IANA Day 2: BNSF and UP CEOs Frame Rail’s Biggest Question—Consolidation or Collaboration?

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At IANA, the proposed merger between Union Pacific and Norfolk Southern was presented as a pivotal decision that would shape the future of intermodal freight, rather than a routine business transaction.

Katie Farmer, CEO of BNSF Railway, emphasized the need for increased collaboration, responsiveness, and competitive options for shippers. In contrast, Jim Vena, CEO of Union Pacific, advocated for an operating model that eliminates handoffs, reduces transit times, and provides seamless rail service from east to west.

Both leaders addressed the same core question: how can rail shift significant freight volumes from highways?

Their approaches differ markedly.

Farmer’s Case: Choice and Responsiveness.

Farmer addressed the issue from the buyer’s perspective, focusing on a direct question:

“What’s better for my optionality? What’s better for my long-term competitiveness?” — Katie Farmer

Her main argument was that, while a transcontinental map may appear compelling, shippers interact with railroads through rate requests, service exceptions, terminal performance, claims, capacity commitments, and available alternatives when initial plans fail.

Farmer argued that the merger would reduce the four current East–West railroad combinations—BNSF–Norfolk Southern, BNSF–CSX, Union Pacific–Norfolk Southern, and Union Pacific–CSX—to only two main options over time. She also challenged the notion that technically open interchange gateways ensure real competition, citing BNSF's experience at Laredo after the CPKC merger. In her view, a gateway may remain physically open but become commercially unviable due to economic conditions.

The STB should recognize that a gateway is not truly competitive simply because trains can pass through it. True competitiveness exists only when shippers can access it at viable prices and service levels.

Farmer then addressed the more difficult question of why rail has struggled to attract additional freight from trucks.

She cited a survey of shippers that highlighted concerns about responsiveness and rates. The survey found that at least half of respondents who shifted freight from rail to truck did so because of poor rail responsiveness. Shippers also stressed the importance of pricing and criticized slow, complex, and inconsistent pricing processes.

Farmer’s argument centers on the fact that shippers already recognize rail’s potential efficiency. They seek timely rate responses, reliable schedules, shipment visibility, and empowered contacts to resolve service issues.

Railways often lose business before the first container is loaded, rather than during delivery.

Vena’s Case: A Seamless Network

Vena addressed the same network issue, stating that the U.S. rail system is fragmented. He noted that frequent transfers between railroads cause delays, extra billing, and fragmented accountability.

His argument was equally direct:

“We want to give customers the option to operate seamlessly across the country.” — Jim Vena

Both speakers frequently used the term 'option.' Farmer referred to competition among carriers, while Vena described a new single-line service. These definitions are important but distinct.

The most compelling example is the intermodal lane from Harrisburg, Pennsylvania, to Salt Lake City. Currently, Norfolk Southern transports the container to its terminal on 47th Street in Chicago, after which it is trucked about 20 miles to Union Pacific's Global 2 terminal before continuing west. Union Pacific states that this transfer could add up to 36 hours.

With the new combined network, shipments would move through Chicago via a block swap rather than being lifted, trucked across the city, and reloaded. UP expects transit times to improve by 20 to 24 hours. Vena stated that some Chicago connections could be completed in 2.5 to 3 hours, linking shorter journeys to reduced inventory and equipment costs.

This is a practical operational issue with a direct impact on customers. Each lift, terminal movement, and truck transfer increases the risk of delay, damage, or missed connections. Eliminating these steps should result in faster and more reliable service.

The proposal claims the merger will create seven premium intermodal routes and convert 10,000 existing interchange routes to single-line operation. The updated application projects annual truck-to-rail diversions of about 2.1 million and shipper savings of $3.5 billion, though these figures remain unverified claims by the applicant.

The STB has also requested additional support for those projections. When the Board approved the amended application in May, it requested additional information and more details on competitive improvements, diversion assumptions, and shipper remedies if the promised benefits do not materialize.

The block swap is a genuine improvement, but scaling from one strong example to millions of converted truckloads remains unproven.

The Core Tradeoff: Service vs. Choice

The key issue is not the value of single-line service, which is clear, but whether achieving that value requires common ownership and what losses shippers might incur as a result.

Both arguments contain truth.

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