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Supply Chain

Freight rail companies merge in shake-up for US logistics network

Merger could remake US retail supply chains, with nearly 50% of freight cargo consisting of consumer goods.

a freight train at a red railroad crossing signal

Thomas Winz/Getty Images

less than 3 min read

Freight rail companies Union Pacific and Norfolk Southern have agreed to a $85 billion merger deal that could remake US supply chains.

The combined company would operate nearly 50,000 miles of track across 43 states, effectively creating a “transcontinental railroad” that, in the words of Union Pacific, “will transform the US supply chain, unleash the industrial strength of American manufacturing, and create new sources of economic growth and workforce opportunity that preserves union jobs.”

Regardless of whether these lofty ambitions come to fruition, the deal could have major consequences for the retail industry. While 52% of freight rail cargo consists of bulk commodities such as energy and agricultural products, 48% consists of consumer goods and other miscellaneous products, according to the US Department of Transportation. 

  • Many of these consumer goods are categorized as intermodal traffic, meaning they are made up of shipping containers that move between other transportation modes such as trucks or planes, and so are plugged into other parts of the US supply chain.

National Retail Federation CEO Matthew Shay stated in 2022, amid negotiations between freight railroads and rail labor unions that were resolved in December 2022 after Congress intervened, “freight rail is critical to the retail supply chain, and retailers of every size rely on it to move cargo every day.”

In announcing the merger, Union Pacific touted the potential benefits to the US economy, including winning back freight volume from Canada and providing additional rail options for shippers in underserved regions such as the Ohio Valley and Mississippi River watershed.

However, shippers are already speaking out against the deal, expressing their opinion that consolidation will only drive increased fees and more unreliable service.

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Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.