Shippers oppose Union Pacific-Norfolk Southern deal

A group representing industries that use the rail system is warning a federal agency that Union Pacific Corp.’s proposed acquisition of Norfolk Southern Corp. could harm competition in the freight rail network.

The Rail Customer Coalition (RCC), which represents manufacturing, agriculture, energy, and other industries, sent a letter to the Surface Transportation Board arguing that such a merger would drive up costs and exacerbate service failures.

Union Pacific announced its intention to buy Norfolk Southern on July 29 for an enterprise value of $85 billion. If approved, the deal would connect over 50,000 route miles across 43 states from the East Coast to the West Coast and link about 100 ports. The deal is currently under federal review. The STB expects to receive a merger application by Jan. 29, 2026.

“Past rail mergers have shown what happens when consolidation goes unchecked: service suffers, costs increase, and jobs disappear,” the letter states. “A transcontinental merger could spark a new wave of consolidation, leaving captive shippers with even fewer rail companies to choose from.”

The RCC said that freight rail rates have risen more than 40% over the past 20 years, “far outpacing both demand and operating expenses,” while rail rates rose 70% more than truck rates in the same period.
Those increases followed a series of rail mergers that cut the number of large U.S. freight railroads from 23 to six, the group said.

Meanwhile, rail revenue from potentially non-competitive rates has surged 265% since 2004, compared with an almost 50% increase from presumed competitive rates, RCC said.

Supporters, such as the Mesilla Valley Economic Development Alliance in New Mexico and say the rail deal would create faster, more dependable service and an expanded reach for their business.

Union OKs deal

On Monday, the nation’s largest rail union said they supported the tie-up between Union Pacific and Norfolk Southern once Union Pacific agreed to secure union jobs.

The International Association of Sheet Metal, Air, Rail and Transportation Workers – Transportation Division (SMART-TD) and Union Pacific Railroad said they reached a deal that would guarantee SMART-TD members working in train and yardmaster service will have job protection for the length of their careers following a merger, subject to the usual requirements for continued employment.

“For generations, railroaders have worried about what mergers might mean for their jobs and whether or not they would be given the opportunity to reach retirement on the rail,” SMART-TD President Jeremy Ferguson said in a statement Monday. “Today, we can say with confidence that the biggest railroad and the biggest rail union in America are breaking new ground. We are protecting jobs, protecting families, and protecting the future of the U.S. supply chain.”