A railway merger trifecta? What supersized UP/Norfolk Southern combo could mean

 
A Union Pacific freight train heads east Thursday in Geneva. Union Pacific and Norfolk Southern railroads are seeking a merger.
Brian Hill/bhill@dailyherald.com

Here we go again. For the second time in recent years, two railroad titans are contemplating a marriage that could shake the freight landscape nationally and locally.

Union Pacific Railroad and Norfolk Southern Railway informed the U.S. Surface Transportation Board in late July they want to merge, pending approval.

The two are among the biggest freight carriers in the U.S. — UP owns over 32,000 miles of track in the central and western U.S.; Norfolk Southern stretches from the Midwest to the East Coast on 19,000 miles of track.

They converge in Chicago, the nation’s busiest rail hub.

The issue “requires a fundamental consideration of what the North American freight network’s going to look like — for better or worse — with the merger … without the merger,” said Martin Oberman, former chairman of both the STB and Metra.

“This could be either good (or) bad for the Chicago region — the devil is in the details,” DePaul University transportation expert Professor Joseph Schwieterman said.

The railroads touted the merger as “an unprecedented opportunity” to create a transcontinental railroad, which will offer faster and more efficient service with lower supply chain costs across 43 states.

They promise “the combined company will also compete more effectively with Canadian railroads to win back U.S. freight volume and American jobs.”

In 2023, the STB granted Canadian Pacific Railway’s request to acquire Kansas City Southern Railway amid objections from numerous suburbs.

In 2008, the board allowed the Canadian National Railway to combine with the smaller EJ&E, as the region split on the merits.

“While it’s still too early to know what the effect of this merger will mean for our communities, I have already been in contact with several municipalities along the UP West line,” Winfield Village Manager Evan Summers said.

In DuPage, “we have a long history of banding together to protect the interests of our residents and businesses alike. We will closely monitor this merger, and if we identify negative impacts, we stand prepared to intervene.”

The railroads will be filing a formal application for UP to acquire Norfolk Southern on or before Jan. 29.

A Norfolk Southern locomotive moves along the tracks in Norfolk, Virginia. Union Pacific and Norfolk southern railroads are seeking to merge.
The Associated Press

“A key question is how the flow of freight from east to west of our region will change. Even small shifts could have large ripple effects, particularly on highway crossings and commuter rail,” Schwieterman said.

UP and NS both have a major footprint in the region with sprawling rail yards.

“My own observation would be, I would not expect a huge change in the Chicago area,” Oberman said

But, “it would just be speculation” until the railroads file their application, which will contain detailed projections about train numbers, lengths and routing, he noted.

At that point, the public will have a chance to comment online and the railroads will make their case to board members. The process took about 17 months with CP/KCS.

“The two railroads likely see an opportunity to get the federal government to say ‘yes’ in Washington’s unpredictable regulatory environment,” Schwieterman observed.

Should the acquisition happen, it could lead to the remaining major players, BNSF and CSX railroads, combining, insiders predicted.

Under new rules, UP/NS will have to show the STB how a merger would enhance competition, Oberman pointed out. “That’s a big challenge if you’re down to two railroads.”

Metra opposed the CP/KCS deal but had no comment on the newest proposal. Metra is now involved in fraught negotiations with UP to take over passenger service, which the freight railroad wants to discontinue.

If the consolidation impacted commuter trains, “I fully expect that the board will look into it very closely and can put conditions on it,” Oberman said.

Got a comment? Email mpyke@dailyherald.com.

 
A Union Pacific freight train heads east Thursday in Geneva. Union Pacific and Norfolk Southern railroads are seeking a merger.
Brian Hill/bhill@dailyherald.com

One more thing

Illinois Secretary of State Alexi Giannoulias is opening select DMVs from 7:30 a.m. to noon Saturdays through Sept. 6, for walk-ins seeking driver’s license renewals, REAL IDs and other services. Locations include Addison, Aurora, Des Plaines, Elgin, Lake Zurich, St. Charles and Woodstock.

Gridlock alert

Kane and McHenry county drivers can expect delays through August as Illinois tollway crews repair six bridges over I-90. Daily lane closures will occur on Routes 72 and 23, and Randall, Tyrell, Sandwald and Getty roads.

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