CN Cashes in its Chips
As the UP-NS proposed merger rumbles on into year 2, there have been several news items worth noting recently.
Just last week, CN announced two agreements with UP after some horse trading. The first is an MOU to “Improve North American Rail Connectivity” while the second includes conditions dependent on the proposed merger’s approval. In exchange, CN will “not oppose” the merger and “both parties will collaborate through the STB process to ensure that [the] agreement takes effect.”
“Union Pacific struck a deal with Canadian National to secure that rival’s support for its proposed $85 billion acquisition of Norfolk Southern railroad…
“UP CEO Jim Vena said he believes these agreements with Canadian National will address many of the competitive concerns with the merger because CN will gain permission to be able to serve any customers that will see significantly reduced shipping options after the merger. And CN will take over Norfolk Southern’s ownership of smaller railroads in St. Louis and Kansas City to ensure the merged railroad will never control the majority of those operations…
“Canadian National will also gain access to tracks between St. Louis and Kansas City where there was the most overlap between UP and NS, and CN will be able to use a key rail yard in Kansas City that will help that railroad compete better for business to and from Mexico. Union Pacific will get the ability to move more traffic around the congested tracks in Chicago.”
That CN found an agreement with UP to support the merger, isn’t surprising. In contrast with BNSF and CPKC, who have been adamantly opposed to the merger, CN has largely remained independent of all parties. Their commentary on the merger has at times been challenging to UP, but not combative. They were always fishing for a deal and they were wise to leverage their position into something at some point. Perhaps UP was a bit more willing to do a deal once KCT and TRRA were flagged as a major point of concern.
However, these deals also don’t really change anything. CN was able to scrape out some decent concessions, like a greater share in terminal railroads in KC and STL while UP was able to squeeze more out of CN to operate on the EJ&E around Chicago. CN’s opposition wasn’t all that material, but it is nice from UP’s perspective to have at least one Class 1 out of the way. To the extent that it matters, maybe the STB gives UP a participation grade for trying to address competition concerns proactively.
Labor Gets a Win
In a setback to UP’s efforts to release as little information as possible, the STB ordered UP to release previously classified information regarding its “Employee Impact Exhibits.” From Railway Age,
“On July 2, 2026, unions participating as the “Allied Rail Unions,” consisting of the BMWED (Brotherhood of Maintenance of Way Employes Division/IBT); BRS (Brotherhood of Railroad Signalmen); SMART-MD (International Association of Sheet Metal, Air, Rail and Transportation Workers)-Mechanical Division); IAM (International Association of Machinists and Aerospace Workers District #19); TCU (Transportation Communications Union/IAM); BLET (Brotherhood of Locomotive Engineers and Trainmen); and IBEW (International Brotherhood of Electrical Workers), filed a joint motion requesting the Board order UP and NS to redesignate as “public” the Employee Impact Exhibits included in appendices to their revised application. The unions argued the UP and NS “had improperly designated the information as Highly Confidential.” The impact exhibits “provide detailed information on how the proposed merger would affect craft and management employees of UP and NS, including numbers of positions that would be abolished, created or designated as transferred because of the proposed merger, and the job transfer locations for certain positions,” STB noted…
“UP responded that the Highly Confidential designation “is appropriate because the information is ‘competitively sensitive,’” STB said. “It explains that the exhibits reveal Applicants’ anticipated workforce deployment and operational implementation plans at a facility-specific level. According to Union Pacific, facility-specific information is not publicly available and could provide competitors with insight into Applicants’ post-Transaction operations. (Union Pacific is also concerned that public disclosure of the granular employment information could enable competing railroads to target Applicants’ employees for recruitment.”
While there may be some merit to UP’s arguments, and I certainly can appreciate a desire to disclose as little as possible about your business, this was never going to fly. Does this information really tell UP’s competitors much of anything? No. What it does is prevent potentially embarrassing statements, facts, and figures from being released to the public on how UP views its labor with this merger. If there is anything ugly, this is the political fodder that will likely be rolled out again and again throughout this process.
The unions obviously don’t trust UP when it touts its “agreements for life.” Having just attended a labor union convention, there are still strong feelings about the 2022 contract negotiations and fight over paid sick leave. If there’s anything remotely damning in UP’s “Employee Impact Exhibits,” expect the unions to broadcast it fervently and frequently.
