By Reagen Tibbs
Whether moving grain to market, delivering fertilizer, or shipping food products nationally and internationally, freight railroads are essential to American agriculture. With tracks spanning coast to coast and everywhere in between, freight railroads are just one part of the complex transportation system for agricultural and other goods. According to the United States Department of Agriculture’s Agriculture Marketing Service (USDA-AMS), farm and food products represent about 20% of total rail tonnage over the past five years. In 2023, more than 80.5 million tons of corn, 26.3 million tons of soybeans, and 25.8 million tons of wheat were shipped by rail. Many of these products come from high-output regions in the Midwest and Plains and are transported to ports in the Pacific Northwest and Gulf for export abroad. Recently, two of the biggest freight railroads in the United States, Union Pacific and Norfolk Southern, announced plans to merge, creating the first railroad linking the East and West coasts. While railroad mergers are common and can bring benefits, they can also negatively affect producers. This blog post explains how the merger process works, reviews past mergers in the railroad industry, and discusses how mergers might impact agriculture.
Merger Process
Merging railroads might seem simple at first. The involved railroads announce the merge, work together, and combine their operations, right? In reality, the process is much more complicated and can take years. Railroads are complex organizations with thousands of miles of track, thousands of employees, and hundreds of pieces of equipment. There are also strict legal requirements that govern the merger process. The Surface Transportation Board (STB) was established in 1996 after the Interstate Commerce Commission (ICC) was eliminated. The STB's role is to oversee transportation operators, mainly freight railroads, and it has authority over mergers and line abandonments. The STB classifies railroads into three “classes,” based on their annual operating revenue. The thresholds for the three classes are:
- Class I railroad: annual operating revenue greater than $1,074,600,816
- Class II railroad: annual operating revenue between $48,237,637 and $1,07,600,816
- Class III railroad: annual operating revenue less than $48,237,637
There are four different types of mergers:
- Major: a transaction involving two or more Class I railroads.
- Significant: a transaction that does not involve two or more Class I railroads but has a significant impact on regional or national transportation.
- Minor: a transaction that is not considered major, significant, or exempt.
- Exempt: a transaction that falls into certain categories established by the STB.
So, what happens when two railroads want to merge? On July 30, 2025, the Union Pacific and Norfolk Southern railroads announced their intention to merge. The image below outlines the process the STB follows for a major merger. The two “applicant” railroads file a joint notification with the STB, which then publishes a notice and receives a formal application. The STB then decides whether to accept or reject the application. If accepted, there is a period for comments and record building before the STB makes its final decision. This process can take several months or even years to complete. For example, the recent merger between the Canadian Pacific (CP) and Kansas City Southern (KCS) railroads to form the CPKC was initially announced in October 2021 and finally approved by the STB in March 2023.
Source : illinois.edu