The Great Rail Divide: A Transcontinental Merger on Trial

CHICAGO, IL – January 15, 2026 – In a packed room at the Midwest Association of Rail Shippers (MARS) winter meeting, Union Pacific CEO Jim Vena laid out a bold vision for the future of American freight: a single, seamless railroad stretching from the Atlantic to the Pacific. The company is doubling down on its proposed merger with Norfolk Southern, a move it claims will create America’s first transcontinental railroad, injecting new life and competition into the nation's supply chain. However, this ambitious plan is chugging into a storm of opposition from rival railroads who argue the deal conceals anti-competitive risks behind a veil of corporate secrecy.

The high-stakes proposal, officially submitted to the Surface Transportation Board (STB) on December 19, 2025, seeks to combine Union Pacific’s sprawling western network with Norfolk Southern’s dominance in the east. The result would be a colossal 50,000-mile system connecting 43 states and nearly 100 ports. Proponents paint a picture of a more efficient, resilient, and competitive logistics landscape.

“This is a transformational merger that will inject more competition into the railroad industry and force them to enhance their service, reduce their price, or do both,” Vena stated, directly addressing the pushback. “We are not content to compete for share of a shrinking railroad industry. America needs strong, innovative railroads to shoulder the weight of a growing U.S. economy, and we are going to deliver.”

Forging a Coast-to-Coast Connection

At the heart of the proposal is the promise of eliminating the friction of “interline” handoffs, where cargo is transferred between separate rail networks. According to a study by industry advisor Oliver Wyman cited in the merger application, merchandise traffic moving 1,000 to 1,500 miles on multiple lines costs shippers an average of 35% more than comparable single-line service. By creating one continuous network, the combined entity projects it can unlock significant efficiencies.

The financial stakes are immense. The companies forecast approximately $2.75 billion in annual synergies from the deal, composed of an estimated $1.75 billion in new revenue and $1 billion in cost savings. A major part of this strategy involves directly challenging the long-haul trucking industry. Union Pacific and Norfolk Southern claim their combined network could convert an estimated 2 million truckloads of freight from highways to rail each year, a move they argue would reduce road congestion and offer a more environmentally friendly shipping alternative.

This vision is supported by what the companies describe as a record-breaking 2,000 letters of support from customers, public officials, and unions, all filed with the nearly 7,000-page STB application. The companies argue this broad coalition demonstrates that the shippers who actually use the rails understand and desire the benefits of a single, coast-to-coast provider.

A Battle for Transparency and Competition

Despite the rosy projections, the tracks ahead are far from clear. Major competitors, including BNSF Railway, Canadian National (CN), and Canadian Pacific Kansas City (CPKC), have mounted a significant challenge, accusing the merging parties of a lack of transparency. In filings with the STB, these rivals allege that Union Pacific and Norfolk Southern are withholding critical internal documents that could paint a very different picture of the merger’s competitive impact.

Opponents are demanding access to board presentations, financial adviser analyses, and internal communications related to the deal. BNSF has gone so far as to ask the STB to pause or completely reset the merger review schedule until this information is produced, questioning whether the public narrative of enhanced competition aligns with private executive assessments. CN has argued that the application is procedurally incomplete because it omits a key document, referred to as “Schedule 5.8,” which likely outlines the regulatory risks and concessions the companies are willing to make.

The core of the opposition’s argument is that the STB cannot fulfill its duty to the public without scrutinizing what was discussed behind closed doors. They suggest that while Union Pacific and Norfolk Southern publicly champion the merger as a classic “end-to-end” combination with little overlap, their internal analyses might reveal unstated plans or acknowledge potential competitive harms that have not been disclosed.

An Unprecedented Pact with Labor

In a striking departure from the often-contentious history of rail mergers and labor relations, Union Pacific has put forth a groundbreaking pledge to its workforce. The company has promised “jobs-for-life” agreements for its union employees, assuring that every worker with a union job at the time of the merger’s approval will continue to have one.

This commitment is designed to preempt fears of mass layoffs that typically accompany large-scale corporate consolidation. Going a step further, the companies project that the anticipated growth in rail traffic will not only preserve jobs but create them. They forecast the addition of approximately 900 net new union positions by the third year after the merger is finalized to handle the increased freight volume. This unprecedented labor protection plan stands as a key pillar in the companies’ public interest argument, positioning the merger as a win for workers as well as for shippers and shareholders.

The Regulatory Gauntlet Ahead

The fate of America’s first transcontinental railroad now rests with the Surface Transportation Board. The agency is operating under its stringent 2001 merger rules, which set a high bar for approval: any Class I railroad merger must be proven to enhance competition, not merely preserve it, while also serving the broader public interest.

The STB must now weigh the compelling vision of a streamlined, more efficient national supply chain against the serious concerns raised by competitors about market concentration and transparency. The board will sift through the thousands of pages of analysis, financial projections, operational plans, and letters of support and opposition. The decision, expected by early 2027, will not only determine the future of Union Pacific and Norfolk Southern but will also set a powerful precedent for the entire structure of North American freight transportation for decades to come.