Four years ago we published a history of the American railroad system, showing how mergers had reshaped the industry in the late 20th century and beyond. That article contains maps and illustrations that bring life to this story. At that time, we concluded our write-up on this note:
Considering this history, it is almost hard to imagine that the two eastern and two western giants will not at some point try to pair up. As in the past, it might take years – usually about a decade – before the next big moves. But history indicates that we might expect to see either CSX+UP and NS+BNSF, or CSX+BNSF and NS+UP. With Warren Buffett controlling the biggest card in the deck, his thinking and strategy, or that of his railroad executives, would have to play a critical role in agreeing to any deals. And many squabbles over trackage rights, the sharing of routes, and trading of track segments like in the Conrail deal can be anticipated. If this were to occur, the US would end up with two big railroads rather than the present four.
And this week, the news:
Tue, July 29, 2025 at 9:13 AM CDT
Union Pacific (UNP) is set to acquire Norfolk Southern Corporation (NSC) in an $85 billion cash-and-stock deal. The agreement would create the industry’s largest deal ever and the largest merger and acquisition (M&A) action of 2025. The deal will also be a test of the Trump administration’s attitude on antitrust regulation.
From a comment:
Well, an $85 billion deal in the rail sector. Union Pacific agreed to acquire Norfolk Southern in a cash and stock transaction that will form a transcontinental rail giant in what stands to be the industry’s largest deal ever. With a total enterprise value of $85 billion for Norfolk, it is the largest deal of the year announced so far as well, according to data compiled by Bloomberg. The deal comes a year after a dramatic activist fight at Norfolk Southern and a subsequent ouster of its CEO. It narrowly fended off investor Encoa, which won three board seats. The deal raises competitive pressure on rivals, including CSX and Berkshire Hathaway’s BNSF, to potentially pursue deals of their own to keep pace. Historically, rail mergers have been difficult to do, but the industry is hopeful that the Trump administration will be friendlier to industry consolidation.
This last stage of final consolidation into two national giants has finally begun. Union Pacific (UP) has made an offer for Norfolk Southern (NS) and Warren Buffett’s Berkshire Hathaway’s Burlington Northern Santa Fe (BNSF) is considering its options, which will be limited to buying CSX or remaining independent if the UP succeeds in winning the NS.
Analysis
These efforts to take one more consolidating step will meet with plenty of controversy.
Opponents include those shippers who will potentially suffer higher prices because they will have only one line to choose from rather than having two railroads competing for their business. However, most major ports and cities would be on both new railroads if the four become two.
Regulators can point to the last major round of mergers, in the late 1990s, when today’s big systems were created. In general, the railroads did a terrible job of integrating after the mergers, resulting in traffic tie-ups and bottlenecks across the nation. As a result, in 2001 the rules regulating mergers in the industry were stiffened, making mergers harder to do now. (One smaller merger between two of the smallest railroads, the Canadian Pacific and the Kansas City Southern, was given an exemption more recently, but they had to jump through a lot of hoops to get the deal done).
These four (or two) big American railroads compete with two large Canadian lines, both of which will fight having bigger competitors, though the Canadian companies’ traffic flow is quite different from the big four American railroads, as shown in the maps later in this article.
On the other side of the equation, Union Pacific CEO Jim Vena, the most vocal advocate of consolidation, points out that moving freight from coast to coast often involves a 24 to 36 hour delay due to switching cars between trains (though through trains which cross multiple railroads also exist). He and most industry analysts believe that by saving time on very long haul runs, the railroads would take traffic away from trucks, resulting in much less energy use and a cleaner environment. Trains can move one ton of freight 470 miles on one gallon of fuel, about three times as far as trucks can.
Canada has had a coast-to-coast through freight railroad since the 19th century, and many up there are happy with that (now two coast to coast Canadian rails).
Substantial savings should be realized as the industry moves from four CEOs to two, consolidates finance and accounting, marketing, and many other functions into fewer companies with fewer headquarters staff and overhead expenses.
For many shippers, having one line that serves the whole nation, and can move shipments from coast to coast with ease, would be a big advantage. Those on either side of the Mississippi River, east or west, could now ship freight the short distances between the two sides of the river on one line instead of two, lowering the cost and complexity. (The Mississippi is roughly the key dividing line in the US rail system, see maps below.)
With those pressures pushing and pulling on the deal, the politicians will line up with their donors and constituents, claiming it is the greatest thing since sliced bread or the end of the world. And no one really knows what the now more Republican STB (Surface Transportation Board), which calls the shots, will do – stick to the tight regulations or loosen them, more in line with the administration’s thinking on regulation.
As to the railroads themselves, the Union Pacific has led the way and obviously the Norfolk Southern is fine with consolidation. While CSX has been quieter about it, the BNSF has indicated a lack of enthusiasm for further mergers – maybe Buffett is not crazy about the idea. He and his people might not want to spend billions of his cash hoard to expand a part of Berkshire Hathaway, the BNSF, which has had a mixed record in recent years. But could the independent BNSF and CSX effectively compete with a unified UP-NS that offers service to and from both coasts?
All these people, pro and con, agree that the regulatory challenges are massive, and complex.
When railroads merge, unhappy competitors, shippers, and politicians make sure adjustments are made to keep competition intact. Railroads are required to let other railroads use their tracks (“trackage rights”) but that is not easy, since most of our railroads are single track, requiring for example a one- or two-mile-long train to go onto a siding in order to let another one pass. That gets understandably complex when there are two different railroads vying for the same tracks, fighting over which trains go through first.
Merging lines often have to completely give up some track to “the other guy” to balance things out. Port facilities and factories once dominated by one line may have to make it possible for the competition to serve them. Railroads also have complex payment schemes when the freight cars and locomotives of one railroad run on another, which might have to be renegotiated.
