Railroad Giants Merge (8/5/25)

Ellie Thornton

Alright friends, welcome back to Milestones Behind the Freight Curtain! I’m Ellie Thornton, and as always, I’m joined by the one and only Steve DeNunzio. Professor I feel like we’ve been building up to this moment for ages—today we’re talking about the Union Pacific-Norfolk Southern merger. It’s official, right? Eighty-five billion dollars, and suddenly we’ve got the first coast-to-coast railroad in the U.S. I mean, that’s just wild.

Steve DeNunzio

Yeah, Ellie, it’s, uh, it’s huge. I mean, this is the kind of thing that, honestly, people in the industry have speculated about for decades, but to actually see Union Pacific and Norfolk Southern tie their networks together—over 52,000 route miles, 43 states, and, what, a hundred ports? It’s a game-changer for American logistics. And, you know, the combined company’s gonna be worth more than $250 billion. That’s not pocket change.

Ellie Thornton

No not at all! And, you know, I was thinking back—this is a bit random, but I remember seeing a Union Pacific train when I visited the U.S. as a student. I never imagined that one day, UP would be connecting both U.S. coasts with Norfolk Southern. It’s like something out of a logistics fantasy novel. But, seriously, the benefits they’re touting—streamlined supply chains, better service, job preservation, and making the U.S. more competitive with Canadian railroads. It all sounds, well, almost too good to be true doesn't it?

Steve DeNunzio

Yeah, and, you know, the railroads are really leaning into that narrative. They’re saying this is gonna boost domestic manufacturing, shift more freight from roads to rail, and, uh, reduce congestion on highways. Plus, they’re promising to preserve all union jobs, which is a big deal. The new headquarters will be in Omaha, but Atlanta’s still gonna be a key hub. And, I mean, the synergies they’re projecting—almost 3 billion a year within three years. That’s a lot of efficiency gains, at least on paper.

Ellie Thornton

Yeah, and I think the timing is interesting, too. We’ve talked before about how Canadian railroads have been eating the U.S.’s lunch a bit, especially with those cross-border networks. So, this is the U.S. rail industry kind of fighting back, right? Trying to reclaim some of that freight volume and bring jobs back home. But, as always, there’s a lot more to the story than just the press releases.

Steve DeNunzio

Absolutely. And, you know, as we’ve seen in past episodes—like when we talked about the port surges or the parcel shakeups—these big moves always have ripple effects. So, yeah, the vision is bold, but the reality? Well, that’s where things get interesting.

Ellie Thornton

Right, so let’s talk about the folks who aren’t exactly popping champagne over this merger—the shippers. I mean, the National Industrial Transportation League, the American Chemistry Council, the Freight Rail Customer Alliance—they’re all basically saying, “Hang on, this is not great for us.” They’re worried about higher rates, less choice, and, honestly, just being squeezed by a giant with 52,000 miles of track. And Steve it’s not like this is the first time shippers have been burned by a merger, is it?

Steve DeNunzio

No, not at all. I mean, shippers have long memories, right? Every time there’s a big rail merger, the railroads say, “Hey, this is gonna be great—more efficiency, better service.” But what shippers actually see is, uh, higher fees, less competition, and, honestly, a lot of promises that don’t really materialize. Nancy O’Liddy from NITL said it pretty bluntly—shippers just don’t want more consolidation. And, you know, the American Chemistry Council, they’re especially worried about monopoly power. Chemical shippers are super reliant on rail, and if you take away options, they’re kind of stuck.

Ellie Thornton

Yeah, and the Freight Rail Customer Alliance, too—they represent thousands of companies in manufacturing, agriculture, energy, you name it. They’re saying railroads already have too much market power, and now it’s just going to get worse. I mean, Ann Warner from FRCA pointed out that railroads can force shippers into contracts that the Surface Transportation Board can’t even regulate. So, it’s like, who’s actually looking out for the little guy here?

Steve DeNunzio

Exactly. And, you know, the STB—the Surface Transportation Board—they’ve got these tougher merger review rules from 2001, but they’re kind of untested at this scale. So, shippers are watching to see what kind of concessions the railroads are willing to make. In past mergers regulators have sometimes forced railroads to give a second carrier access to customers, or, you know, trackage rights. But, honestly, it’s not always enough. I remember a case here in Ohio—a large retailer lost out big time after a merger. They went from having two rail options to just one, and their rates shot up. That kind of thing sticks with people.

Ellie Thornton

Yeah, and there’s talk about expanded reciprocal switching, right? So, if you’re a customer who only has one railroad, you might get access to a second one. But, as FRCA pointed out, that doesn’t always help everyone—especially those relying on unit trains. And, you know, shippers are saying, “Look, if you want our support, you’ve got to give us real concessions—like access to another railroad, rate reform, penalties for service failures.” Otherwise, it’s just more of the same old story.

Steve DeNunzio

Yeah, and, I mean, we’ve seen this before. As we talked about in our episode on parcel power plays, when there’s less competition, prices go up and service can suffer. So, shippers are right to be skeptical. The devil’s in the details, and, honestly, the STB’s got its work cut out for it.

Ellie Thornton

And then there’s the labor side, which is, honestly, just as complicated. The SMART-TD union—the biggest rail union in the U.S.—they’re coming out swinging against this merger. They’re saying Union Pacific’s got a bad track record on safety and labor, and they’re worried about job security and even national security at the border. That’s a lot to unpack.

Steve DeNunzio

Yeah, and, you know, SMART-TD represents, what, 125,000 active and retired workers? That’s a lot of voices. They’re saying UP leads the industry in accidents and injuries, and that there’s a culture of prioritizing cost-cutting over safety. And, uh, they’re not alone. The Brotherhood of Locomotive Engineers and Trainmen—BLET—they haven’t taken a formal position yet, but they’ve sent letters to the White House about concerns over using Mexican crews at the border. That’s not just a jobs issue, it’s a national security thing, too.

Ellie Thornton

What a great name, BLET. Yeah, and the Teamsters Rail Conference—they’re kind of holding back, waiting to meet with the companies before they say anything definitive. But it’s clear that labor politics are going to be a huge part of this. And, you know, the Surface Transportation Board, they’ve got these 2001 merger review rules that, like you said, haven’t really been tested on something this big. So, it’s a bit of a wild card, isn’t it?

Steve DeNunzio

It really is. The STB’s gonna have to weigh all these concerns—labor, safety, competition, national security. And, you know, unions are demanding real guarantees—job protections, safety improvements, maybe even language requirements at the border. It’s not just about the economics, it’s about the people on the ground. And, as we’ve seen in other industries—like when we talked about warehouse automation a few weeks back—these big changes always hit workers the hardest.

Ellie Thornton

Absolutely. And, you know, the railroads are promising to preserve all union jobs, but unions are saying, “We’ve heard that before.” So, it’s going to be a long, messy process, and the regulatory hurdles are real. I guess we’ll just have to see how it all plays out, but one thing’s for sure—this merger is going to keep us busy for a while.

Steve DeNunzio

Yeah, no doubt. There’s a lot at stake for shippers, workers, and the whole U.S. economy. We’ll keep following it as it moves through the regulatory process, and, uh, I’m sure we’ll have plenty more to talk about in future episodes.

Ellie Thornton

Definitely. Thanks for joining us today, everyone. Steve always a pleasure to dig into these big stories with you!

Steve DeNunzio

Same here Ellie. Sounds like London's enjoying cool weather while the U.S. Midwest bakes! Thanks, everyone, for listening. We’ll catch you next time on Milestones Behind the Freight Curtain. Take care!

Ellie Thornton

Bye bye everyone!