The merger of Union Pacific & Norfolk Southern marks one of the biggest shifts in U.S. rail history. In this Supply Chain Byte, Lisa Anderson explains how this deal could reshape freight movement, capacity and reliability across the country—and what it means for manufacturers and distributors relying on rail to keep supply chains running.

Union Pacific announced the plan to acquire Norfolk Southern in an $85B deal. This massive deal would form the first U.S. transcontinental railroad. According to a Union Pacific press release, the combined network would cover more than 50,000 miles across 43 states and connect to around 100 ports, uniting Union Pacific’s western reach with Norfolk Southern’s eastern operations. Strategic partnerships that enable a partnership form of vertical integration are gaining momentum to scale, grow and meet customer needs successfully. 

Why are they forming the partnership? They wanted to develop a win-win relationship that would drive operational efficiencies, reduce complexity, and set them up with an improved competitive position to enable scale and growth. In addition, it will also benefit shippers with faster service. In today’s Amazon-impacted world, fast service is more important than almost anything else. 

What should we take away? There are several key points. Goods movement is vital as nothing will occur if businesses and consumers don’t have raw materials, products, energy etc. No matter where products are manufactured in the world, goods movement is required. As companies move to regional supply chains, goods movement will simply evolve and follow the goods. Second, it must be done at scale and delivered quickly and efficiently. To achieve this sort of win-win-win, you must think creatively and be innovative in your strategies for success. 

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Why Railroads Matter