By Esther Fung | Photography by Caleb Alvarado for WSJ
A plan to build the first transcontinental freight railroad in the U.S. is putting a spotlight on a chokepoint in American rail shipping.
Today, no single railroad controls tracks from the West Coast to the East Coast, so carriers rely on each other to complete cross-country cargo deliveries. Freight trains loaded with goods from the Western U.S. typically have to stop at a rail yard in Chicago or another city along the Mississippi River and transfer their railcars to a different carrier for the remaining journey east. The process, which works the same way in reverse, can lead to long layovers and shipping delays.
Union Pacific and Norfolk Southern say their proposed $71.5 billion merger will help fix that. The two railroads, which control tracks on opposite sides of the Mississippi River, contend that by joining forces they could reduce bottlenecks at the Midwest interchanges and get coast-to-coast deliveries to retailers and factories faster.
It takes an average of 21 days for a Union Pacific train carrying mixed cargo to do a round trip from the West Coast to the East Coast and back, based on data from 2024. The merger could shave two to four days off that time, according to Union Pacific executives.
"The win is we can move faster and provide more consistent service," says Jim Vena, chief executive officer at Union Pacific.
The proposed deal is controversial, however, and already drawing opposition. Competing railroads say delays at interchanges can be reduced without the megamerger, and some customers worry that further rail consolidation would give railroads more power to raise shipping rates and reduce service, making the time savings moot.
Nine Republican attorneys generals recently sent a letter to the Surface Transportation Board, the economic regulator overseeing the freight railroads, saying that the proposed merger poses significant risk to American companies that could throttle the economy.
The deal "will result in undue market concentration that stifles competition and therefore creates higher prices, lower reliability and less innovation at the expense of America's manufacturers and, ultimately, America's consumers," said the attorneys general of Ohio, Tennessee, Kansas, Florida, North Dakota, South Dakota, Mississippi, Iowa and Montana.
Union Pacific and Norfolk Southern plan to submit their merger application to regulators this month. If it is accepted, the Surface Transportation Board will review public comment and rebuttals before making a final decision sometime in 2026 or 2027.
Creating congestion
The current U.S. freight rail network is served by four major U.S.-based railroads: Union Pacific and BNSF Railway, which own tracks west of the Mississippi, and Norfolk Southern and CSX, which own tracks east of it.
They operate a transportation network resembling a four-quadrant matrix, and they have financial and operational agreements with each other to ship goods to their final destinations. There are two other major Canadian railroads with U.S. operations more focused on the North-South journeys.
Most of the railcar exchanges between Western and Eastern carriers take place at interchanges in Chicago, St. Louis, Memphis or New Orleans. However, the poster child for layovers and delays is Chicago, home to the largest number of interchange terminals.
The terminals are scattered across the Chicago metropolitan area and connected by rail lines and roads. While railway companies can transfer freight cars to each other via the tracks, they often have to rely on trucks to do it, especially if their terminals are located far from each other.
For example, a Union Pacific train from Los Angeles carrying goods destined for Harrisburg, Pa., might have to stop at a rail yard in the Chicago area for three hours as an overhead crane unloads double-stacked containers one by one onto multiple chassis parked next to the tracks. Truckers would then have to drive into the rail yard, pick up the loaded chassis and take them to the other carrier's rail yard for the next leg of the journey to Pennsylvania. This layover can add around 12 to 24 hours of transit time.
"If I'm flying from L.A. to New Jersey, I don't think I want to fly to Midway [airport], drive to O'Hare, and take another flight," says Zach Russell, general manager of premium operations, at Union Pacific.
The use of trucks also is a contributor to traffic congestion in Chicago.
If the merger happens, Union Pacific says it could build more trains specifically for destinations on the Eastern seaboard, reducing the need for railcars to be decoupled at a busy interchange. A crew change could take place elsewhere in the rail network, keeping cargo on railroad tracks and trucks off the roads. And the combined railroad might be able to bypass Chicago altogether and route freight trains through a less-congested area.
"It's going to clean things up," says Russell.
The case against the merger
Some industry insiders say it doesn't require a merger to speed up transit times and minimize truck movements at interchanges. Railway companies could do it with better cooperation, says Eric Jakubowski, a recently retired railroad executive.
The issues arise when one operator encounters a bottleneck in its own network -- say, a train is delayed because of weather or a labor issue -- and decides to focus on easing congestion in its own network rather than getting its railcars to the next railroad on time.
"They've just got to spend time coordinating" their operations and networks, says Jakubowski, a former executive at Canadian National Railway, among others.
BNSF, Union Pacific's direct competitor, also has come out against the merger, saying carriers can achieve many of the same benefits through alliances.
In November, Berkshire Hathaway-owned BNSF beefed up its partnership with CSX to offer faster five-days-to-a-week schedules for shipments between Los Angeles and several locations in Ohio Valley, such as Columbus, Ohio, and Louisville, Ky., and the Northeast, including Syracuse, N.Y., and Philadelphia. The agreement allows BNSF to operate its trains further into CSX's network, resulting in speedier crew swaps and a reduction in the number of railcars that need to be decoupled, among other things.
Other ways to alleviate congestion and delays at major interchanges include building more overpasses and underpasses that separate road and railroad tracks.
Katie Farmer, president and CEO of BNSF, says customers may be disadvantaged if a merger takes place as Union Pacific could raise rates or reduce the reliability of service.
"The new merged railroad usually raises rates on competing interchange partners to the point of making those lanes economically uncompetitive," says Farmer, adding that this was Union Pacific's own argument against previous rail-industry mergers.
Union Pacific's Vena says that the railroad sets rates based on several factors, including costs and trends in their customers' respective industries. He also points out that the merger proposal has already "enhanced competition" since BNSF offered faster service across more lanes in recent weeks.
"It's the American way of business," says Vena. " You get better yourself, or you offer a better price."
Esther Fung is a reporter for The Wall Street Journal in New York. Email her at esther.fung@wsj.com.
(END) Dow Jones Newswires
December 16, 2025 10:00 ET (15:00 GMT)
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