This is the first in a five-part series about railroad growth coming from truck conversions. Given Union Pacific’s proposed acquisition of Norfolk Southern, their Dec. 19, 2025 Surface Transportation Board application estimates there will be more than two million trucks converted to rail from this new network within three years. Based on my professional experience as a former Union Pacific executive focused on growth during much of my tenure, I want to analyze and opine based on my own experiences.
Part 2 of this series will dive deeper into carload watershed growth; Part 3 into intermodal conversion challenges; Part 4 into competition among railroads in general; and Part 5 into the proposed Committed Gateway Pricing (CGP) relative to competition and effects on shippers.
Time for Math
Two million new truck conversions to rail from UP’s acquisition of NS: The premise is that, without this transaction, the existing railroads can’t get this freight converted from truck. From the carload watershed perspective, I tend to agree, but it’s more complicated than it seems—hence, Part 2 of this series. From an intermodal perspective, I’m perplexed, based on my professional experience in UP’s intermodal business running interline container programs (EMP and UMAX). I am a “plank owner” in the UP/CSX UMAX container program in addition to being responsible for UP’s intermodal growth in some capacity from 2006-2016—10 years.
As of Week 50 2025, the UP and NS franchises combined are 51% intermodal and 49% carload freight across 15.1 million revenue moves. If the growth were allotted along these proportions, (which per the Dec 19 filing they roughly are), it would be 1.02 million trucks converted to intermodal and 0.98 million trucks converted to carload. This assumes a 4:1 railcar-to-truck conversion ratio (UP used 4.5:1 except for motor vehicles), or 245,000 new railcar moves. Note that UP’s submission has 1.17 million trucks converted to intermodal and 188,000 railcars from trucks due to the 4.5:1 conversion. Regardless, the postulate is this traffic isn’t convertible without the transaction.
Intermodal
UP and NS combined moved 7.7 million intermodal loads through Week 50 2025. Converting 1.17 million trucks to intermodal is a 13% growth goal, which is significant. Let’s say it takes five years to reach that goal. Note that UP’s application assumes three years, which is even harder. The 13% amounts to 2.5% average net growth per year. If the UP/NS international/domestic split is 50/50, and the truck conversions unlocked from the merger are largely a function of domestic intermodal—not international intermodal, which picks ports first—then we’re looking at 5% net domestic intermodal growth every year for five years on average. That’s 26% net growth over five years, or 5.2% per year for five years. It seems like a lot. Has domestic intermodal ever grown that fast in history? The answer per IANA (Intermodal Association of North America) data is no. What do you think? Let’s put a pin in this until Part 3.
Carload
UP and NS mathematically combined to move 7.39 million carloads through Week 50 2025. Converting 980,000 trucks to 245,000 carloads is a 3.3% carload growth goal. This is seemingly more reasonable than what feels like a high domestic intermodal goal noted above, which hasn’t happened during the past 15 years. Spread out over five years, this equates to 0.75% or three-quarters of a point of net growth per year. Given there will need to be significant capital investment made by shippers who will make decisions based on total cost and return, this 3.3% conversion goal could be aggressive. What do you think?
To explore the carload growth goal further, we need to dive deeper into why there is rail carload growth opportunity in the watershed markets and how the UP-NS transaction can unlock it. In addition, we need to understand the factors that inhibit rail development and growth. Supply chains develop over years, requiring significant capital investments and customers with opportunities. Production and receiving facilities are located geographically based on competitive access to providers. The watershed markets are the result of an ecosystem built during the 45-plus years since the 1980 Staggers Rail Act. More on this in Part 2.
Realistic Numbers
The North American rail industry has not grown since 2017 and has consistently lost market share to trucking and other modes since 2018. Rail is a precious commodity, and the benefits of rail transportation—cost savings, access to capacity, environmental benefits and better jobs—aren’t in question. The UP-NS STB application is the beginning of a long process.
Per the merger rules established in 2001, this transaction must enhance competition to be approved. We want what’s best for the industry and ultimately our country, as our rail system is a key factor in its economic success. Professionally, at Russell-Kroese Partners, we are neither for nor against the merger. We stand for our clients to help them navigate through this proposed acquisition to help them do business with rail. Two million truck-to-rail conversions gave me a headache and required some independent math. Is the conversion opportunity that massive? Probably, per a dataset UP’s consultants used, much like I used during my tenure there doing market studies. The percentage likely to convert and how long it takes are the right follow-up topics to be explored. See you in Part 2.
Rob Russell, Managing Partner, Russell-Kroese Partners (RKP), is a seasoned transportation executive who operates fluidly from the boardroom to the shop floor. A certified six sigma black belt and a LEAN champion, Rob is a proven business leader who has a track record of strategy development, financial planning, business development, operations and performance management to accomplish an organization’s desired goals. RKP partners with railroads, ports, shippers and land developers on growth strategy, market development, competitive positioning and operational execution. They help clients translate complex transportation dynamics into clear, execution-ready business decisions. You can learn more about RKP at www.russellkroese.com.
