Temple U. Professor Misty Blessley looks at an important logistics issue.
Union Pacific (UP) and Norfolk Southern (NS) are seeking Surface Transportation Board (STB) approval to merge into what would become the first true coast- to-coast Class I railroad in the United States. A Class I railroad is a freight carrier generating more than $1 billion in annual revenue.
A unified UP–NS network could eliminate thousands of daily railcar and container handlings, reduce chokepoints, and create a more fluid national network. For shippers, that means fewer delays, lower inventory carrying costs, and more predictable inland flows from ports.
The UP–NS merger would follow the 2025 Canadian Pacific–Kansas City Southern (CPKC) merger, which created the first single-line railroad connecting Canada, the U.S., and Mexico. But CPKC is significantly smaller than either UP or NS. CPKC has 51,065 cars online, compared to 304,481 for Union Pacific and 162,339 for Norfolk Southern.
The combined railroad would reshape east–west freight flows. However, the massive scale underscores why the UP–NS proposal is drawing scrutiny.
A major part of the railroads’ argument is competitive pressure from long haul trucking. Motor carriers win when shippers need speed, flexibility, and door-to-door simplicity. If the merged railroad can reliably cut one to two days from cross country moves, rail becomes a more credible alternative to truckload.
The STB has ordered Union Pacific and Norfolk Southern to submit full internal documents so regulators can verify the merger’s promised benefits. While the Board is not an antitrust agency in the traditional Department of Justice sense, it is responsible for evaluating whether a merger would reduce competition, create market dominance, or harm shippers. The STB is “getting all the facts and elevating transparency in agency decision making.” For now, only time will tell.
Classroom Discussion Questions:
1. Would you allow the merger given its potential benefits and its potential risks to competition? Why?
2. In Example S4 of Chapter 11 in your Heizer/Render/Munson textbook, Transportation Mode Analysis, Daily Cost of Holding shows how time is money. How does a shipper benefit financially when transit times improve?