Thus, there are a ton of moving pieces in any deal, with plenty of people adamant on both sides. It can take years to get through the government approval process.
Those most strongly opposed, such as the Canadian railroads, claim serious loss of competition unless the nation adopts an “open access” policy, allowing each line to run pretty much wherever they want, without all the payments between them. They add, “If we had open access, then any benefit from consolidation goes away, so why consolidate?” But Vena of the UP says that would be fine with him, he is willing to compete on that basis, opening up another major area of debate and possibilities. Clearly, he believes his company can compete in any environment.
The Backstory
All those railroad names and initials make more sense if we look at the history and route maps of these historically important organizations, all rooted in the 19th century.
This chart, thanks to this website, gives some indication of how the “big four” came about, showing the mergers since 1960 (if one goes back 125 years, there were originally thousands of railroads):
Relating that to this table from our complete story of the history of the railroads, one can see how the great railroads of the past would end up in these new combinations if they happen. Note that when Conrail, which resulted from the failed merger of the former Pennsylvania and New York Central, was broken up and split between CSX and Norfolk Southern, they each took parts of both railroads, though we have only shown the main place where the “Pennsy” and NYC would end up in the new scenario. (The Chicago, Milwaukee, St. Paul and Pacific, known as the Milwaukee Road, went bankrupt and did not survive, though some of its old track is still in use.)
Turning to maps, here is a rough map of the big four as they stand today (a few blue UP lines are not shown because they run right alongside some of the orange BNSF lines):
The takeaways from that map are that two companies dominate the east and south, two companies dominate the west, and that the dividing line runs roughly down the Mississippi River. The key junction points of Chicago, St. Louis, Memphis, and New Orleans are all served by all four railroads. These cities are where freight and passengers have changed railroads since the beginning of the industry.
The following map gives a close-up view of the competition in the west, between America’s two largest and most profitable railroads. Note only the BNSF breaks the Mississippi barrier, reaching into Alabama. The BNSF also dominates the northwestern USA.
And here is the situation in the east. In a more significant breach of the Mississippi line, the Norfolk Southern through its ownership of the old Wabash, a “bridge line,” reaches west to the key junction point and railroad center of Kansas City. But the CSX dominates booming Florida.
The merger just announced, with the UP buying the NS, would result in these maps.
Post-merger:
Then, if BNSF did buy CSX, the following maps would become meaningful.
Post-merger:
However, railroad merger history is littered with reversals and new deals, such as when the Southern Pacific and Santa Fe merged for a few years, then the regulators voted against the merger. The Burlington Northern got the Santa Fe and the Union Pacific ended up with the Southern Pacific. For example, if BNSF decided they would rather have the NS than CSX and made a higher bid than UP for the NS and succeeded, then the UP might buy the CSX instead of the NS in order to create their coast to coast system, as shown in the next two maps.
If the presently proposed merger goes through, and the BNSF follows up with the acquisition of the CSX, then the new map would look something like this:
Any look at our railroad system is incomplete without including a few other elements, starting with the two big Canadian companies. The larger of the two, Canadian National, took control of the historic Illinois Central from Chicago to New Orleans years ago. More recently, in a bold and visionary move, the smaller but even more historic Canadian Pacific bought the Kansas City Southern, which had previously acquired a big line across Mexico, making the renamed CPKC the most “North American” of all railroads.
We cannot forget Amtrak, which runs on the tracks of these other railroads except in a few places where it owns its own tracks, such as the northeast “high speed” corridor.
As this industry evolved, streamlined, and dropped unprofitable and low traffic lines, small railroad operators bought those excess tracks and provided freight service. Over time, thousands of miles of track were sold off in this way, resulting in “short lines” all over America.
Some of those smaller operators grew big by acquiring many disconnected tracks spread across the nation, and even abroad. This clip from Wikipedia covers the largest of these operators:
Genesee & Wyoming Inc. (G&W) is an American short line railroad holding company, that owns or maintains an interest in 122 railroads in the United States, Canada, Belgium, Netherlands, Poland, Bolivia and the United Kingdom; and formerly in Australia.
The company grew from the Class III Genesee and Wyoming Railroad, founded in 1899. As of 2011, it operates more than 13,000 miles (21,000 km) of owned and leased track. As of 2021, G&W owns or leases 116 freight railroads organized in locally managed operating regions with 7,300 employees serving 3,000 customers.
G&W’s four North American regions serve 42 U.S. states and four Canadian provinces and include 113 short line and regional freight railroads with more than 13,000 track-miles.
Its UK/Europe region includes the Freightliner Group, as well as regional rail services in continental Europe.
G&W subsidiaries and joint ventures also provide rail service at more than 30 major ports, rail-ferry service between the U.S. Southeast and Mexico, transload services, and industrial railcar switching and repair.
Bringing it all back together is the financial overview of these large transportation companies, shown below. For what it is worth, in 2024 Amtrak lost $1.8 billion on revenues of $3.8 billion, a pretty expensive way to offer passenger rail service. Even those little short freight lines do better than that. To the freight railroads, passenger trains are faster moving trains that just get in the way of their profitable freight trains which move at more efficient slower speeds.
While those of us who love railroad history will always miss the “fallen flags” – railroads that built this nation but are no longer with us, each with their own brilliant colors, that has not stopped the thousands of railroad mergers that have taken place since the Civil War. It gives rail buffs more reasons to write books and articles about these companies which were so critical to the development of each region of America. We close with this map from the Avalon Hill strategic board game Rail Baron, which was based on real railroads and their most important routes, showing what America’s railroad map looked like 60 years ago:
Gary Hoover
Executive Director
American Business History Center
