POET says rail merger could open eastern markets to its Iowa ethanol

Ethanol producer POET has backed the Union Pacific–Norfolk Southern merger, telling US regulators that about 70% of its Union Pacific ethanol and feed traffic leaves plants with limited eastern access.

Chief operating officer Ben Sweat signed the letter to the Surface Transportation Board (STB), dated September 16, 2026. POET describes itself as the biggest US producer of bioethanol. It reported 35 bioprocessing plants in nine states after an acquisition in September 2025.

Union Pacific and Norfolk Southern listed POET among supporters in a release issued the same day. It said more than 500 customers now publicly back the deal, including 23 shippers added through recent filings.

Why Iowa ethanol rarely heads east

POET moves bioethanol, other farm products and distillers dried grains with solubles (DDGS) by rail from its Midwest plants to buyers in the US and overseas. Many of those plants reach western and southern markets well, the letter says. But a large share of the Iowa network sells little into the East, because the economics of two-railroad service work against it.

The plants that originate about 70% of POET’s ethanol and DDGS traffic on Union Pacific sit in the rail “watershed” around the Mississippi River. There, moves handed from one railroad to another are not currently competitive on cost, POET says. Most of the output from those sites therefore travels south and west.

Four gains POET expects from one railroad

The letter lists four possible benefits. First, single-line service could open competitive routes to big markets in both the East and the West for ethanol, DDGS, corn oil and CO2. It could also improve rail economics for plants in the watershed. Railcars could move with fewer empty miles and at lower cost. And shippers could deal with one railroad accountable from origin to destination, with less variability at interchange points.

The backing is qualified. POET ties it to the merits of the deal and to commitments the railroads have proposed for shippers. It says the combination could lower prices for end consumers “if orchestrated well.”

Grain shippers’ group asks the STB to reject the deal

POET’s position is not shared across agriculture. The National Grain and Feed Association (NGFA) asked the STB on August 13, 2026 to reject the merger. It argued that the railroads’ July 27 update still fails the board’s 2001 rules for major rail mergers, which require a deal to improve competition rather than only preserve it.

The watershed in the railroads’ own case

The watershed is also central to the railroads’ argument. With their first application in December 2025, Union Pacific cited an Oliver Wyman estimate: 105,000 carloads of merchandise traffic would shift from road to rail once single-line service reaches watershed markets. The railroad also said rail’s share against trucks runs about two to three times higher on single-line routes than on interline routes.

Where the STB review stands

In January 2026, the STB rejected the first application as incomplete. The railroads filed a revised version on April 30. The board adopted a procedural schedule on August 18, and on September 18 it denied several motions that sought summary denial of the revised application. Notices of intent to participate are due by September 30.

Union Pacific and Norfolk Southern estimate that the combined railroad would save about $3.5 billion a year. They also expect it to move an estimated 2.1 million truckloads a year from highways to rail. The companies now aim to complete the deal in the third or fourth quarter of 2027, later than the early-2027 target they gave in December 2025. POET’s letter does not name the plants, eastern markets or volumes it expects to gain.