Regulator restarts the $85 billion merger review
The Surface Transportation Board resumed its review of Union Pacific's proposed $85 billion acquisition of Norfolk Southern, lifting the hold it placed on the process in late May. The board said the supplemental information submitted by the two railroads was sufficient to restart the proceeding, while emphasizing that the move is not a ruling on the merits. The deal would create the first modern coast-to-coast freight network in the United States, combining two of the six remaining Class I carriers.
The board adopted a procedural schedule that is projected to run through at least May 28, 2027. A final decision is due within 90 days after the close of record, which has not yet been set. The schedule also sets out a timeline for public comments from shippers and other stakeholders.
Shipper protections added in the supplemental filing
According to the Surface Transportation Board statement, the railroads' revised filing offered several new assurances to customers, including service protections and fixed pricing agreements covering more shipments. The board separately denied the companies' request for an expedited proceeding related to their proposed divestiture, a detail flagged in the reporting without further characterization.
A fuel-surcharge surplus enters the regulatory record
A separate review of Union Pacific's Surface Transportation Board filing showed that the railroad reported $91.1 million more in fuel-surcharge revenue than in fuel cost during the second quarter. Management attributed roughly $0.14 of EPS, about $83.2 million using diluted weighted-average shares, to the net gap between fuel expense and surcharge revenue, equivalent to around 4% of quarterly net income.
For comparison, Norfolk Southern reported a $3.6 million surplus over the same period and CSX reported $8.4 million, and Union Pacific was the only major U.S. railroad whose fuel surcharges exceeded fuel costs over the first half of the year. The first-half surplus totaled $56.4 million, and Union Pacific had a $34.8 million shortfall in the first quarter; 2025 ended with surcharge revenue $48 million below fuel expense.
What the gap actually reflects
Fuel surcharges use benchmark-linked formulas embedded in published pricing programs or negotiated customer arrangements and can lag fuel-cost movements by about two months, producing timing effects rather than a permanent earnings shift. Second-quarter revenue rose 12% to $6.9 billion, while freight revenue excluding fuel surcharges increased 4%; fuel consumption per thousand gross ton-miles improved 1%, but higher fuel prices still pressured the operating ratio by 120 basis points.
Remaining uncertainties
The fuel-surcharge surplus is too small to alter the long-term financial case for the combination, but it adds to the regulatory narrative at a time when the Surface Transportation Board is weighing public comments and updated shipper commitments. The railroads have argued that a coast-to-coast network would cut interchange delays and is estimated to save shippers about $3.5 billion annually, a figure the board has not endorsed in its procedural order. With the record-closing date still to be set, the timing of a final decision beyond the May 2027 procedural horizon remains the key open variable.
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