Merging tracks and moving crops: What rail mergers mean for farmers

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.

In the early days of railroads in the United States, there were few regulations or laws governing mergers and acquisitions. This allowed railroads to merge more freely. As a result, famous railroad barons like Cornelius Vanderbilt, James J. Hill, and Edward H. Harriman emerged. However, after the passage of the Sherman Anti-Trust Act and the creation of the Interstate Commerce Commission (ICC), there were fewer major mergers because railroad barons were seen as too wealthy and powerful. The ICC, when approving mergers, often required certain conditions, such as preventing line abandonments or rejecting rate increases. For example, when the New York Central Railroad and Pennsylvania Railway merged to form Penn Central in 1968, the ICC required them to also acquire other failing railroads and keep unprofitable lines. These and other external factors contributed to Penn Central filing for bankruptcy in 1976. 

• 1980:
  • The Seaboard Coast Line merged with the Chessie System to form CSX Transportation.
• 1982:
  • The Norfolk and Western merged with the Southern to form the Norfolk Southern.
• 1995:
  • The Chicago and North Western merged into the Union Pacific.
  • The Burlington Northern merged with the Atchison, Topeka, and Santa Fe to form the BNSF.
• 1996:
  • The Union Pacific acquired the Southern Pacific.
• 1997:
  • The Denver and Rio Grande Western merged into the Union Pacific.
• 1998:
  • The Canadian National acquired the Illinois Central.
• 2001:
  • The Canadian National acquired the Wisconsin Central.
• 2023:
  • The Canadian Pacific merged with the Kansas City Southern to form CPKC. 

But what do these rail mergers mean for agriculture? After all, Illinois and many states in the Midwest sit at the crossroads of all the major Class I freight railroads in North America. Studies conducted after the mergers of the mid to late 1990s offer some perspective on how those mergers, especially the BNSF and UP mergers, impacted rail shipping and agriculture. Park et al. (1999) found minimal increases in both BNSF and UP market shares, even though those two railroads became the dominant Class I freight railroads in the western United States. Shippers using either railroad benefited from more direct routing and lower handling costs because the loads would be handled by one railroad instead of multiple. Rates also stayed low as both railroads competed for business. In another study, Park et al. (2001) examined the broader effects of rail mergers. The study found that rates varied by geographic region and were generally lower in regions with more competition. However, the net revenues for Class III “shortline” railroads decreased, which could lead to their closure and reduce competition. Winston et al. (2011) looked at the long-term impacts of rail mergers on shippers in the western United States. The study found that the merged railroads in the western U.S. did show some increased efficiency through operational changes and lower costs. While there were some initial delays and rate hikes, shippers in the long run did not pay higher overall fees or face major delays. Although the Union Pacific and Norfolk Southern merger may be finalized for a couple of years, it’s important to understand how previous mergers have affected shippers and the agriculture industry overall. 

Railroad mergers are complex processes influenced by regulatory oversight, strategic objectives, and changing market dynamics. Since 1960, major consolidations like the Burlington Northern–Santa Fe and Union Pacific–Southern Pacific mergers have reshaped the U.S. rail industry, reducing the number of Class I carriers while increasing network efficiency. For agriculture, especially grain producers, these mergers raised concerns about less competition and higher transportation costs. However, research indicates that long-term effects have been mostly neutral or even positive. Merged railroads gained operational efficiencies and simplified routing, while competitive pressures—both within the rail industry and from intermodal services—helped keep rates manageable. Shippers generally experienced lower logistics costs and reliable access to markets. As the industry continues to consolidate, ensuring competitive access and monitoring regional impacts will be essential to make sure agriculture remains well-served by the rail system.

For additional reading, visit the following links:

• Railroad Transportation: An Essential Piece of the U.S. Agricultural Supply Chain (USDA-AMS)
• Union Pacific and Norfolk Southern to Create America’s First Transcontinental Railroad
• Surface Transportation Board Resources:
  • About STB
  • Economic Data
  • Frequently Asked Questions: Major Railroad Mergers
  • Sample Merger Timeline
• The evolution of rail merger policy (Smith 1983)
• Impact of the Staggers Act of 1980 (Federal Railroad Administration 2011)
• Major North American Rail Mergers (Whitehurst and Clarke 2004)
• The impact of railroad mergers on grain transportation markets: a Kansas case study (Park et al. 1999)
• Simulating the Effects of Railroad Mergers (Park et al. 2001)
• Long-Run Effects of Mergers: The Case of U.S. Western Railroads (Winston et al. 2011)