The Case for a Stronger National Rail Network
● The combination addresses many of the Surface Transportation Board's key questions with unprecedented customer protections. New commitments strengthen competitive access, expand pricing protections and create additional safeguards to ensure customers benefit from the transaction
● A unified transcontinental network will strengthen competition and improve freight service. Expanded single-line service, new shipping options and faster transit times will create more choices for customers while helping rail compete more effectively with long-haul trucking.
● The combination delivers measurable public benefits while preserving a competitive rail marketplace. Billions in projected annual shipper savings, improved supply chain efficiency and reduced highway congestion reinforce the long-term value of creating America's first transcontinental railroad.
Key Takeaways:
- A seamless transcontinental network expands freight options. The combination would create America’s first single-line coast-to-coast railroad with new lanes, faster routing and broader market access.
- Single-line service reduces supply chain friction. Fewer handoffs and more direct routing are designed to improve speed, reliability and efficiency for long-distance freight movement.
- The proposed combination strengthens American competitiveness.The applicationhighlights supply chain growth, new union jobs, and expanded rail capacity as long-term economic benefits.
Creating America’s first transcontinental railroad will have enhanced competition well beyond any previous rail merger, the CEOs of Union Pacific and Norfolk Southern told industry leaders Tuesday.
Union Pacific CEO Jim Vena and Norfolk Southern President and CEO Mark George made the comments in a joint interview with Trains Magazine editor Bill Stephens at the Future of Rail Symposium hosted July 28 by FreightWaves and Trains Magazine. The session is available to watch here.
The discussion took place at a time when momentum for the merger is building. The Surface Transportation Board (STB) accepted the merger application as complete; CN withdrew its opposition; and the railroads demonstrated their confidence by making four new voluntary commitments to support rail competition and protect customers.
Vena and George said they listened to feedback from customers and the STB. They realized there was an opportunity to show confidence in the merger and provide even more assurances the combination is pro-competitive and backed by a comprehensive plan for a smooth transition.
The railroads doubled the scope of Committed Gateway Pricing (CGP); ensured 2-to-1 and 3-to-2 shipper facilities will have access to an additional Class I railroad; created a mechanism to give customers alternative rail access in the unlikely event that service performance declines during merger integration; and proposed a new enforcement tool for the STB if expected merger benefits are not delivered in a timely manner.
“CGP opens it up and lets us go and compete,” Vena said. “It’ll put everybody’s feet to the fire more to compete even harder, and that’s what it’s all about. We’re willing to compete.”
“We’ve gone beyond what any Class I merger in the past has done in terms of offering new competition,” George said. “When you couple that with what we did through our agreement with CN, we’re changing the competitive landscape for the better.”
The agreement with CN, including expanded use of the Elgin, Joliet & Eastern Railway, would not have happened without the prospect of the merger, Vena said. “I wouldn’t have gotten through the turnstiles. They would’ve kicked me out of the building.”
Beyond increasing railroad competition, the CEOs emphasized the direct benefits for customers. A combined Union Pacific and Norfolk Southern would create 88,000 new single-line lanes, eliminating many of the handoffs that today occur between eastern and western railroads. George said customers consistently tell him they want one railroad responsible for their shipment from origin to destination, with one service plan, one operating philosophy and one point of accountability.
“What we’re doing with the merger is truly transforming, creating 88,000 new single-line lanes,” George said. “We know when single-line service is offered, shippers are 2-3 times more likely to select rail versus truck. We are creating an enormous public benefit when we come together by offering all these new single-line options.”
George said those benefits translate into meaningful opportunities for growth, particularly across the Mississippi River watershed, where many customers today rely on trucks or complex interline rail moves to reach new markets. He noted that every eliminated interchange removes risk, reduces variability and improves reliability – factors that directly influence purchasing decisions. Examples include finished vehicle shipments from Georgetown, Indiana, to Mira Loma, California, which could move more than 48 hours faster; chemical traffic moving from Old Fort, Ohio, to Green River, Wyoming, with approximately 24 hours of transit improvement; and paper and consumer products shipments from Jackson, Alabama, to Salem, Oregon, with roughly 48 hours savings. Both CEOs consistently acknowledged that customers don't buy handoffs, they buy speed, consistency, and accountability.
For Vena, the bottom line is simple: customers benefit when railroads compete harder for their business.
“At the end of the day, the end user of the product would say, let them go compete,” he said. "[The other railroads] can drop their price. They can provide a higher level of service to compete against us. They are very strong. We’re going to protect railroads that want to be inefficient? I don’t think so.”
In a Washington Examiner article, Michael Toth, director of research at the Civitas Institute at the University of Texas, argues that the Union Pacific-Norfolk Southern combination should be evaluated on the facts developed throughout the Surface Transportation Board's review process and the significant public benefits it will deliver.
Major infrastructure projects deserve rigorous review, particularly when they reshape critical parts of the American economy. As the Surface Transportation Board (STB) continues evaluating the Union Pacific-Norfolk Southern combination, the record reflects a proposal that has evolved in direct response to regulatory feedback and customer concerns.
Over the course of the review process, Union Pacific and Norfolk Southern have supplemented their application with additional commitments designed to strengthen competition, protect customers and ensure accountability during integration. Most recently, the companies introduced four significant customer protections that expand upon commitments made in previous rail transactions.
Among those commitments is a substantial expansion of the Committed Gateway Pricing program, nearly doubling the number of eligible shipments while extending pricing protections to additional agricultural and bulk customers. The companies also committed to preserving access to another Class I railroad for the small number of customer locations that would otherwise see fewer competitive options wherever legally possible. Additional safeguards include a Targeted Access Program that provides customers access to alternative rail service if performance thresholds are not met during integration, as well as a new Rate Alternative Dispute Resolution process that allows the STB to intervene if promised public benefits fail to materialize.
These commitments reinforce the unique nature of the transaction. Unlike combinations that join direct competitors, Union Pacific and Norfolk Southern operate largely in separate regions of the country, creating an end-to-end network that connects western and eastern freight corridors. The recently announced agreement with Canadian National further addresses limited areas of network overlap while preserving competitive access for customers.
Connecting the two rail systems also unlocks meaningful operational benefits. The combination is expected to convert approximately 10,000 existing interline routes into seamless single-line service while creating roughly 88,000 new county-to-county shipping lanes. The result is a more efficient network that reduces handoffs between railroads, shortens transit times and gives shippers more direct service options. The companies estimate these improvements will save customers approximately $3.5 billion annually.
Competition throughout the freight marketplace remains strong. Multiple Class I railroads will continue serving customers across North America, while trucking—the industry's largest competitor—continues to move the majority of domestic freight. By providing seamless coast-to-coast rail service, the combination strengthens rail's ability to compete for long-haul shipments, with projections showing more than 2 million truckloads shifting from highways to rail each year. That benefits shippers, reduces highway congestion and improves supply chain efficiency.
The STB's responsibility is to weigh competitive risks against public benefits. After an extensive review process and multiple rounds of enhancements, the record demonstrates a combination designed to expand customer options, strengthen competition and create a more connected national freight network.
Read the full Washington Examiner article here.