An Industry on the Move

The freight rail industry is no stranger to consolidation. What began as a vast and competitive network has, over the decades, narrowed to a small number of dominant players. Union Pacific primarily operates in the western United States, while Norfolk Southern covers the east. This proposed combination would finally unify those territories under one corporate banner—offering a logistical line stretching from the Pacific to the Atlantic.

“Railroads have been an integral part of building America since the Industrial Revolution,” said Union Pacific CEO Jim Vena in Tuesday’s statement, “and this transaction is the next step in advancing the industry.”

The Domino Effect on Rail Giants

This move is already sending tremors through the rail sector. Analysts are predicting a ripple effect that could pressure the only other major freight operators—Burlington Northern Santa Fe (a Berkshire Hathaway company) and CSX Corp.—to consider their own merger in order to stay competitive.

“We believe BNSF and CSX will have to come together or else they’ll be handcuffed in terms of competition,” said Jason Seidl, managing director at TD Cowen, speaking to CNN after the announcement.

Such a consolidation would reshape not just the freight business but also the wider transportation sector. With fewer operators holding more territory, questions of market power, competition, and service quality are rapidly becoming central to the discussion.

Vital Infrastructure, Mounting Concerns

According to the Bureau of Transportation Statistics, U.S. freight railroads carry roughly 30% of the nation’s goods by weight. These goods include everything from automobiles and food to energy supplies and manufacturing materials. Given their economic importance, changes in how these goods are moved—and by whom—have serious consequences for businesses across the country.

Norfolk Southern CEO Mark George echoed the potential economic impact of the merger.
“We are confident that the power of Norfolk Southern’s franchise, diversified solutions, high-quality customers and partners, as well as skilled employees, will contribute meaningfully to America’s first transcontinental railroad,” George stated. “And to igniting rail’s ability to deliver for the whole American economy today and into the future.”

Shippers Raise Red Flags

Despite the enthusiasm from the railroad companies, the news has been met with caution—and some outright concern—by shipping clients, many of whom have long complained about lackluster service, inflexibility, and monopolistic behavior.

Ann Warner, a veteran logistics consultant, said the history of rail mergers is anything but reassuring.
“The experience in the rail industry has been that mergers have resulted in no improvement in, or worse, service, and higher rates,” Warner noted. “Shippers won’t know until an application is filed what this all means.”

That uncertainty is echoed by academic experts in logistics. Peter Swan, emeritus professor of logistics and operations management at Penn State Harrisburg, pointed out that service performance has generally declined after past mergers.

“Service has suffered following every rail merger,” said Swan. He added that while a coast-to-coast system might bring efficiencies, it won’t eliminate all logistical hurdles. “There’s not that many containers that move all the way from one coast to the other,” he said, explaining that most goods still need to be unloaded and redistributed at various points.

Regulatory Headwinds and Historical Echoes

The deal will require approval from the Surface Transportation Board (STB), which oversees rail industry mergers, as well as federal antitrust regulators. It could take many months—or even years—for the merger to be finalized. Still, experts like Seidl believe the regulatory path is navigable.

“We think the board will look at this not as approving one deal, but instead approving two,” Seidl said, suggesting that a future BNSF-CSX merger may already be on the board’s radar.

The most recent precedent came in 2023, when the STB approved Canadian Pacific’s acquisition of Kansas City Southern—forming a direct freight corridor from Canada to Mexico. That deal was greenlit partly because the companies had minimal overlapping routes, a condition shared by Union Pacific and Norfolk Southern.

A Journey That Began in 1869

While the idea of transcontinental rail evokes nostalgia, it’s rooted in a long and complex history. In 1869, the Golden Spike ceremony in Promontory Summit, Utah marked the first time the eastern and western U.S. were linked by rail. That, too, was a collaboration—between Union Pacific and Central Pacific Railroads. Yet freight has never been under one roof since.

This new deal proposes to do just that.

“Imagine seamlessly hauling steel from Pittsburgh, Pennsylvania to Colton, California,” said Union Pacific’s Vena. “And moving tomato paste from Heron, California to Fremont, Ohio. Lumber from the Pacific Northwest, plastics from the Gulf Coast, copper from Arizona and Utah, and soda ash from Wyoming.”

It’s an enticing vision—but one that must now survive the scrutiny of regulators, the skepticism of shippers, and the scrutiny of a freight industry that has learned not to trust grand promises too quickly.

As the proposal enters its next phase, the question remains whether this historic rail marriage will mark a new golden era for American freight—or simply another costly consolidation in an already narrowed field.