Cash Market Moves

The Surface Transportation Board (STB) confirmed on July 30, 2025, that it received a "notice of intent regarding a proposed merger that would result in the combination of Union Pacific Railroad Company (UP) and Norfolk Southern Railway Company (NS) (together Applicants), both Class I railroads. This notice, required under the Board's merger regulations at 49 C.F.R. Part 1180, initiates the regulatory review process for a proposed major merger between two Class I railroads."

Under the STB's major merger regulations, the notice of intent, also referred to as a prefiling notification, initiates a timeline for UP and NS to submit a merger application in three to six months.

Since the notice of intent, rail-served customers such as the American Chemistry Council (ACC) and the Rail Customer Coalition (RCC), have voiced concerns as to what this merger could mean for service, lack of competition for shippers and higher rates.

RCC represents manufacturing, agriculture, energy, and other vital industries across the U.S. economy. On Sept. 16, they sent a letter to the STB warning, "Union Pacific's proposed acquisition of Norfolk Southern could erode market competition across the U.S. freight rail network, driving up costs and exacerbating chronic service failures."

The letter further explained STB's merger rules rightly focus on the need to enhance competition. "For any transaction that would so dramatically extend a single railroad's market power, that threshold should mean broad new access to competing rail service, not just claims that single-line routes could make rail more competitive with trucks."

I spoke with Jeff Sloan, senior director of regulatory and scientific affairs at the American Chemistry Council (ACC) and he commented the railroads have power over customers because customers can't switch railroads, meaning customers have less control over high rates and poor service.

"In 2001, the STB adopted a new set of rules on how they would review rail mergers. In those rules, not only does a merger like this have to protect against harm to competition, but it is supposed to demonstrate that it will enhance competition. Nothing we see thus far shows how competition will be enhanced. We are concerned that the efficiency gains UP talks about with a merger, come through by implanting the Precision Scheduled Railroading network in the UP system," said Sloan.

The 2001 regulations partially state, "The Board believes that mergers serve the public interest only when substantial and demonstrable gains in important public benefits such as improved service and safety, enhanced competition, and greater economic efficiency, outweigh any anticompetitive effects, potential service disruptions, or other merger-related harms. Although further consolidation of the few remaining Class I carriers could result in efficiency gains and improved service, the Board believes additional consolidation in the industry is also likely to result in a number of anticompetitive effects, such as loss of geographic competition, that are increasingly difficult to remedy directly or proportionately." There is a link to 49 C.F.R. Part 1180 in the Code of Federal Regulations below.

On Sept. 22, 2025, The SMART Transportation Division (SMART-TD) union approved the proposed UP-NS merger, "gaining written guarantees from the companies to provide lifetime job protection for its members. This agreement ensures that no SMART-TD train or yardmaster members will face involuntary furlough as a result of the merger, which would create the first transcontinental railroad in the U.S.," according to a press release on their website.

In a response to the SMART-TD announcement provided to DTN, ACC's President & CEO Chris Jahn said, "History has shown that mergers slash service and shift costs onto customers and the UP-NS merger risks more of the same. President Trump has made real progress rebuilding American manufacturing. Let's not let a monopoly undo it. We need a better deal, one that enhances competition between railroads, lowers costs, grows jobs, and strengthens America."

The Union Pacific and Norfolk Southern railroads will file their official application between the end of October and the end of January. The initial filing of a Notice of Intent starts the clock, and from that point it's a 12- to 18-month review process once the formal application is filed.

Link to a copy of the letter to the STB and comments from RCC: https://www.freightrailreform.com/….

Link to merger regulations at 49 C.F.R. Part 1180: https://www.ecfr.gov/….

Link to ACC Rail Merger Policy: https://www.americanchemistry.com/….

Mary Kennedy can be reached at Mary.Kennedy@dtn.com

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