Union Pacific and Norfolk Southern plan to create America's first transcontinental freight railroad

In July 2025, two major US railroads, Union Pacific and Norfolk Southern, announced their plan to merge in a $72 billion deal. This merger aims to establish America's first transcontinental freight railroad, significantly impacting the freight system in the country. The consolidation comes at a time when US freight railroads, crucial for carrying approximately 30% of the nation's freight by weight, are under scrutiny for service quality and reliability issues. The CEOs of both companies expressed confidence that the merger would not only enhance efficiency but also meet customer demands with improved solutions and service quality. Concerns among rail customers have been raised about potential service disruptions and higher rates following any merger. Historical trends suggest that mergers in the rail industry have often resulted in service declines rather than improvements. Industry experts like Ann Warner, a logistics consultant, have noted that shippers may face disruptions as they await further clarity on the implications of the merger. Union Pacific's CEO, Jim Vena, addressed these concerns, asserting that the integration would ultimately benefit customers with various freight services, including lumber, plastics, and copper. The proposed deal will require approval from regulatory bodies including the Surface Transportation Board as well as antitrust regulators. This follows the recent 2023 approval of a major railroad merger where Canadian Pacific acquired Kansas City Southern. Such mergers have been scrutinized due to apprehensions regarding competitive dynamics, as the potential for further consolidation could leave only two major freight railroads operating in specific regions of the country. Analysts believe that if this merger is favorable, it could trigger more deals in the near future among the remaining railroads to maintain competitive standing. Despite the promise of potential efficiencies, experts warn that considerable adjustments will be required to adapt to the new operational model, particularly for cross-country transport from coastal ports to inland destinations. Such changes, while promising a streamlined process, suggest that logistical and operational challenges will likely arise during the transition to a transcontinental railroad system. The next steps hinge on regulatory approvals, which could take several months or even years to finalize. Amid this backdrop of change, the rail industry remains a central element in the functioning of the American economy, emphasizing the need for improving service quality and customer satisfaction amidst ongoing consolidations.