ARLINGTON, Va. – Union Pacific and Norfolk Southern recently announced plans for a proposed $85 billion merger that would connect over 50,000 route miles across 43 states, linking about 100 ports, and creating a combined enterprise valued at more than $250 billion, according to officials.

The merger has prompted the National Grain and Feed Association (NGFA) to evaluate the potential impact on agricultural shipping.

“About 3.2 million rail cars of grains, oilseeds and other agricultural products move by rail on an annual basis, representing more than 10 percent of all rail shipments, and 26 percent of grain has at least one rail movement,” Mike Seyfert, NGFA president and CEO, told Farm World.

Mike Steenhoek, Soy Transportation Coalition executive director told Farm World, “Railroads – both the large Class I railroads and the regional and shortline railroads – are integral to the success of farmers and U.S. agriculture. Therefore, any major development within the railroad industry is of acute interest to those who supply nutrition and protein to domestic and international customers.”

Steenhoek said, “Many agricultural and other railroad shippers will be concerned that further consolidation in the industry will result in diminished competition among railroads. This could result in increased rates and diminished service.”

Railroad officials said in a July 29 media statement that the proposed merger would enhance the competitiveness of U.S. freight: “U.S. freight railroads move approximately 1.5 billion tons of material and goods every year, and would compete more effectively with Canadian railroads to win back U.S. freight volume and American jobs.”

Moreover, with access to 10 international interchanges and approximately 100 ports, the proposed merger would “unlock strong international trade routes and offer greater access to U.S.-made goods,” officials said.

“This dynamic occurred when Canadian Pacific originally offered to acquire Kansas City Southern a few years ago,” Steenhoek said. “This prompted Canadian Pacific’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.

“It is a fundamental reality within supply chains that handoffs – whether between modes of transportation or providers of transportation – frequently result in additional costs,” he added. “Those who have long promoted consolidation between the eastern and western railroads have argued that eliminating these handoffs between one railroad and another will reduce costs and enhance marketing options for shippers.

“Proponents will argue that eastern shippers will have augmented access to western markets and ports,” he said. “Similarly, western shippers will have increased access to eastern markets and ports.”

Officials said the proposed merger would “unlock rail options for shippers in regions where railroad connections are less efficient, such as the Ohio Valley and on both sides of the Mississippi River, creating a more accessible, sustainable, and lower-cost supply chain for manufacturers and consumers.”

In the interim, Seyfert said, “NGFA looks forward to hearing from the Union Pacific and Norfolk Southern railroads and learning how they believe the merger will create resilient and reliable efficiencies and incentives in timeliness of service and deliveries – along with fair and reasonable rates to better serve our members.”

He added, “NGFA will also undertake extensive analysis and discussions with our members to determine the impact on cost and competitiveness for American agriculture.”

Officials said if the proposed mergergoes through, the combined company would be headquartered in Omaha, Neb., while Atlanta, Ga., would remain a core location for the combined organization over the long term, with a focus on technology, operations, and innovation, among other priorities.

Officials added the proposed merger is subject to Surface Transportation Board review and approval within its statutory timeline, customary closing conditions, and shareholder approval.

“Many of us in agriculture, including NGFA, will be evaluating the potential transaction to assess its impact on the industry,” Steenhoek said.

The two companies are targeting closing the transaction by early 2027, officials said.