The merger announced in July between Union Pacific and Norfolk Southern is set to become the largest ever reviewed by the Surface Transportation Board. Given the significant supply chain breakdowns caused by past rail mergers, the stakes are simply too high to get this one wrong, says Chris Jahn, President and CEO of the American Chemistry Council. SmartBrief spoke with Jahn to learn more.
SmartBrief: How important is freight rail in US chemical manufacturing?
Chris Jahn: Freight rail isn’t just important to chemical manufacturing – it’s a vital link that connects our industry to the US supply chain. Our industry is one of the biggest customers of the freight rail system. In 2024 alone, we moved 2.2 million carloads of chemicals by rail. That’s more than 8% of all rail traffic — generating $13.3 billion in revenue for the railroads and making up over 16% of Class I earnings.
Chemical facilities are built around rail access. It’s how we get raw materials into chemical facilities and our finished products to market – chemistries that power nearly every part of the economy. When rail service is reliable and competitive, it can help fuel growth. But when it breaks down, the impacts and ripple effects are immediate and widespread — hitting manufacturers, farmers, energy producers and consumers.
It’s quite simple — to make more in America, we need affordable, reliable options to move more US chemistry by rail.
SmartBrief: What sort of impact have past rail mergers had on your industry?
Jahn: The railroads have a very poor track record when it comes to mergers and their impact on the broader economy. The Union Pacific–Southern Pacific merger in 1996 led to a network collapse that triggered service embargoes, and widespread supply chain disruptions followed. The problems and fallout were so severe that the Surface Transportation Board placed a moratorium on mergers to revise its rules to address the negative impacts on competition and customers caused by consolidation.
More recently, the Canadian Pacific–Kansas City merger resulted in on-time performance sinking to just 26%, causing serious delays for chemical plants and refineries along the Gulf Coast. Decades of consolidation have left us with fewer transportation options and more fragile supply chains. Over the last 20 years, real freight rail rates have increased 44% above inflation, while railroads ship fewer goods. These are hard lessons that we can’t afford to ignore when it comes to future mergers.
SmartBrief: Why is ACC concerned about the UP–NS merger?
Jahn: The Union Pacific–Norfolk Southern deal would create a transcontinental monster of a railroad that would put nearly half of US freight rail traffic under the control of just one rail company. With four major railroads currently handling more than 90% of traffic, this merger would all but eliminate what little competition exists today. We know how this story ends, and it’s not good for shippers or American consumers.
Despite promises from the railroads, past rail mergers have resulted in serious service meltdowns, skyrocketing costs and less competition. It would leave even more chemical manufacturers captive to a single railroad and in a take-it-or-leave-it situation when it comes to service and rates. At a time when the nation is working to strengthen supply chains and reshore manufacturing, this merger would send America down the wrong track.
SmartBrief: What should policymakers do?
Jahn: We support the efforts by President Trump and Congress to strengthen American manufacturing and outcompete China. Achieving that goal depends on a freight rail system that delivers affordable, reliable service for chemical producers, energy suppliers, farmers and every other sector that depends on rail.
That requires more rail-to-rail competition – not less. The Surface Transportation Board must hold the line and reject any merger that fails to provide more competition. Policymakers need to strike a better deal that fights monopolies. One that creates more rail-to-rail competition across the entire rail network and one that strengthens American supply chains, drives innovation, delivers lower costs and puts US producers first. That’s a real win for America.