Union Pacific, the most profitable freight railroad in the United States, said on Thursday that it was in talks to merge with Norfolk Southern, another freight giant.
Such a deal would for the first time create a single network connecting the East and West Coasts, and perhaps speed up how long it would take to transport goods. But it would also reduce competition in an already concentrated industry.
The companies said in a news release that they were “engaged in advanced discussions regarding a potential business combination,” but that “there can be no assurances as to whether an agreement for a transaction will be reached.”
Freight railroads have lost much business to trucks in recent decades. A tie-up of Union Pacific and Norfolk Southern may create opportunities to win new business.
When asked on an analyst call on Thursday whether a merger would disrupt Union Pacific’s performance, Jim Vena, the company’s chief executive, said, “If you stand still, you get left behind.”
Norfolk Southern only recently emerged from the turmoil that followed a catastrophic derailment in an Ohio town in 2023 and the firing of its chief executive last year.
The timing may be ripe for a Union Pacific and Norfolk Southern merger, as the Trump administration has started to pursue deregulation in the rail industry.
“This is an opportunity to create the nation’s first true transcontinental railroad,” said Jason Seidl, a stock analyst who covers freight industries at TD Cowen. “I am sure the president would love to tout a pro-business merger that created something historic.”
George Jay Gould, a powerful businessman, came close to creating a coast to coast railroad early in the last century, but the effort fell apart in the 1907 financial panic. Amtrak runs coast to coast but not all the way on its own tracks.
The proposed deal has set off speculation that Warren Buffett’s Berkshire Hathaway, the owner of BNSF, a large western railroad, could soon make an offer for CSX, which operates in eastern markets.
A spokeswoman for BNSF declined to comment but pointed to Mr. Buffett’s denial this week that Berkshire had hired bankers from Goldman Sachs to assess a deal with CSX. On a call with analysts on Wednesday, CSX’s chief executive, Joseph Hinrichs, declined to comment on merger speculation.
Moving freight on a single railroad spanning the country could be quicker than the current system, in which the goods have to move from one railroad to another.
But the merger may face resistance from the railroads’ customers — companies that transport goods like coal, chemicals, manufacturing parts and shipping containers — because it could end up making the rail system less competitive. Customers like to play railroads against one another to get better rates, but if the merger cuts the number of major freight railroads in the United States to five from six, that bargaining might become harder.
Also, sprawling rail operations can be hard to integrate, said Dan Cupper, the editor of Railroad History, the journal of the Railway and Locomotive Historical Society. He noted that Union Pacific bungled its merger, in 1996, with Southern Pacific.
“There are cautionary tales why regulators have been careful about mergers,” Mr. Cupper said.
And some experts noted that the railroads did not need to merge to improve connections between eastern and western networks.
“Expand your network through actual investment, rather than by trying to expand your network by taking out another one,” said Erik Peinert, an assistant professor of political science at Boston University, who has studied monopolies.
Opponents and supporters of the deal will be able to submit comments to the Surface Transportation Board, which regulates rail and approves mergers.
Right now, though, the board is evenly split between two Democratic appointees and two Republicans. A fifth board member, to be appointed by President Trump, may not be installed for many months, which could delay the proposed merger.
The board took nearly 17 months to approve the merger, in 2023, of Canadian Pacific, a large Canadian railroad, and Kansas City Southern, a medium-size American railroad, but demanded extended oversight of the combined operations.
The combined Union Pacific and Norfolk Southern network would have nearly 90,000 miles of track, putting it far ahead of BNSF, the country’s second most profitable freight railroad, which has around 55,000 miles. Combined, Union Pacific and Norfolk Southern had over $9 billion in profit last year.
Union Pacific, based in Omaha, has over 32,000 employees, and Norfolk Southern, with headquarters in Atlanta, has nearly 20,000. At both railroads, around four-fifths of the work force belongs to a union.
In February 2023, a Norfolk Southern train carrying hazardous chemicals derailed in East Palestine, Ohio, forcing the evacuation of hundreds of residents and upending life in the town for months. Its chief executive at the time, Alan H. Shaw, came under scrutiny from both lawmakers and regulators. In September, Norfolk Southern fired Mr. Shaw for having an affair with the company’s chief legal officer.
Mr. Vena, who has been chief executive of Union Pacific for nearly two years, worked for over 40 years at Canadian National, a large Canadian freight rail company.
Norfolk Southern’s stock, up slightly on Thursday, has risen in recent days on the back of news reports that the merger discussions were occurring. Union Pacific’s shares were down over 2 percent.
Peter Eavis reports on the business of moving stuff around the world.
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