Editor’s Notebook — Difficult Days — November 2025 RT&S Opinion

David C. Lester, Editor-in-Chief

ATLANTA –– Uncertain Days Lead to Uncertain Outcomes.

I think it’s fair to say that many in the U.S. railroad industry are holding their breath right now, given that all four Class I railroad systems are going to be impacted in some way by the almost relentless discussion of industry organization –– i.e., mergers. Union Pacific and Norfolk Southern are well on their way in promoting a potential merger through various communication outlets and in Washington, D.C. Yet, we’ll see what the Surface Transportation Board has to say along with how well their statutory independence holds up. The CSX Board of Directors just fired their CEO due mainly to the fact that he was not overly enthused about a merger with another Class I and hired someone from another industry who specializes in mergers and acquisitions to sit in the big chair. And privately owned BNSF is playing its cards close to the vest. 

Something is going to have to give at some point. If UP+NS is approved, it’s very difficult to see how BNSF and CSX will be able to compete unless they somehow revolutionize the way interline agreements work. The recent partnership between these two railroads on cross-country intermodal service is interesting, but a precise study of how well it works in various lanes compared to how single-line service would perform is needed and whether it would work as well with manifest traffic. 

I’m not a financial expert, but what provisions are there for a privately-owned company and a publicly owned one to merge? I’ve mentioned that before but haven’t found any useful answers. Could a creative financial arrangement be worked out? If so, I don’t see how BNSF would be immune from the whims of the investment community, a position they’ve enjoyed for fifteen years, if CSX were to remain publicly owned? Would BNSF outright buy CSX? Will BNSF be open to or forced into merger depending on the approval of UP+NS or some action by CSX? Do we really need mergers at this point? I’ve argued elsewhere that railroads need to vastly improve customer service and aggressively grow their traffic base, rather than relying on salespeople working at desks all day, along with contract rates, to solicit and maintain traffic.  

While all of this is brewing, many rail employees, particularly in the administrative and executive ranks, are wondering what impact these decisions have on them in two to three years. I believe craft employees would not be as affected by any mergers because local staffing needs, it seems, would need to remain at a level relatively close to what they are now. 

Businesses are worried, too, about the economy. Inflation has grown since the implementation of trade tariffs, but not as significantly as was originally expected. At least for the moment.  Yet, how much longer can existing, or even increasing, tariff levels remain before we see them take their toll on larger companies? While the U.S. economy has been growing, much of this growth is due to massive investments in artificial intelligence, and the construction of large data centers to support it –– not growth that increases rail traffic. One Class I road, in presenting its increased Q3 earnings, said the good performance was due to “core pricing gains and continued operational efficiencies,” while traffic volume growth was flat. How long can that go on? 

The next few years are going to be interesting, yet likely difficult, ones for the industry. The crystal ball is cloudy.