WALKERTON, IN 9/27/19

 

Canadian National Double Stack Train at Griffith 9/5/11 (SD75I/C44-9W)

Canadian National SD75I and BC Rail GE C40-8M at Griffith, Indiana

KCS Grain Train At Bloomington TX 3/18/21

G&W Hi Rail Truck at Plymouth, IN 9/19/21

 

The Union Pacific-Norfolk Southern merger could boost traffic by nearly 10%

By Bill Stephens | August 13, 2025

The windfall from a transcontinental system would be a sharp turnaround for both railroads, which have struggled to return to pre-pandemic traffic levels

Union Pacific and Norfolk Southern doctored the road numbers on their locomotives in this image to reflect the founding years of their railroads; 1827 for Norfolk Southern’s oldest predecessor and 1862 for Union Pacific. UP/NS

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OMAHA, Neb. — The proposed Union Pacific and Norfolk Southern transcontinental merger could lead to nearly 10% traffic growth by 2030 — a significant turnaround for railroads that have yet to rebound to their pre-pandemic volume levels.

UP and NS did not provide traffic growth projections as part of their July 29 merger announcement.

Rather, they said the combination would produce $2.75 billion in synergies, with $1 billion coming from productivity and cost savings and $1.75 billion coming from growth.

That $1.75 billion figure, however, was not revenue, the traditional yardstick for measuring merger-related growth. Instead, it referred to earnings before income taxes, depreciation, and amortization, or EBITDA.

“That means the expected revenues jump to $3 billion plus,” independent analyst Anthony B. Hatch wrote in a note. “Since $3 billion-plus is much bigger than $1.75 billion, it’s a wonder why they buried the lede.”

Either way, the financials allow analysts to back into a traffic growth number using a formula that takes into account the railroads’ combined revenues and EBITDA as well as their combined average revenue per carload and intermodal unit.

Rick Paterson, an analyst with Loop Capital Markets, says that his back-of-the-envelope math shows UP-NS revenue growth would top $3.48 billion as traffic grows 9.9% — or 1.55 million additional loads — by year three of the merger.

The railroads’ merger application, which will be filed with the Surface Transportation Board between Oct. 29 and Jan. 29, will detail traffic projections, including how many truckloads the railroads believe they can convert to intermodal and carload business. The railroads expect to close on the $85 billion transaction by early 2027.

UP CEO Jim Vena and NS CEO Mark George have said the combined company will deliver faster, more comprehensive freight service by eliminating interchange delays, opening new single-line routes, expanding intermodal service, and reducing distance and transit times.

George says the initial earnings growth expectations likely underestimate the potential of the transcontinental system, should it gain regulatory approval.

Both railroads have struggled to return to 2019 volume levels. In 2024, UP’s traffic was down 2.7% compared to the pre-pandemic 2019, while NS volume was off 7.1% over the same stretch.

Overall North American 2024 rail freight volume was down 4.4% since 2019, according to Association of American Railroads data. Carload traffic was down 7.8%; intermodal declined 0.92%; and coal sank 24%.

For the first half of 2025, UP’s volume is up 5%, putting it nearly even with the halfway mark of 2019, with volume off by just 0.3%. Norfolk Southern’s first-half volume was up 2% but still remained 8% behind the first six months of 2019.

UP-NS MERGER DECISION THIS WEEK?

 

Report: Union Pacific, Norfolk Southern could reach merger deal this week

By Stuart Chirls | July 27, 2025

Agreement would create $200 billion, coast-to-coast company

Union Pacific ES44AC No. 7819 and Norfolk Southern Dash 9-40C No. 8767 

lead a train over Chicago’s Sanitary and Ship Canal on March 7, 2015. David Lassen

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OMAHA, Neb. — Union Pacific and Norfolk Southern could announce a tentative merger agreement as early as this week, according to a published report.

Bloomberg cited sources familiar with the talks in its report on Friday.

UP, the largest Class I railroad, and Atlanta-based NS confirmed last week that they are in advance discussions regarding a merger that would create the first U.S. transcontinental railroad. The proposed consolidation would produce a rail colossus valued at almost $200 billion, with some $36 billion in annual revenue based on 2024 earnings.

Union Pacific had no comment. Norfolk Southern did not immediately respond to a message from FreightWaves seeking comment.

It’s also likely that competitors such as BNSF Railway, Canadian National, and Canadian Pacific Kansas City would importune the Surface Transportation Board for concessions to balance potential competitive issues. The STB will ultimately accept or reject the deal. Industry observers have said that CN, in particular, could seek access to Mexico, after the 2023 Canadian Pacific-Kansas City Southern merger created the first single-line carrier serving Canada, the U.S., and Mexico.

The STB last week published a timeline estimating the review process could take up to 22 months once formal filings are submitted [see “STB creates merger resources page …,” Trains News Wire, July 25, 2025].