America's freight rail system, often described as the nation's economic circulatory system, faces a potential transformation that could impact everything from consumer prices to industrial competitiveness. At the center of this upheaval is a proposed merger between two rail giants—Union Pacific (UP) and Norfolk Southern (NS)—that has sparked fierce debate among industry stakeholders.
A Consolidation Crisis
The American Chemistry Council (ACC), representing an industry that underpins one-quarter of U.S. GDP, has emerged as the most vocal opponent of the potential merger. ACC President and CEO Chris Jahn has warned that the consolidation would be "deeply problematic" unless it demonstrably improves rail competition and service quality.
"This isn't just about railroads moving boxes," Jahn explained. "Chemical manufacturing forms the foundation of nearly every consumer and industrial product. When rail service suffers, the entire supply chain feels the pain—and ultimately, consumers pay the price."
The Shrinking Rail Landscape
America's rail industry has undergone dramatic consolidation over recent decades, shrinking from 23 major carriers to just six today. While mergers theoretically promise efficiency gains, Jahn contends the opposite has occurred: "Each consolidation has brought worse service—like restaurants merging but offering fewer menu items with slower delivery."
The data reveals troubling consequences of reduced competition:
- 75% of ACC member facilities rely on single-rail service
- Transportation rates for captive shippers surged 240% over 15 years
- Competitive routes saw only 24% rate increases over the same period
Fragile Networks, Falling Standards
While the Surface Transportation Board (STB) reports adequate current service metrics, Jahn warns this masks systemic fragility: "Like someone appearing healthy but vulnerable to illness, our rail network remains one weather event or pandemic away from paralysis."
Compounding concerns, current stability may reflect declining freight volumes rather than service improvements. "The rail industry seems uniquely uninterested in growth," Jahn observed, noting that chemical shipments alone may require 100,000 additional railcars by 2035—capacity the current system struggles to provide.
Scale Matters: Comparing Mergers
The proposed UP-NS merger dwarfs recent combinations like Canadian Pacific's acquisition of Kansas City Southern. A combined UP-NS would control nearly half of U.S. rail freight, creating what critics call a "continental colossus" with unprecedented pricing power.
CPKC CEO Keith Creel has publicly cautioned that large mergers carry significant integration risks, with historical precedents showing service collapses during consolidation periods.
The Pricing Power Problem
Transportation costs already disadvantage U.S. manufacturers globally, particularly in chemicals where America trails China's production scale. Rail companies compound this through:
- Base rate increases
- Fuel surcharges
- Demurrage fees (nearly $3 billion in 2021)
- Empty car repositioning charges
"The fundamental issue is absolute pricing power with zero shipper leverage," Jahn emphasized. "Rail remains chemicals' safest transport option, but carriers prioritize profits through staff reductions that degrade service."
ACC's Counteroffensive
The chemical industry has launched a multi-pronged response:
- A seven-figure advocacy campaign targeting policymakers
- Focus on real economy impacts beyond Wall Street interests
- Warnings about potential domino effects if other carriers merge
Jahn stresses that better solutions exist: "We need policies promoting competition—not consolidation—to achieve reliable, affordable service."
Regulatory Crossroads
The debate unfolds amid STB leadership changes, including President Trump's removal of board member Robert Primus, whom Jahn praised as "a strong freight rail advocate." The ACC urges appointment of officials committed to STB's congressional mandate for competitive, reliable rail service.
A recent missed opportunity came when courts overturned STB's reciprocal switching rules, which Jahn called "too weak to matter" compared to Canada's effective model. "True reciprocal switching could immediately improve competition," he argued.
Economic Stakes
The merger's potential consequences ripple across the economy:
- Consumers: Higher prices as transportation costs pass through supply chains
- Businesses: Reduced service reliability and innovation
- Workers: Potential job losses from merger-related efficiencies
As the ACC intensifies its campaign, the coming months will test whether America's freight rail system evolves toward greater competition or consolidation—a decision carrying profound implications for the nation's economic future.