Opinion: The case for the UP-NS merger runs through America's Heartland

Economists are trained to follow the data. When it comes to the proposed $85 billion railroad merger between Union Pacific and Norfolk Southern, the data points in one direction: approval would be good for American agriculture, good for American consumers and good for the broader economy.

The merger would create the first single-line transcontinental freight railroad in the United States, connecting Union Pacific's network west of the Mississippi River with Norfolk Southern's eastern system. The two networks overlap on only a small stretch of track in the middle of the country. This is not a merger, therefore, of head-to-head competitors. It is a merger of complementary systems — the functional equivalent of connecting two halves of a network that were never designed to work apart.

For American farmers, the benefits would be immediate. 

Under the current system, a shipper moving corn or soybeans from an Iowa elevator to an East Coast port typically faces a hand-off between two railroads at an interchange point — often Chicago — where cars can sit for days before moving on. These delays translate into higher input costs, tighter margins and reduced flexibility about which ports to use and which markets to reach. A combined UP-NS system eliminates those hand-offs. Farmers gain access not just to East Coast ports, but to the Gulf Coast, the Pacific Northwest and the Great Lakes, all under a single-line service contract.

According to USDA's Agricultural Marketing Service, farm and food products represent about 20 percent of total rail tonnage. In 2023 alone, more than 80.5 million tons of corn and 26.3 million tons of soybeans moved by rail. These two commodities define the Midwest farm economy and are most exposed to the interchange bottlenecks created by moving between rail lines that this merger would eliminate. Roughly 60 percent of U.S. corn exports and 80 percent of soybean and soymeal exports move by rail, making competitive, efficient rail access a direct determinant of what American farmers net at the end of the harvest. 

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The historical record on what this kind of integration does to rates and service is unambiguous. A University of Illinois analysis of past mergers following the Staggers Act of 1980 found increased efficiency and stable to lower shipping rates — not the price spikes consolidation skeptics predicted. This finding was reinforced by the Logistics and Transportation Review journal which concluded that transport cost reductions accompany mergers. In fact, the Association of American Railroads has found that average inflation-adjusted rail rates were 44 percent lower in 2024 than in 1981. The deregulation era produced a better outcome for shippers than the heavily regulated era that preceded it.

The competition concern most often raised — that going from six Class I railroads to five reduces market options — also does not hold up under scrutiny here. The relevant question is not how many carriers exist on paper, but whether any shipper loses a competitive option they currently have. Because Union Pacific and Norfolk Southern serve opposite ends of the country, very few shippers are currently served by both. The "two-to-one" problem that defined earlier, more contentious mergers and reduced shippers’ access from two competing railroads to a single carrier is largely absent here. The Surface Transportation Board should evaluate this merger on that basis, not on a simple carrier count.

There is also a national security dimension or particular importance at play. Food security is supply chain security. A rail network capable of moving grain from Midwest farms to Gulf export terminals in two fewer days than the current system is a strategic asset, not just a commercial one. The United States competes directly against Brazil and Canada for global grain market share, and the USDA's own analysis makes clear that Brazil's competitiveness depends largely on its transportation infrastructure and costs. Every day shaved from farm to port is a competitive advantage. A fragmented, interchange-dependent rail network is a structural disadvantage we have chosen to live with for too long.

The Surface Transportation Board's public interest standard requires companies considering a merger to demonstrate that the deal enhances competition and serves the broader public good. In this instance, that case is strong. For American farmers facing tight margins, rising input costs and intense global competition, a more efficient, lower-cost, single-line rail network is a lifeline. The STB should approve this merger. The data says so. History says so. And America's farm economy is counting on it.

Paul Prentice has a Ph.D. in agricultural economics and is a former chief macro-economist for the USDA.