Originally published at: GOP members to STB: Find ‘real’ benefits or ■■■■■■ rail merger - FreightWaves
Dozens of Senators and Representatives have urged a careful review by federal regulators of the proposed merger of Union Pacific and Norfolk Southern.
What is most striking about this article is not what it says, but what it assumes.
The piece faithfully reports that 46 ■■■■■■■■■■ members of Congress have urged the Surface Transportation Board to conduct a “rigorous and comprehensive review” of the proposed Union Pacific–Norfolk Southern merger. Their demand is straightforward: the railroads must demonstrate “clear, measurable, and substantial benefits” to shippers and the broader economy. Absent such proof, the letter warns, the Board should ■■■■■■ the transaction.
This framing appears reasonable. It reflects the Surface Transportation Board’s statutory obligation to ensure that major rail consolidations serve the public interest. It acknowledges the heightened merger standards adopted after the disruptive rail consolidations of the 1990s. It recognizes that the burden of proof rests squarely on the applicants.
But the article, like the congressional letter it reports, evaluates the merger almost entirely within the internal logic of the rail industry itself. It treats the transaction as though its primary competitive consequences will unfold among railroads—Union Pacific, Norfolk Southern, BNSF, CSX, and CPKC—when in fact the merger’s primary competitive arena lies elsewhere.
The true competitor is not another railroad. It is the Interstate Highway System.
This omission is not trivial. It is foundational.
Freight railroads operate on infrastructure they own, maintain, and finance themselves. Every mile of track, every bridge, every signal system, and every intermodal terminal represents private capital at risk. Railroads internalize their infrastructure costs completely.
Motor carriers do not.
Trucking operates largely on publicly funded highways whose costs are only partially recovered through fuel taxes and registration fees. The federal diesel fuel tax has remained nominally unchanged since 1993. In real terms, adjusted for inflation and infrastructure wear, its cost recovery value has steadily eroded. Pavement damage, congestion, and maintenance costs are broadly socialized across the public.
This asymmetry is the defining structural feature of modern freight competition in the United States.
Yet neither the congressional letter nor the article acknowledges it.
Instead, the debate is framed narrowly around whether the merger will enhance or reduce rail competition. This question, while legally necessary, is economically incomplete. Railroads today do not dominate freight markets. Trucks do. Rail’s primary challenge is not excessive market power, but declining modal share driven in part by structural infrastructure pricing imbalances and operational coordination challenges.
The UP–NS merger directly addresses one of rail’s most persistent operational disadvantages: interchange friction. When freight moves across multiple rail carriers, service reliability suffers. Variance increases. Accountability diffuses. Shippers, facing uncertainty, shift to trucks—even when rail would otherwise be more efficient.
Single-line service reduces that friction. It aligns incentives. It improves reliability. It makes rail more competitive with trucking, not with other railroads.
By evaluating the merger exclusively through the lens of rail-to-rail competition, policymakers risk overlooking its most important systemic implication: its potential effect on rail’s ability to compete with trucking at all.
The article briefly notes that the merger would create the first coast-to-coast freight railroad in American history. But it does not fully explore why that matters. A unified transcontinental rail network has the potential to reduce transit variability, improve asset utilization, and make intermodal rail service more competitive with long-haul trucking. These are not theoretical benefits. They are operational realities rooted in network economics.
Nor does the article fully acknowledge the paradox underlying current opposition. The same policymakers expressing concern about rail consolidation simultaneously preside over a freight system in which trucking dominates more than seventy percent of domestic freight tonnage, operating on infrastructure that railroads help fund through taxes but do not control.
This imbalance has shaped freight markets for decades.
None of this is to suggest that the merger should be approved automatically or without conditions. The Surface Transportation Board’s review must be rigorous. The applicants must demonstrate credible operational plans, enforceable service commitments, and realistic integration timelines. The concerns raised by shippers, labor organizations, and competing railroads deserve careful examination.
But a review that evaluates rail consolidation without evaluating rail’s competitive position relative to trucking risks misunderstanding the transaction’s true economic context.
The merger is not occurring in a vacuum. It is occurring within a freight system defined by asymmetric infrastructure ownership, fragmented rail coordination, and publicly funded highway competition.
A “rigorous and comprehensive review,” as Congress rightly demands, must account for those realities.
Otherwise, regulators risk preserving fragmentation in the name of competition—while leaving the deeper structural imbalance that shapes American freight untouched.