Canadian National has agreed to support Union Pacific’s proposed $85 billion acquisition of Norfolk Southern after securing new customer access, trackage rights and terminal railroad interests in the Midwest.

Canadian National freight locomotives hauling freight cars in Green Bay, Wisconsin
Illustrative CN freight train in Green Bay, Wisconsin; it does not depict the UP–CN agreement. Photo: Michael Barera / Wikimedia Commons / CC BY-SA 4.0

CN gains conditional access in the Midwest

Under a binding memorandum of understanding announced on July 22⁠, Union Pacific and CN established a framework that would take effect only if the Surface Transportation Board approves the merger and the transaction closes.

CN would be allowed to serve facilities where the number of available Class I railroads falls from two to one or from three to two, provided service is commercially and operationally feasible. It would also acquire Norfolk Southern’s ownership interests in the Kansas City Terminal Railway Company and the Terminal Railroad Association of St. Louis.

The agreement adds overhead rights between Tuscola and East St. Louis, Illinois, plus rights to serve customers between St. Louis and Kansas City, Missouri. CN would also gain access to Union Pacific’s Neff Yard in Kansas City, strengthening its route options for traffic moving to and from Mexico.

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In return, CN will not oppose the Union Pacific–Norfolk Southern transaction and will work with Union Pacific through the regulatory process. Union Pacific would gain more flexibility to route freight around congested tracks in Chicago.

“As the rail industry considers significant structural change, it is essential that customers continue to benefit from meaningful competition and choice,” CN President and CEO Tracy Robinson said.

Map of Union Pacific and Norfolk Southern rail networks across the United States
Illustrative map of Union Pacific and Norfolk Southern networks; it does not depict the UP–CN access agreement or an approved merger. Map: Wikideas1 / Wikimedia Commons / CC0 1.0

Regulatory review remains paused

The Surface Transportation Board accepted the revised merger application⁠ for consideration on May 28 but placed the proceeding, including its environmental review, in abeyance. Union Pacific and Norfolk Southern must provide supplemental information by July 27 before the Board sets the remaining review schedule.

The regulator requested more detail on enhanced competition, access for affected shippers, service assurance, gateways, car supply, market-share projections, downstream merger effects and passenger rail. On July 22, it also ordered the applicants to make specified employee-impact exhibits public by the same deadline.

If approved, the merger would create the first single-line coast-to-coast U.S. railroad. The combined company would control more than 40% of U.S. rail traffic, while the number of major freight railroads would fall to five.

BNSF, CPKC and CSX oppose the transaction. Shippers are divided between expectations of faster cross-country service and concerns, especially in the chemical and agricultural sectors, about rates and reliability.

The Board will evaluate the proposal under merger rules adopted in 2001⁠, which require a transaction among the largest railroads to serve the public interest and enhance competition. Its 2023 approval of Canadian Pacific’s acquisition of Kansas City Southern used the earlier, less stringent standard.

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