What a Coast to Coast Railroad Company Could Mean for U.S. Infrastructure

On July 29, 2025. Union Pacific (UP) and Norfolk Southern (NS), two of the three biggest rail companies in the U.S., agreed to an $85 billion merger. The deal faces a range of praise and criticism and is poised to redefine the American rail industry.

Despite being introduced almost 200 years ago, freight rail remains central to the U.S. economy. The sector generates more than $200 billion in economic output, with nearly 140,000 miles of track cover the continental U.S., moving 1.5 billion tons of goods, and more than 30 million passengers annually. While car and airplane travel remain the primary mode of transportation for U.S. domestic travel, and trucking edges out rail in overall freight cargo, railways remain the dominant mode of transport for industrial and bulk goods over land.

Union Pacific and Norfolk Southern, two of the nation’s six Class I freight railroads, hold market capitalizations of 37.3 percent and 18.4 percent respectively. Union Pacific is the largest rail freight company in the U.S., making up almost 40 percent of the market share amongst public rail firms. The western-focused UP has experienced strong revenue growth in 2026, to the tune of 4.97 percent in the past year since June 30, 2025. Net income sits at $7.1 billion, up 5.8 percent from 2024 and 5.7 percent from 2023. Such strong performance is attributed to the firm’s dominance in intermodal and bulk good shipping, as well as strict cost management.

Norfolk Southern operates primarily on the eastern seaboard, meaning that the merger would create the first true, single-company-owned transcontinental railroad in the U.S. However, the company has struggled at times in recent years, including the 2023 East Palestine, Ohio, derailment, which released hazardous materials. Cleanup efforts cost the company upwards of $1.7 billion, as well as roughly another billion dollars in settlements to citizens and the government. While this incident put a significant dent in NS operations, the company has rebounded. Similar to Union Pacific, Norfolk Southern has seen strong growth in 2026, 11.41 percent revenue growth year over year in Q2 2026 and 2.97 percent increase in the past 12 months. Net income in 2024 shot up 43.59 percent from $1.82 billion to $2.62 billion.

Union Pacific proposed the $85 billion merger agreement with Norfolk Southern. The deal ultimately serves to benefit both parties and their customers. Under the terms of the agreement, Norfolk Southern would be completely folded into Union Pacific. The move is projected to increase revenue by $1.8 billion and decrease costs by $1 billion. A single connected rail line would help UP compete with the trucking industry, rail’s largest competitor in the freight sector. For NS, the selloff provides shareholders an excellent exit opportunity following the East Palestine derailment. Additionally, the NS network would gain access to American pacific ports and trade hubs.

This merger, however, is not without its opponents. The largest concern is that the deal would lead to a decrease in competition and a corresponding increase in prices. The Stop the Rail Merger Coalition argues that the merger poses a risk to supply chain health for key goods and creates the beginning of a rail monopoly. Supporters of the coalition include the Alliance for Chemical Distribution, the American Farm Bureau Federation, and the National Industrial Transportation League. Other major railways, including BNSF and CPKC, have also opposed the merger. Farmers have voiced strong opposition, claiming agriculture expenses will climb to a record $14 billion this year, in part due to limited railway carrying capacity. Industry surveys have also reflected concerns about consolidation. In a 2025 survey of major freight shippers, three times as many respondents planning to participate in the STB review intended to oppose the major as support it.

Rail employees have expressed concern over job security. The Stop the Rail Merger Coalition reports that UP has a history of cutting jobs after similar mergers. The Teamsters Rail Conference, another member of the coalition, makes up most of NS and UP’s unionized workforces. The companies project 1,138 management-position reductions and 546 transfers during integration, while also projecting approximately 1,200 new net union jobs by the third year.

Proponents of the merger point to increases in efficiency that could impact the American consumer. A single transcontinental track would connect 88,000 new county-to-country points. Additionally, a stronger, more central rail service would help to compete with trucking, which dominates the freight industry, moving 72 percent of total freight by weight. A more competitive freight industry could reduce costs across the board. Competition with trucking and the remaining Class I railroads dispel the allegations of monopoly pricing and cost increases.

Proponents also point to the potential environmental benefits of shifting freight from highways to rail. A decrease in trucking means a decrease in carbon emissions. The vast majority of U.S. transportation-related emissions are caused by cars and other automobiles. Shifting freight traffic from trucking to railway could cut carbon emissions by 75 percent. A single intermodal train can carry roughly 550 truckloads of freight, and a more connected rail network would increase efficiency, cut costs, and incite positive market competition. Rail transport is also safer and more predictable than roadway cargo, leading to fewer incidents, fewer casualties, and less impact on public infrastructure given the private funding of railroad track and infrastructure.

While the merger remains subject to federal approval and many more months of negotiation, the proposal marks a significant moment for American transportation and supply chains. If approved, it could reshape the freight rail industry and offer an important test of whether greater network integration can improve competitiveness and efficiency of U.S. rail.

Written by Owen Williams, Public Policy Intern