Union Pacific, the largest U.S. freight railroad operator, is exploring a possible acquisition of Norfolk Southern to create a US$200-billion coast-to-coast rail network, a person familiar with the matter said.

Talks are in early stages, the person said, with no guarantee talks will progress or that any deal would pass what would be expected to be a lengthy, detailed regulatory review. The two companies declined to comment.

Any deal to unite two of the six largest freight rail operators in North America is likely to draw intense regulatory scrutiny. Major shippers in the steel, chemical and grain industries are expected to lobby against any further concentration in an industry that has consolidated from over 100 Class I railroads in the 1950s to just six today.

Union Pacific UNP-N shares fell 2.7 per cent in Friday afternoon trading, while Norfolk Southern NSC-N rose 1.52 per cent.

A combination would mark a shift in the U.S. freight rail landscape, creating a single-line network stretching from coast to coast, changing the current divide between western and eastern regional operators.

Norfolk is recovering from a tumultuous past couple of years that included the firing of its previous CEO amid ethics investigations, a boardroom battle with activist Ancora, and a train derailment that cost the company about $1.4-billion.

A merger between Union Pacific and Norfolk Southern would create the first modern West-to-East single-line freight railroad in the U.S.

Earlier this year, Union Pacific CEO Jim Vena said a transcontinental merger would be good for customers, eliminating the need for interchanges between carriers in Chicago – a longstanding bottleneck – and reducing costly delays for shippers.

But critics warn that such consolidation could reduce competition, a possible concern for regulators. With fewer major players in the market, shippers may face higher costs and diminished service options.

“We suspect certain shipper groups could get vocal on the perceived lost competition a merger would bring,” Barclays analyst Brandon R. Oglenski said.

Discussions between the two operators, first disclosed by Semafor, spurred speculation that competitors would also consider concentration.

“History teaches that mergers and acquisitions within the railroad industry will inspire and motivate additional M&A,” said Mike Steenhoek, executive director of the Soy Transportation Coalition.

That happened earlier this decade when Canadian Pacific offered to acquire Kansas City Southern, which prompted CP’s main competitor – Canadian National – to submit their own offer to acquire Kansas City Southern.

Ultimately the Canadian National offer was not allowed to proceed, and Canadian Pacific did acquire Kansas City Southern in 2023 – creating the first railroad to link Canada, the U.S. and Mexico.

In 2024, Union Pacific led the industry with $24.3-billion in revenue, followed by BNSF (privately held, owned by Berkshire Hathaway), CSX CSX-Q, Canadian National CNR-T, Norfolk and Canadian Pacific Kansas City CP-T.

“The energy and momentum toward the remaining two U.S. based Class I railroads – BNSF and CSX – pursuing a merger would be considerable,” Steenhoek said.

A regulatory decision could take 16 to 22 months, with merging carriers required to notify the Surface Transportation Board three to six months before filing an application, followed by a year-long evidentiary review and a final ruling within 90 days, Oglenski said.

A potential Union Pacific acquisition of Norfolk Southern could have material synergy, he said.

“Any deal would face serious review from regulators,” said Emily Nasseff Mitsch, equity analyst at CFRA.

Tomeka Watson Bryant, 34
General manager
New Orleans Public Belt Railroad

Education: Degree in exercise science, Elon University; MBA, Pfeiffer University.

Job responsibilities: Oversee daily operations, ensuring safe, efficient and compliant train movements; customer service and track maintenance for the New Orleans Public Belt Railroad (NOPB). This includes managing 176 employees.

Briefly describe your career path.
I started my railroad career in operations, moved into a safety and training role, and was later promoted to a position in sales and marketing. I now serve as the general manager of the NOPB.

What sparked your interest in the rail industry?
I am a second-generation railroader, so the railroad has always been a part of my life.

What was your first job and what did you learn from it?
My very first job was in retail at Levi’s and Dockers. I learned how to fold clothes properly.

What’s something people might be surprised to learn about you?
Most people are surprised to learn that I am an All-American college athlete and a member of the Elon Hall of Fame.

What’s one of the most valuable lessons you’ve learned so far in your career?
The most valuable lesson I have learned in my career is that your employees are your most valuable asset; and that safety is never “fixed,” you must actively work on it every day.

How do you stay resilient and motivated when things get tough at work, in the industry or in life?
When things get tough, I usually call my dad and other mentors I have in the industry. I also lean heavily on my faith.

If you could share a meal with anyone in the world today, who would it be and why?
I would definitely pick Beyoncé! However, if I had to choose someone in the rail industry, I would pick [BNSF Railway Co. President and CEO] Katie Farmer. With both women, I’d love to learn the secret to their success from the perspective of balancing family, career and life.

In your view, what is the rail industry’s greatest challenge today?
From my perspective, technology and visibility continue to be the biggest challenges facing the rail industry today.

While Britain’s railway continues to be one of the safest across Europe, the report underscores significant issues in operational performance and financial sustainability, particularly concerning Network Rail’s funding and maintenance strategies.

