FROM THE EDITOR, RAILWAY AGE JULY 2025 ISSUE: Consolidation: “The action or process of making something stronger or more solid,” or, “The action or process of combining a number of things into a single, more effective or coherent whole” (Oxford Languages English Dictionary). Let’s apply those definitions to our industry: “The action or process of making railroads stronger or more solid through merger,” or, “The action or process of combining two (or more) Class I’s into a single, more effective transcontinental railroad.”
I’ve been around long enough (OK, I’m dating myself) to have witnessed and covered the “megamerger” period in the mid-to-late 1990s: Burlington Northern + Santa Fe. Union Pacific + Southern Pacific. The Conrail Split between CSX and Norfolk Southern. The STB’s nixing of the attempted CN/BNSF combination, which led to new merger rules. Intense battles typically preceded these transactions. The most interesting at the time was John Snow’s attempted deal with David LeVan for CSX to acquire 100% of Conrail, and David Goode’s “hell no!” response, which resulted in Norfolk Southern splitting Conrail with CSX, 58%/42%—largely following route systems that dated back to Conrail predecessors Pennsylvania Railroad and New York Central. There’s a lot of history here.
Among the best resources is Railway Age Capitol Hill Contributing Editor Frank N. Wilner’s book, “Railroad Mergers: History, Analysis, Insight,” published in 1997. After all the activity (and scuttled attempts at an East-West transcontinental, like Canadian Pacific’s hostile bid for NS) between 2000 and 2021, the year Canadian Pacific and Kansas City Southern announced what resulted in CPKC, the first and still only single-line transnational, it may be time for Frank to publish a second edition. He will need to wait, though, for at least two more years. Why? If, given the right regulatory and economic climate, an attempt is made at a U.S. transcontinental ultimately resulting in four Class I’s—two East-West carriers, CPKC and CN (a Canadian transcontinental with a very large U.S. footprint)—it will require at least that much time.
“A last wave of Class I mergers isn’t inevitable, and is not even necessary,” wrote Railway Age Contributing Editor Jim Blaze in 2020. “But it is possible if growth is the next strategic goal. A merger (or mergers) could produce a corporate benefit and an added geographic coverage public benefit. Perhaps the biggest hurdle is this: Well over half of global corporate mergers never achieve their major business objectives. There is plenty of research on mergers that failed. It is also true that not every railroad merger was successful. Yet, if the current railroad freight business model has run its course and the growth plan is now to ‘milk’ the network assets as market share diminishes, then a last round of megamergers might be a reasonable alternative. A well-designed merger could assist a new railroad pivot toward more customer volume growth rather than margin growth.”
Five years later, our Wall Street Contributing Editor, TD Cowen’s Jason Seidl, echoes Jim’s analysis. This time, though, consolidation may not be a “reasonable alternative.” It may be needed “if all else fails.”
