OPINION:
Conservatives have spent decades arguing that Washington’s instinct to regulate its way to better outcomes usually produces the opposite.
The history of American freight rail makes that case better than almost any other industry, and the proposed Union Pacific-Norfolk Southern merger is the next test.
The Staggers Act of 1980 stripped away price controls and route mandates that had crippled the industry, resulting in a largely deregulated network that gave carriers and shippers, including Union Pacific and Norfolk Southern (which now jointly invest $5.6 billion annually in infrastructure and network expansion), the freedom to build into a highly efficient system.
According to the Association of American Railroads, inflation-adjusted rail rates fell 44% from 1981 to 2024. The lesson was simple enough: Free markets, when allowed to function, produce better outcomes for producers and consumers than regulators can engineer from Washington.
The proposed merger of Union Pacific and Norfolk Southern deserves to be evaluated through that same lens. Critics who focus on the number of carriers often miss how this industry actually works for the people using it.
The number of carriers on a map tells you hardly anything about whether any particular shipper loses a competitive option they use. Importantly, rail also does not operate in a vacuum. Railroads compete with trucks, barges and pipelines for nearly every shipment.
The competitive picture facing any given shipper is far broader than a count of Class I rail carriers suggests.
For farmers in Kansas and across the Midwest and Plains, it comes down to whether a combined Union Pacific-Norfolk Southern system will move grain faster to more markets at a lower cost. The post-Staggers record suggests it will.
A University of Illinois analysis of past rail mergers found that efficiency gains followed consolidation and that rates remained stable or declined, contrary to skeptics’ predictions each time.
The structural problem this merger addresses is one that farmers have dealt with for decades. Moving corn or soybeans from an elevator to an export terminal often requires a handoff between railroads, where cars can sit idle for days before continuing their trip. Farmers believe that the delay results in tighter margins at the end of their harvests.
A single-line transcontinental network reduces that uncertainty, allowing the same farm product to move under a single service from origin to port without getting stuck between carriers. Removing those interconnection delays is a major reason the companies estimate the new combined company will save $3.5 billion a year in shipping costs.
Research on grain transportation has consistently shown that delays and service variability translate into lower farm-level returns, even when the disruption occurs further down the supply chain. As the U.S. Department of Agriculture’s Economic Research Service has documented, shippers facing higher transportation costs reduce their cash bids to producers, weakening the basis farmers receive.
Improvements in rail reliability tend to show up in stronger returns and more predictable market conditions over time.
American farmers compete with Canada and South America for export demand, and the ability to move grain efficiently to a range of ports affects who wins those sales. Transportation is one of the few variables that can still be improved domestically, with direct impacts on what farmers ultimately receive for their crops.
Food security and national security are inseparable. A rail network that moves grain more reliably from farm to export position is a strategic asset with implications well beyond commodity prices. Rail also moves a ton of freight roughly four times farther on a gallon of fuel than a truck does, a margin that matters when fuel costs and supply-chain resilience are part of the same conversation.
The Surface Transportation Board’s public interest standard requires that a proposed merger enhance competition and serve the broader public good. The question comes down to whether agricultural shippers have more or fewer ways to reach the market.
For the overwhelming majority of Midwestern farmers who rely on only one of these two railroads, the answer is that they gain access to a far wider network than they have today.
Last week, the Surface Transportation Board accepted Union Pacific’s merger application as complete, kicking off the review process. The board is giving stakeholders extra time to weigh in, given the scale of this merger. That is appropriate, and I have complete confidence that the evidence will demonstrate that the merger’s benefits far outweigh its risks.
The Staggers Act was a policy success precisely because it trusted markets. The Union Pacific-Norfolk Southern merger applies that same logic to the transportation system American agriculture depends on every day. The Surface Transportation Board should approve it.
• Tim Huelskamp represented Kansas’ 1st Congressional District from 2011 to 2017 and subsequently served as president of The Heartland Institute.
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