Last week, Union Pacific (UP) and Norfolk Southern (NS) railroads announced an agreement to combine into a single transcontinental railroad (the “Union Pacific Transcontinental Railroad”). The companies expect to file their formal application with the Surface Transportation Board (STB) within six months and have targeted early 2027 to close the transaction (subject to review by the STB and final shareholder approval). UP will acquire NS, combining 52,215 route miles.

 

Class I rail mergers are reviewed and ruled on by the Surface Transportation Board (STB) according to regulations established in 2001 (49 CFR Part 1180). Those rules state that “The Board’s consideration of the merger or control of at least two Class I railroads is governed by the public interest criteria…In determining the public interest, the Board must consider the various goals of effective competition, carrier safety and efficiency, adequate service for shippers, environmental safeguards, and fair working conditions for employees. The Board must ensure that any approved transaction would promote a competitive, efficient, and reliable national rail system. The Board has provided further resources on major railroad mergers, including a “sample timeline.”

 

By reducing the number of US-based Class I railroads from 4 to 3, the proposed merger would impact fertilizer freight rail and would give the new railroad greater market power over pricing and service for captive customers. IFCA is currently watching what the impact might be on our members.