WASHINGTON — The Rail Customer Coalition, which represents the manufacturing, agriculture, and energy industries, has told federal regulators that Union Pacific’s proposed acquisition of Norfolk Southern will stifle rail competition and drive up costs.
“Past rail mergers have shown what happens when consolidation goes unchecked: service suffers, costs increase, and jobs disappear,” the coalition wrote in a Sept. 16 letter to the Surface Transportation Board, which will review the merger. “A transcontinental merger could spark a new wave of consolidation, leaving captive shippers with even fewer rail companies to choose from. This is in direct contrast to the President’s executive orders aimed at promoting American prosperity, curbing anti-competitive practices, and preventing monopolistic behavior.”
The railroads expect to file their merger application with the STB sometime between Oct. 29 and Jan. 29, although executives have said they aim to complete the application as soon as possible.
“With so much at stake members of the RCC felt it was important to weigh in with the STB now — especially since UP/NS are putting on a full court press with policymakers in advance of their official application to merge,” a spokesman said in an email.
Union Pacific CEO Jim Vena met with President Donald Trump and other administration officials at the White House earlier this month.
The Rail Customer Coalition, which says its members employ 7 million Americans and contribute $4.8 trillion to the economy, cautioned that the UP-NS merger would further concentrate the rail industry and diminish options for shippers.
The release of the letter coincides with new findings from Escalation Consultants showing that, after adjusting for inflation, freight rail rates have risen more than 40% over the past 20 years, far outpacing both demand and operating expenses. Rail rates also increased by almost 70% more than truck rates in the same period.
Rail revenue from potentially non-competitive rates has surged 265% since 2004, compared with an almost 50% increase from presumed competitive rates, the Rail Customer Coalition said. “Non-competitive pricing has become the norm, not the exception,” Jay Roman, president of Escalation Consultants, said in a statement. “Rail customers continue to pay a substantial price for the consolidation of railroad market power.”
The surge in rail rates followed a series of mergers that reduced the number of Class I U.S. freight railroads from 23 to six. The Rail Customer Coalition contends that reduced competition has enabled rail profit margins to soared even as the amount of freight shipped by rail has declined.
The Association of American Railroads says that average rail rates — adjusted for inflation on a revenue per ton-mile basis — were 44% lower in 2024 than in 1981, the first year after passage of the Staggers Act that partially deregulated the industry.
UP and NS have said that their merger will enhance competition, provide shippers with more options for single-line service, reduce transit times, and lead to volume growth. Thus far 18 rail customers, ports, and short lines have indicated their support for the merger, which would create the first transcontinental railroad.
