Union Pacific Norfolk Southern merger alarms U.S. ports

The Union Pacific Norfolk Southern merger has set off warnings from a coalition of U.S. ports and marine terminal operators.

This is reported by the railway transport news portal Railway Supply.

They argue that the proposed $85 billion UP-NS rail merger risks eroding port competition, narrowing intermodal rail service options and, in turn, constraining both regional and national trade flows.

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Regulators pressed to scrutinize Union Pacific Norfolk Southern merger

In a letter to the Surface Transportation Board (STB), the National Association of Waterfront Employers (NAWE) asks the regulator to carry out a thorough STB merger review. The group wants the board to assess in detail how the deal could reshape intermodal rail services and port competition before any approval is even considered, as reported by FreightWaves.

The ports made NAWE’s letter public on Monday. On that same day, BNSF Railway submitted a petition to the STB, calling on the agency to immediately examine whether Union Pacific has complied with the conditions attached to its 1996 acquisition of Southern Pacific. BNSF — a Berkshire Hathaway-owned railroad and one of the strongest critics of the new UP-NS rail merger — alleges that Union Pacific has engaged in “obstructive conduct” since the Southern Pacific deal, to the detriment of both customers and competition, a position laid out in a news release.

According to NAWE members, further concentration in the intermodal rail market could leave shippers facing fewer service choices or push carriers to prioritize only the most cost-effective routes. Either scenario, they warn, would jeopardize economic opportunities for port regions that depend on varied and reliable rail access.

“Many businesses rely, in turn, on the competitiveness of their local port delivery system,” NAWE president Carl Bentzel wrote in the letter. He cautioned that continued concentration of intermodal rail service could negatively affect local and regional trade if rail carriers focus on services that meet their own needs while overlooking opportunities to serve other port areas.

BNSF has previously argued that the Union Pacific Norfolk Southern merger could lead to the elimination of 300 intermodal lanes across the U.S. Union Pacific CEO Jim Vena has rejected that claim, but the railroad has not given direct guidance on how many lanes it might scrap or consolidate, if any, should the merger move forward.

Intermodal rail, Chicago hub and port competition

NAWE notes that marine terminals rely on efficient intermodal rail services to handle rising volumes of global trade. This intermodal rail connectivity is described as pivotal for moving imports and exports through port complexes that are already “increasingly strained.”

Bentzel points to the central role of intermodal shipping service into Chicago via the Ports of Los Angeles and Long Beach. Chicago serves as a major inland hub for cargo destined for much of the nation’s interior, and a large share of that freight moves through these two West Coast gateways. At the Ports of Los Angeles and Long Beach, more than 60 percent of import cargo is handled by intermodal rail, making these ports and their terminals market-dominant precisely because of the scale and quality of their intermodal rail services.

Bentzel and NAWE argue that intermodal rail expansion — not consolidation — is essential if ports and terminals are to grow. In their view, the U.S. needs intermodal rail services that extend the reach and capacity of medium-sized ports so they can develop, along with a stronger, more balanced business partnership between railroads and port operators. Many other port regions across the country, they note, still struggle to secure firm service commitments and the level of rail investment needed to spur growth.

The association also underlines what it sees as an investment gap between the rail industry and the maritime and terminal sectors when it comes to building new intermodal business opportunities through U.S. ports. In practice, Bentzel says, marine terminals are often forced to bear all of the costs of developing intermodal, on-dock rail facilities. At the same time, railroads frequently take an “if you build it, I may carry your cargo, if I see fit” approach. This can leave the marine terminal industry financing and managing intermodal rail infrastructure while receiving only limited guarantees on service levels in return.

NAWE further criticizes the Class I railroads’ move toward precision scheduled railroading (PSR), describing the model as a network scheduling system aimed at boosting service and profits for the railroads themselves. Industry stakeholders have linked precision scheduled railroading (PSR) and service consolidation to more route consolidations, fewer stops and reductions in staffing — developments that can reduce flexibility for marine terminals and shippers relying on intermodal rail.

At the same time, broader concerns over the Union Pacific Norfolk Southern merger and its impact on shippers and communities have featured in industry and general media coverage, including analysis of competitive and safety risks previously covered by Railway Supply.

BNSF petition to revisit UP-SP merger conditions

Alongside its criticism of the Union Pacific Norfolk Southern merger, BNSF is urging the government to revisit the nearly 30-year-old framework governing Union Pacific’s takeover of Southern Pacific. The railroad asserts that Union Pacific has spent nearly three decades undermining the competitive protections the STB put in place when it approved that earlier UP-SP merger.

Those conditions granted BNSF extensive rights — including trackage rights, customer access and equal dispatching — to ensure that shippers in the western United States would not lose effective rail competition. BNSF now contends that Union Pacific has gradually chipped away at these safeguards through delay, obstruction and refusal to fully comply with the merger conditions.

In its petition, BNSF asks the STB to reopen and review the entire UP-SP merger structure, enforce the existing conditions and modify them where necessary to restore and protect competition for shippers. The company frames this as directly tied to the new UP-NS rail merger proposal and to broader concerns over intermodal rail services and port competition.

“With UP now proposing another unprecedented merger, this time with Norfolk Southern, the stakes for shippers nationwide could not be higher,” said Jill Mulligan, BNSF’s executive vice president and chief legal officer, in a statement. She argued that before considering any new consolidation, the board must ensure that commitments made during the UP-SP merger are honored and that competition is preserved at least at the level required under the prior merger standards.

Union Pacific, for its part, intends to submit a detailed merger application to the STB as soon as this week, setting the stage for a high-profile regulatory review of the Union Pacific Norfolk Southern merger and its potential impact on U.S. ports, marine terminal operators and the broader intermodal rail network.

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