns
Canadian Pacific Kansas City (CPKC) CEO Keith Creel has voiced strong objections, arguing further consolidation isn't in the industry's or economy's best interests. The merged entity would handle approximately 40% of U.S. rail freight, with significant market overlaps in Chicago, Memphis, St. Louis, and New Orleans.
Creel's primary concerns:
- Market dominance: Potential monopolistic control could harm competition, raise rates, and degrade service
- Service disruption risks: Integration challenges might create supply chain bottlenecks
- Reduced competition: Fewer competitors could slow innovation and service improvements
Congressional Scrutiny
A bipartisan Senate group including John Hoeven (R-N.D.) and Amy Klobuchar (D-Minn.) has requested the STB apply rigorous standards, noting this would be the first major rail merger reviewed under 2001 rules requiring enhanced—not just maintained—competition. They emphasized potential agricultural impacts, as harvest-time delays could damage perishable goods and miss export windows.
Customer Opposition
The Freight Rail Customer Alliance (FRCA), representing over 3,500 companies, opposes the merger, citing historical patterns where consolidation led to higher rates, fees, and unreliable service. Since 1980's Staggers Rail Act, the industry has consolidated from 40 railroads to just six handling 90% of U.S. freight.
FRCA spokesperson Ann Warner noted: "Any efficiencies from Precision Scheduled Railroading have benefited shareholders, not shippers. For most bulk shippers without trucking alternatives, this merger must demonstrate enhanced rail competition—not just competition with trucks."
Other opposing groups include the National Industrial Transportation League, American Chemistry Council, and Alliance for Chemical Distribution.
Future Implications
This complex transaction could reshape U.S. economic infrastructure. While shareholders have spoken, regulatory approval remains uncertain. If cleared, the merged railroad would become a transportation powerhouse while facing ongoing oversight. Regardless of outcome, the proposal highlights continuing debates about rail industry consolidation's effects on competition and public benefit.