Trump expresses positivity towards the proposed merger of Union Pacific and Norfolk Southern
The proposed $85 billion merger between Union Pacific and Norfolk Southern is currently under review by the Surface Transportation Board (STB), the regulatory body responsible for overseeing railroads in the United States.
If approved, the merger would be the first subject to tougher merger rules and would create the first transcontinental freight railroad, spanning a vast network of 52,000 miles of track in 43 states.
The deal has garnered support from major intermodal companies, but it has also faced opposition from thousands of shippers, including manufacturers, agri-businesses, and energy producers. These opposing shippers argue that the merger would eliminate competition, raise freight costs, and compound service issues.
In response to competing intermodal partnerships, Union Pacific and Norfolk Southern have rolled out new interline services of their own. However, competing railroads have also introduced new intermodal partnerships in an effort to counter the proposed merger.
The STB's review process could be influenced by the re-nomination and appointment of new members to the board. Notably, President Donald Trump fired STB member Robert Primus, a Biden appointee who had been the lone vote against the 2023 merger between Canadian Pacific and Kansas City Southern. Trump has since tabbed railroad industry consultant Richard Kloster to an initial term of an open seat at the STB, and he re-nominated Michelle Schultz to the Surface Transportation Board last week.
Industry observers speculate that Trump's actions regarding the Surface Transportation Board could accelerate the review process for the Union Pacific and Norfolk Southern merger. The proposal is subject to review by the STB and could be submitted for formal application as soon as late October.
President Trump has expressed his approval of the merger, stating that Union Pacific is a great railroad. The merger offers shippers single-line transit for freight, which is claimed to eliminate delays at key interchange points, attract more business, and help jumpstart growth.
The proposed merger was jointly announced by Union Pacific (NYSE: UNP) and Norfolk Southern (NYSE: NSC) in late July. As the review process unfolds, stakeholders will closely watch the developments to determine the potential impact on the rail industry and the broader economy.
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