Two of the largest US railroads, Union Pacific and Norfolk Southern, announced on Tuesday a plan to combine in a $72 billion deal that would create America’s first transcontinental freight railroad. The stock and cash deal would be the largest ever in a sector that has already massively consolidated in recent decades. The deal still needs regulatory approval and will serve as a major test for the Trump administration’s antitrust regulators, who have appeared more willing than the Biden administration to approve mergers in certain industries, even if they reduce significant market competitors.
US freight railroads are crucial to America’s economy, carrying about 30% of the nation’s freight in terms of weight, according to the Bureau of Transportation Statistics. Union Pacific (UNP) serves the western United States, while Norfolk Southern (NS) serves the eastern parts of the country. The coast-to-coast combination could force the other two major freight railroads, Burlington Northen Sante Fe, a unit of Berkshire Hathaway, and CSX Corp., to also merge to stay competitive, leaving the nation with two major freight railroads moving goods east-to-west. “Railroads have been an integral part of building America since the Industrial Revolution, and this merger transaction between Norfolk Southern and Union Pacific is the next step in advancing the industry,” said Union Pacific CEO Jim Vena in a statement.
The possibility of a Union Pacific and Norfolk Southern merger has been stirring significant interest across the rail, logistics, and shipping sectors, and for good reason. Such a consolidation would represent one of the most substantial shifts in the North American rail landscape in decades. If approved, it would create a rail network spanning the country from coast to coast, potentially altering how freight is moved, how Class I railroads compete, and how regulatory bodies like the Surface Transportation Board and the Department of Justice approach antitrust and competition in the industry.
Union Pacific, headquartered in Omaha, Nebraska, is the largest publicly-held U.S. railroad with a market capitalization of $135.92 billion. It has 32,000 employees operating over 32,000 miles of track in 23 mostly western states. Norfolk Southern, based in Atlanta, Georgia, has a market cap of $60.27 billion, with approximately 30,000 employees and a network of 36,000 track-miles in 22 states. UP dominates the western half of the United States, while NS holds a strong footprint in the eastern U.S., particularly from the Midwest to the Atlantic coast. A merger would create a seamless transcontinental freight network, enabling single-line service across thousands of miles. This would likely appeal to major shippers seeking operational efficiency, fewer interchanges, and simplified logistics from origin to destination. Agricultural, automotive, intermodal, and energy-related shipments could benefit from faster delivery times and fewer handoffs, which have long been pain points for supply chains that cross multiple Class I carriers.
But while shippers may see upside in service simplification, the competitive implications cannot be ignored. The U.S. rail industry is already concentrated, with only seven Class I railroads remaining after decades of mergers and acquisitions. A UP–NS merger would reduce that number even further and create a powerhouse rivaling BNSF in scale. BNSF, owned by Berkshire Hathaway, is the other giant in the western U.S. and would be significantly affected by the deal. For years, BNSF and UP have been direct competitors in the western region, battling over lanes like California to Chicago and the Pacific Northwest. With UP gaining a massive eastern footprint through NS, BNSF could find itself at a competitive disadvantage in nationwide service offerings.
This raises the question: Would a UP–NS merger force BNSF to seek a partner of its own? A natural match in such a scenario could be CSX, another eastern carrier and direct competitor to NS. A BNSF–CSX merger would allow Warren Buffett’s rail asset to match UP’s coast-to-coast capability, maintaining competitive equilibrium in the market. Such a development would not only signal a full-scale “merger wave” among Class I railroads but also raise red flags for regulators who would need to evaluate the long-term impacts on pricing, service, labor, and smaller short-line railroads.
For row crop producers and the broader ag sector, the implications could be both significant and nuanced. On one hand, a coast-to-coast network under a unified carrier could reduce the friction of interline handoffs, potentially improving unit train fluidity during peak grain harvest or fertilizer delivery seasons. This might result in faster turnaround at elevators, more reliable export lane access, and better alignment with ports on both the Gulf and East Coasts—especially for containerized grain shipments or inputs arriving from overseas.
However, there’s a trade-off. Reduced rail competition—especially in the Midwest and Plains—could lead to less pricing power for shippers and co-ops who depend on competitive Class I access. If the merger tilts the balance of power, grain elevators and fertilizer terminals that currently benefit from UP and NS playing off each other may find themselves dealing with a singular behemoth that dictates rate structures and service schedules. Short-line railroads and rural sidings could also feel squeezed, particularly if UP–NS prioritizes high-volume routes over smaller local service commitments. This dynamic could directly affect basis levels, delivery timeframes, and storage decisions for farmers, especially those operating in single-rail markets.
Input logistics may also be reshaped. Fertilizer, crop protection, and seed shipments—which often rely on long-haul rail from Gulf ports or Canadian production sites—could see improved routing under a unified network, but only if rural delivery infrastructure is preserved or expanded. Otherwise, ag retailers and co-ops may be forced to rely more on truck freight, which introduces capacity and cost concerns, particularly in tight seasonal windows. Producers with access to multiple rail options today might also need to reconsider how they contract storage, delivery, or forward sales, particularly if merger ripple effects make logistics less predictable. This could accelerate on-farm storage investments or alter cash flow planning for operations that rely heavily on elevator grain movement during harvest.
In this context, the ag industry should view the merger not just as a rail sector story, but as a potential reconfiguration of farm-to-market economics. The STB and DOJ will likely receive input from grain groups, farm state lawmakers, and shippers seeking to preserve rural access and competitive pricing. But if the merger proceeds, it could set the tone for how the ag supply chain aligns itself over the next decade.
Historically, the Surface Transportation Board has approached rail mergers with caution. In the early 2000s, following the contentious Conrail breakup between NS and CSX, the STB implemented stricter merger guidelines to prevent service meltdowns and maintain a competitive balance. The STB’s updated merger rules, finalized in 2001, require merging parties to demonstrate substantial public benefits and show that competition will not be reduced. For UP and NS, that could mean divesting certain lines, maintaining competitive access at key interchange points, or agreeing to conditions that preserve route options for shippers.
In addition to the STB, the Department of Justice’s Antitrust Division would have a say, particularly if the merger is viewed as diminishing competitive options for large freight shippers. The DOJ has increasingly shown skepticism toward large consolidations in industries deemed essential to the economy or prone to bottlenecks, of which freight rail is certainly one. In light of recent supply chain disruptions and the growing importance of domestic freight infrastructure, the DOJ may weigh heavily whether the merger enhances resiliency or merely entrenches market power.
From a broader economic perspective, labor unions and state officials are likely to raise concerns about job redundancies, local yard closures, and service cutbacks in smaller markets. Environmental groups could enter the debate as well, particularly if the consolidation impacts modal share between rail and trucking or affects emissions benchmarks tied to infrastructure development.
The proposed merger between Union Pacific and Norfolk Southern is more than just a corporate deal—it’s a potential inflection point for the future of rail in North America. It would offer efficiencies and new capabilities to shippers but also reduce the number of major rail players to just five in the U.S., increasing the risk of reduced competition and regulatory scrutiny. Whether this merger triggers a domino effect, such as a BNSF–CSX combination, remains to be seen (I have to imagine it would). But one thing is clear: the STB and DOJ will be under immense pressure to carefully balance innovation with oversight. The decisions they make in the coming months could shape not just the future of railroads but also the underlying economics of how American farmers market their grain, manage logistics, and access global trade lanes for years to come. Pay attention! (Source: Barron’s, apnews)
