Rail Customers Urge Regulators to Block Union Pacific-Norfolk Southern Deal, FT Reports
August 4, 2025
U.S. railroad customer groups are pressing the Surface Transportation Board (STB) to block or impose strict conditions on the proposed $85 billion merger between Union Pacific and Norfolk Southern, according to a Financial Times report on August 3, 2025. The deal, announced on July 29, 2025, would create the nation’s first coast-to-coast freight rail network, spanning 50,000 miles across 43 states with a combined enterprise value of $250 billion. However, seven shipper associations, representing industries from agriculture to manufacturing, warn that the merger could lead to higher prices and reduced service quality due to diminished competition.
The proposed acquisition, which would see Union Pacific acquire Norfolk Southern for $320 per share in a cash-and-stock transaction, aims to streamline freight movement by eliminating delays at interchange points like Chicago. The companies claim it will unlock $2.75 billion in annual synergies and enhance competition with trucking and Canadian railroads. Union Pacific CEO Jim Vena emphasized potential job growth and efficiency, stating, “This isn’t just about being a bigger railroad. It’s about being a better railroad.” Norfolk Southern CEO Mark George echoed this, calling the deal a “transformational combination” for the U.S. supply chain.
Opposition is mounting, however. The transportation division of SMART, the largest U.S. rail union, plans to challenge the merger before the STB, citing concerns over job losses and service disruptions. The union highlighted Union Pacific’s history of layoffs and infrastructure leasing, which could degrade service quality. Senate Democratic Leader Chuck Schumer called the deal a “hostile takeover of America’s infrastructure,” while Senators Tammy Baldwin (D-WI) and Roger Marshall (R-KS) urged the STB to scrutinize its impact on costs and reliability.
Critics point to past rail mergers, like the 1996 Union Pacific-Southern Pacific tie-up, which caused severe congestion, and the 1999 Conrail split between Norfolk Southern and CSX, which led to eastern backups. Shippers fear the combined entity, controlling 43% of U.S. rail freight, could dominate pricing and service standards. Mike Steenhoek of the Soy Transportation Coalition noted that the merger could exacerbate existing issues in an industry already consolidated from over 100 Class I railroads in the 1950s to just six today.
Union Pacific has engaged with over 100 customers, promising “low-cost rail options” and plans to detail these in its upcoming STB filing, expected within six months. The companies aim to close the deal by early 2027, banking on a favorable regulatory environment under the Trump administration, which has issued executive orders easing merger barriers. However, the STB, currently split evenly between two Democrats and two Republicans, awaits a fifth Trump-appointed member, which could delay review.
The merger’s approval is uncertain, as regulators must ensure it serves the public interest and enhances competition. The 2023 Canadian Pacific-Kansas City Southern merger, valued at $31 billion, faced similar resistance but was approved after extensive review. Analysts like Anthony Hatch note that while the deal could streamline operations, regulatory conditions like divestitures or open-access mandates might erode its value. The outcome could trigger further consolidation, with speculation that BNSF and CSX may explore a counter-merger.
For updates on the merger, visit FT.com or Reuters.com.