Union Pacific and Norfolk Southern Merger IntelliConference

Background Statement

Union Pacific and Norfolk Southern propose an $85 billion merger to form the first U.S. transcontinental railroad, forecasting $2.75 billion in annual gains from improved supply chain efficiency, faster transit times, and modal shift from road to rail. The transaction faces Surface Transportation Board review amid stakeholder concerns about reduced competition, monopolistic pricing, and labor risks, including safety and workforce relations.

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Core Question

What performance measures, financial incentives, and public policy adjustments can investors, rail management, and government reconceive to expand capitalization of the modernization and growth of North American freight railroads and enhance their strategic value to supply chain efficiency?

Dialogue Questions

Round One

Current Freight Rail Capitalization

1. What is the approximate annual capital reinvestment by the railroad industry, expressed as a percentage of total annual revenue, for:
   1. Maintaining a state of good repair?
   2. Expanding capacity?
   3. Modernization efforts?
2. What are the primary investment factors considered by investors, policymakers, and senior rail management when evaluating the current Class I business model, specifically concerning rewards and penalties?
   1. What are the typical return-on-investment (ROI) levels and timelines anticipated?
   2. What are the typical operating income levels and timelines expected?
   3. How are sustainability outcomes incorporated into reward structures?
3. How do these stakeholder groups (investors, policymakers, and senior rail management) currently view the influence of rail growth on overall supply chain optimization?
4. What substantive and realistic rail service growth plans have been adopted by rail management, investors, and policymakers?
5. When rail growth projections are communicated by these stakeholder groups, what are the underlying drivers for those goals?
6. How do the ROI levels and timelines for privately owned rail infrastructure projects compare with those for publicly owned infrastructure projects in other transportation modes?

Round Two

Freight Rail Capitalization to Support Growth

1. Why is collaboration among rail management, investors, and policymakers esse