Canadian National reaches agreement with Union Pacific not to oppose its merger with Norfolk Southern

Canadian National has agreed not to oppose the merger being advanced by Union Pacific and Norfolk Southern. According to a release issued on July 22,press release, the two parties signed a memorandum of understanding aimed at expanding Canadian National's connectivity and capacity.

The agreement is conditional on the Surface Transportation Board (STB) approving the Norfolk Southern merger and its closing. According to the press release, after the merger is completed, Canadian National will have the right to access shipper facilities that those Class I railroads choose to reduce service to, but only where commercially and operationally feasible.

Pending STB approval, Canadian National will also acquire Norfolk Southern's equity interests in the Kansas City Terminal Railway Company and the Terminal Railroad Association of St. Louis. The Canada-based railroad will gain an operating footprint in Kansas City, Missouri, including Union Pacific's Neff Yard, as well as overhead trackage rights in parts of Illinois, thereby expanding its market reach in the U.S. Midwest.

Union Pacific CEO Jim Vena said on a July 23earnings callthat it was this merger that led to the deal between the two railroads, describing Canadian National as a "tough negotiator."

In July 2025, Union Pacific and Norfolk Southern reached anetwork merger agreement, aiming to create the United States' "first transcontinental railroad." The STB initially rejected the original application last December, and the applicants thenresubmitted after supplementing materialsin April. The STB is still reviewing the merger application and hasrecently required the applicantsto make public certain employee data previously marked as confidential.

Industry participants have expressed concerns about the proposed merger, arguing that a transcontinental railroad wouldchange the market landscape, potentially leading to higher rates and stifling rail competition. Before this agreement, Canadian National hadexplicitly opposed the merger。

Vena said in the press release that the Norfolk Southern merger "will protect and enhance competitive options, creating a stronger rail industry and providing better service to customers."

However, another major railroad, BNSF Railway, believes that a merger is not necessary to facilitate agreements like the one between Canadian National and Union Pacific.

"The Union Pacific-Canadian National agreement proves the opposite point. The benefits Union Pacific highlights can be achieved today without a merger, and a large portion of that arrangement is not even contingent on merger approval," said Zak Andersen, BNSF's chief of staff and vice president of communications, in an email statement.

Additionally, Union Pacific and Canadian National have signed another agreement aimed at expanding connectivity and capacity in North America, according to another release issued on July 22press release. Under the terms of that agreement, Union Pacific will expand its operating rights on Canadian National's Elgin, Joliet and Eastern Railway corridor, also known as the Chicago bypass line. Kenny Rocker, Union Pacific's executive vice president of marketing and sales, said in a July 23 letter to customers that the corridor is "one of the fastest paths around Chicago."

According to the press release, Canadian National will also gain operating rights on Union Pacific's line between Memphis, Tennessee, and Eagle Pass, Texas, to support freight flows between Canada and Mexico.