More Senators Pile On
In the latest statement by federal officials on the merger, 23 Democratic Senators signed a letter to the STB expressing opposition to the merger. From the letter,
“As the Surface Transportation Board (STB) considers the proposed merger between Union Pacific Railroad (UP) and Norfolk Southern Railway (NS), we write to express serious concern about the transaction and urge you to thoroughly investigate the potential impacts it would have on competition, workers, and safety in an increasingly consolidated rail industry. If approved, the unprecedented merger would not only create the first transcontinental railroad but it would significantly consolidate our nation’s transportation system, slashing rail jobs across the country, raising prices for customers and consumers, and creating potential supply chain bottlenecks and greater market instability.”
Senator Tammy Baldwin (D-WI), one of the loudest voices in the Senate or rail shipper issues and one of the 23 Democrats signing the previous letter, also sent her own letter to the STB expressing concerns about railroad retaliation. From the letter,
“I write with concerns about the threat of potential retaliation by Union Pacific (UP) towards shippers and other rail stakeholders who choose not to publicly support the merger between UP and Norfolk Southern (NS). Threats of retaliation must be taken seriously, as they directly undermine the Surface Transportation Board’s (STB or Board) review process and could prevent shippers from meaningfully participating in a forthcoming public comment period on the merger application. Given what is at stake with a rail merger of this magnitude, I ask that you address threats of retaliation and make clear retaliation by railroads will not be tolerated by the STB.
“It has come to my attention that UP CEO Jim Vena has made remarks at conferences and closed door meetings threatening to retaliate against stakeholders who oppose their merger application. This includes comments from Mr. Vena at the Southwest Association of Rail Shippers 2026 Annual Meeting in Houston in March, when he issued a thinly veiled threat to raise rates for customers who did not publicly support the merger.”
I was at the SWARS meeting and was at least partially surprised by Vena’s comments, which ranged from taking shots at the quality of thet hotel coffee to questioning why people put more than red and green colors in a report. This was not the speech of a salesman or an ambassador looking to win support from his customers. This was the tirade of a general who was angry that the troops were not falling in line. Shippers reactions ranged from bemused to somewhat offended.
Yes, these new letters to the STB are all from Democrats and yes it’s very easy for a Democrat to sign up to a pro labor or anti-M&A letter. But these are just the latest in a growing cache of filings coming out of Congress about the merger. Some history:
October 2025 - 18 Senators (Bipartisan) signed a letter highlighting concerns primarily backed by the Ag community about the merger.
February 2026 - 48 House members, largely Republican, call on the STB for a “rigorous review” of the merger amid concerns of concentrated market power. Additional letters of concern from various caucuses and other members brings the total count in opposition to the merger up to 72.
June 2026 - Kirsten Gillibrand (D-NY) joins Senator Schumer in calling out NS for not keeping up on its bridge maintenance in New York in light of the merger proceedings, extending an ongoing dispute over how NS conducts its bridge program since it was first opened in 2023.
July 2026 - Chuck Grassley (R-IA) goes on the record stating his ag constituents like the Iowa Farm Bureau are against the merger but that he’s reserving judgement until the STB proceeds further.
That’s more than 100 members of Congress who have expressed concern about the merger. The “For” column only contains two Senators, both from Nebraska. Ag has always been an important constituent in the rail industry. Initial industry regulation was brought on by Ag (Fear the Grange!). Getting NGFA and Co. invested through some type of concessions would be a key win for UP. I don’t know that it’s possible.
UP was never going to get everyone on board with the merger. If they did, they might as well refile as a 501c3. But they also can’t ignore the political dimension of the merger approval and with public opinion. Whether you believe the STB is impartial or will be impartial in its merger review is irrelevant. The path to approval no longer lies exclusively through the Trump Administration.
The most important political calculation to make for UP is going to be the changing political landscape after the Midterm elections in November. Congress has a number of levers they can pull to make life difficult for UP, particularly in the House. With the House most likely to swing back to the Democrats, the T&I committee or other committees could call hearings and issue subpoenas to reveal potentially embarrassing information. None of this helps UP and it only delays or at least muddies the approval process.
Will UP adjust its strategy in DC? Or will other external factors force their hand, like what happened with CN?
I still haven’t seen enough to change my opinion that this merger will get approved eventually. But it’s clear that UP has its work cut out for them, both with the STB and across the broader industry.