ORR praises the railway industry for strong progress in addressing overdue structure assessments and mitigating weather-related risks, achievements made under heightened regulatory scrutiny. However, operational performance remains an area of concern, with record high rail cancellations primarily attributed to train operating companies, signalling ongoing reliability challenges for passengers.

Financially, Network Rail demonstrated resilience by securing £325M in efficiency savings for the fiscal year ending March 2025, surpassing its target by £62M. All regions met or exceeded their renewal plans, bar Eastern, which delivered 99%. Despite these gains, a glaring funding gap of £488M persists in England and Wales, prompting ORR to call for urgent remedial action. It had aimed to reduce the deficit to £450M by the end of the 2024-25 financial year.

The report reveals that Network Rail’s efficiency improvements are threatened by inflationary pressures and escalating costs. The organisation’s five-year plan for Control Period 7 (CP7), 2024 to 2029, leans more heavily on maintenance than on full asset renewal due to constrained funding, raising concerns about the long-term reliability of railway infrastructure. ORR warns that reduced renewal work could necessitate speed restrictions and lead to increased service disruptions.

Network Rail’s management of its renewal programme has already adjusted to these pressures, scaling back future renewals compared to initial plans. This retrenchment heightens the risk of asset deterioration, potentially increasing failures and costs in subsequent control periods. ORR acknowledges the challenging financial context, while calling on Network Rail to maintain transparency and continue exploring funding solutions to preserve network condition.

A substantial portion of Network Rail’s £1.7bn risk fund for unforeseen costs has been utilised, with only £760M remaining as it enters the second year of the control period. This reserve covers input price risks and incentives linked to performance shortfalls, emphasising the need for prudent financial management going forward.

On asset reliability, the network remains stable in the short term, supported by effective renewal delivery in the past year. Nevertheless, ORR highlights the critical importance of robust maintenance practices to compensate for reduced renewals. An independent review found Network Rail currently has adequate maintenance capacity but flagged potential risks for scaling up maintenance activities in later years of the control period.

A significant concern remains over Network Rail’s handling of structures and buildings examinations and assessments. The regulator has escalated its concerns due to backlogs in inspections that fall short of internal standards. If not addressed, this could risk undetected faults, safety hazards and operational disruptions, with implications for passengers, staff and the wider public. Both ORR and Network Rail have committed to commissioning independent expert reviews and developing comprehensive plans to address these deficiencies.

Following earlier intervention, Network Rail has taken steps to rectify overdue infrastructure assessments that had caused regulatory alarm, particularly regarding the condition of bridges and other structures. The regulator notes encouraging developments in how the rail industry gauges “reasonable practicability” in health and safety decisions, a move that could reduce the likelihood of costly future interventions.

Furthermore, Network Rail experienced an unprecedented surge in network access applications from operators this year, but its decision-making process has struggled to keep pace. ORR stresses the necessity for Network Rail to accelerate approvals to support smoother service delivery and operator planning.

Safety and performance

Safety performance remains a notable highlight in ORR’s latest report, with Network Rail maintaining good health and safety standards and overall train accident risk holding steady compared to previous years. Nevertheless, serious incidents persist, notably 29 high potential risk events largely centred on level crossings. The regulator will begin inspections across all network regions to scrutinise how well these dangers are being managed.

The report also revisits the passenger train collision at Talerddig in October 2023, which resulted in one fatality and multiple injuries. This incident raises fresh concerns amid an increasing number of signal passed at danger events throughout the rail system. ORR calls for a unified industry approach to address risks associated with train overspeeding, emphasising the need for stronger leadership and clear accountability at every organisational level as rail reforms progress.

On the performance front, passenger journeys rose by 7% in the year to March 2025, reaching 1.73bn trips, indicating growing demand post-pandemic. Punctuality remained stable, with 84% of trains arriving within three minutes of schedule, while Network Rail succeeded in cutting delays it directly caused. Scotland stood out as the only region to meet government targets for cancellation rates.

Despite these gains, cancellations across Great Britain soared to a record 4.1%, driven predominantly by train operating companies, up from 3.8% the previous year. Network Rail failed to meet national benchmarks for reliability and punctuality, with specific enforcement actions taken in its Wales & Western region to compel improved performance. Other areas, including the Eastern region, are also reportedly seeing better operational plans emerging.

The ORR has urged Network Rail to expedite decisions on granting train operators access to the network. Current short-term access rights have been criticised for hindering open access and freight operators’ ability to plan effectively and invest in necessary rolling stock and personnel. This bottleneck threatens to stymie competition and service expansion in the rail sector.

ORR chief executive John Larkinson said: “The mainline rail network is at a turning point. Rail reform presents an opportunity to do things differently, working better together to improve the experience of all rail users, but its full implementation is some years away and the issues we have raised will not be solved by rail reform alone.

“Overall Network Rail has performed well in a tight financial environment, but it will need to focus relentlessly on every aspect of how it plans and delivers, because there is little margin for error in its regulatory settlement.”

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