Union Pacific Railroad's (UP's) proposed $85 billion acquisition of Norfolk Southern Railway (NS) would set up some shippers for faster transits while others will find that new investments on some routes will come at their expense.
UP will spend $507 million for dozens of rail infrastructure upgrades across what would be the newly combined network and $516 million to upgrade or expand a dozen terminals expected to see a surge in containers, automobiles and manifest trains should the merger happen.
“To achieve the transit-time improvements on certain routes requires making trade-offs,”Union Pacific wrote in the formal merger application it filed Dec. 19 with federal regulators.“[This] requires changes that have the opposite impact on a route with less traffic.”
Fresh investment will go into supporting a new single-line train from Southern California to New Jersey through Kansas City, bypassing Chicago. At UP's Inland Empire intermodal terminal in Southern California, daily lifts are projected to rise by approximately 400%. To handle the increase, the railroad plans to invest $58 million there.
The Norfolk Southern terminals in Cincinnati and Toledo, Ohio, are expected to see daily lifts more than double within three years of the merger, prompting a combined $52.5 million in planned investment. In Council Bluffs, Iowa, where lifts are projected to increase 163%, UP plans to spend $75.4 million to expand capacity.
Track infrastructure supporting the trains also will be upgraded.
The combined railroad would invest $136.6 million in infrastructure between Kansas City and Butler, Indiana, to support faster Southern California-Northeast intermodal trains. Another $172.3 million would be spent between New Orleans and Atlanta to strengthen the Laredo and Houston intermodal trains. The money will go to more than two dozen projects to improve the tracks and bridges in those areas to handle the additional post-merger volume.
Achieving that vision, however, requires trade-offs that could leave other shippers disadvantaged.
Rail rivals have warned about those risks in filings with the US Surface Transportation Board (STB), arguing that UP's merger application understates the downside.
Canadian National Railway said the application omits required market analyses, while CSX Transportation wrote that UP's growth plan relies on outdated or incomplete data, overemphasizing the benefits while masking where service would degrade.
In comments filed with the STB earlier this week, the two railroads asked regulators to deem UP's application incomplete. The STB must decide whether the application is complete before Jan. 20; if the application is deemed incomplete, UP would need to fix any deficiencies and resubmit the document before regulators can resume their review.
Terminals that could be logjammed
While several intermodal terminals would be expanded post-merger, others will have a sharp increase in volume but receive little or no investment.
In Minneapolis, container lifts are projected to increase 343%, yet no terminal upgrades are planned. UP said the intermodal terminal would be overcapacity post-merger, only a few years after hundreds of millions were poured into the facility. UP said intermodal volume increased 94% in Minneapolis between 2023 and 2024, but there was“ample capacity remaining for future expansion.”
Instead, UP wrote in the application that mitigation in Minneapolis would include working with customers to reduce container dwells and exploring off-site parking options.
In Tacoma, Washington, container lifts are expected to rise 44%, also without terminal investment. UP said it would seek to address capacity constraints by coordinating with the terminal operator to extend operating hours. The Tacoma terminal was one location that saw a massive influx in international intermodal volume in 2024.
At NS'Croxton terminal in Jersey City, daily lifts would rise 67% but receive only $7.3 million in capital spending. UP said it may reopen NS' E-Rail terminal in nearby Elizabeth, if necessary.
In Atlanta, container lifts at the Austell terminal would increase by 24%. The land-constrained terminal would not receive new capital investments, but UP will revive intermodal operations in Birmingham, Alabama, and NS also owns a smaller yard about 15 minutes away near downtown Atlanta.
Shippers who might not benefit
One group of shippers who would experience longer transits post-merger are those using trains from Southern California to Memphis and St. Louis. UP identified 191 domestic containers per day that will be removed in Greggton, Texas — between Dallas and Shreveport — and transferred to a second train to Memphis and St. Louis post-merger. On an annual basis, nearly 70,000 containers currently moving on a direct train would face at least a four-hour layover. That delay assumes the first and second trains run on time, much like two connecting flights at an airport.
UP said the Memphis diversions are necessary to build new expedited intermodal trains over the Meridian Speedway to Atlanta, Charlotte, and Jacksonville, saving shippers between 70 and 96 hours of transit time.
The Meridian Speedway itself, a nearly 300-mile corridor linking Shreveport, Louisiana, and Meridian, Mississippi, presents additional uncertainty. UP’s merger application calls for the new trains to average nearly 11,000 feet long, but Canadian Pacific Kansas City (CPKC), which owns 75% of the Meridian joint venture to NS’ 25%, limits train lengths to 8,500 feet. UP acknowledged that Meridian Speedway expedited trains“might be split into a second train,”introducing additional dwell that would cut into the 70- to 96-hour savings.
Union Pacific also highlighted how 185 intermodal routes, totaling more than 300,000 containers annually, would see fewer handlings or layovers under a post-merger operating plan. However, UP provided no details on 62 of the routes representing about 20,000 containers that would see additional handling.
“Any change to train and blocking plans and any yard or terminal rationalization creates a risk of service degradation to the extent plans are flawed in design or execution,”Union Pacific wrote in its application.“[We] will not make any merger-related changes that cannot be reversed, if necessary.”