A risky rail deal threatens to send America down the wrong track
UP-NS rail merger could reduce competition, weaken our supply chain and undermine the economy.
November 11, 2025
The completion of the first transcontinental railroad in 1869 united the country and unleashed a wave of American ingenuity, enterprise and economic growth. Railroads helped our country grow into the world’s greatest economy. But as rail companies grew, so did their power. Monopolies formed and farmers, manufacturers and small businesses suffered. It required bold and much needed federal action, like the Interstate Commerce Act and the later Staggers Rail Act, to restore balance and reinvigorate the competitive forces that have driven American prosperity for generations.
Today, industries that rely on freight rail warn, that hard-earned legacy is in jeopardy. A proposed merger between the Union Pacific and Norfolk Southern railroads would hand nearly half of all U.S. rail traffic to a single company, creating one of the nation’s largest monopolies. Leaders from key sectors, including energy, steel, agriculture and chemicals, point to past mergers as evidence that this merger could raise costs, weaken supply chains and undermine the very industries that fuel American strength. Instead of boosting monopoly power, they’re calling for what they describe as a better deal: one that promotes more rail-to-rail competition, improves service and strengthens the nation’s supply chains.
“Many rail customers are forced to deal with high rates and unreliable service,” said the American Chemistry Council (ACC). “Further consolidation within the rail industry is likely to make these problems worse.”
The Surface Transportation Board (STB), which has sole oversight of freight rail economic and competition issues, will be employing new merger requirements that were put in place as a result of major problems stemming from previous mergers. The new rules require that a rail merger not merely preserve existing levels of competition but enhance them.[1]
A bipartisan group of U.S. Senators expressed serious concerns in a letter to the STB regarding the merger’s potential impact on competition, agricultural supply chains, and the broader economy. The Senate letter explains that, “Our producers already face limited competitive options for rail service. Further consolidation could compound these challenges by reducing routing flexibility, constraining network fluidity, increasing market power, and limiting access for both producers and processors.”[2]
According to the Rail Customer Coalition (RCC), which represents energy producers, farmers and manufacturers that rely on freight rail, the STB must seize this opportunity to promote greater rail competition and protect shippers and consumers from the negative impacts of further consolidation within the rail industry. Here are seven reasons why they believe the STB should consider a better deal:
Freight rail is already more expensive than ever
Rail is vital to connecting American producers with the broader economy, supporting everyone from the smallest farmer to the largest factory. But since 2004, rail rates have increased by 44 percent, adjusted for inflation, while rail carloads dropped by almost 14 percent and railroad company profits soared by more than 230 percent.[3] These increases far outpaced both demand and operating expenses. Rail rates also increased by almost 70% more than truck rates in the same period.
Mergers undermine competition
Decades of consolidation have greatly reduced the number of Class I railroads, with only four of them now controlling 90 percent of American rail traffic.[4] As a result, many shippers have only one railroad to choose from to carry their traffic, giving them no other options when rates go up or service declines. This merger would give a single railroad control of a coast-to-coast network, erasing even more rail-to-rail competition and leaving key sectors of the economy with fewer choices.
Past mergers led to major supply chain meltdowns
The 1996 merger between Union Pacific and Southern Pacific caused chaos across the American southwest, leading the STB to place a moratorium on mergers and implement new rules designed to address the negative effects on competition, rail customers and the public. The 2023 merger between Canadian Pacific and Kansas City Southern was similarly disruptive, delaying nearly three-quarters off shipments and disrupting manufacturing and refining in the Gulf Coast. The proposed merger between Union Pacific and Norfolk Southern will be the largest merger ever reviewed by the STB — if it goes wrong, rail customers warn, the possible disruptions and impacts could be exponentially worse.
A steep price for businesses and consumers
The past two decades of consolidation have shown that when a railroad is allowed to operate without competition, prices spike. Railroads are earning more and more from non-competitive pricing. Over the last 20 years, the total revenue that railroads earn from competitive traffic has increased 49 percent while the revenue they earn from non-competitive traffic has increased 265 percent.[5] Railroads have imposed an array of fees that have led to billions in additional costs per year. These increased prices are passed on to American consumers.[6]
Mergers are not the first or best option
Union Pacific and Norfolk Southern claim the proposed merger will increase efficiency. But, as the ACC points out, railroads can increase efficiency without merging, through agreements such as the one recently reached by CSX and BNSF. This deal demonstrates that railroads can achieve greater efficiencies and pass them on to their customers through partnerships without reducing competition and the other pitfalls of a merger.
Trucks are not a substitute for rail competition
Union Pacific and Norfolk Southern also say that the merger could make rail service for certain traffic more competitive with trucking. However, according to the ACC, this does little to help current rail customers, particularly the many U.S. producers that will now “be captive to” a single railroad from coast to coast.Trucking is not a substitute for most bulk commodities. Many shippers and their customers have built their operations around rail, with large long-term investments in rail infrastructure and equipment.
America deserves more competition — not less
Large customers of freight rail believe that rather than allowing a transcontinental monopoly, the STB should advance reforms that promote greater rail competition, including:
- Eliminating regulatory restrictions on reciprocal switching, allowing customers to access competing railroads at nearby interchanges.
- Removing paper barriers that prevent short line railroads from serving a major railroad’s competitors.
- Reforming bottleneck rules that block competitive routing options across the rail network.
“The STB must reject any merger deal that fails to increase competition between railroads and improve service. And the Board must not stop there. It must move forward with meaningful reforms that strengthen the entire rail network,” the ACC explained. “American success relies on policymakers working with railroads, manufacturers, agriculture and industry to craft a better deal for America. The stakes are too high to get it wrong.”
Learn more about increasing competition and improving America’s rail industry.
Sources
1“Major rail consolidation procedures.”
2Senators stress need to ensure competition in rail industry, potential impacts on U.S. ag producers.”
3“Analysis of proposed merger between Union Pacific and Norfolk Southern railroads.”
4 “Freight rail rates climb higher.”
5“Rail shippers warn: UP-NS merger could harm competition, raise costs.”