Given that the new North Star of growth I gave our rail industry is being used to justify an alteration to the course of its future, I must break my annual publication cadence to deal with this fork-in-the-road moment. Credit to Railway Age Editor-in-Chief William C. Vantuono for maintaining this publication’s place as the rail ideology octagon to have this necessary debate for the future of this industry among railroaders.
The stakes are higher now, and the pressure and failure consequences are real. So, it is time to change the status of rail egos, reputations, years of service, budgets, relationships and career legacies to interchanged-delivered. We must focus on fact, truth, honesty and intellectual depth: May the most meritorious rail track path win its future.
To deal properly with this situation and its complexity, we will use history, logic, reason, fact and real rail honesty. To start the growth our rail industry needs to prosper, we need to start a new fire in its firebox. As usual, please clean your intellectual rail palates before we proceed, ideally with a glass of water to bring with you, for this is a process, and the boiler will be very hot. When we turn on the steam to power the locomotive forward, we will have this new engine prepped for service with the answer to the question: how to get the American rail industry, and the North American rail system, to grow.
To begin, we must unfortunately deal with my least favorite rail acronym, “PSR,” for despite what I thought was my successful deletion of its use and ideas from our industry’s strategic lexicon, its spirit, like a ghost, continues to haunt and distort its future. We must correct its record for this industry to begin growing and dump the ash of this old fire into the ash pan to make space for the new tender and coal that will fuel our new fire.
How did PSR happen? Specifically, why is there a belief that it was a successful financial management strategy for Class I railroads to be admired? Even more specifically, what enabled railroads to generate and realize real higher cash flows and profits, and find themselves ranked as one of the most profitable U.S. industries in 2019? The rail industry’s future, spirit, structure, hiring decisions and reputation have all been altered by these financial results. Despite the sheer quantity of customer shutdowns, emergency situations, bad news stories and regulatory attention, it still did succeed in boosting rail profits to their highest levels in rail industry history at the time. How? And why?
The answer: The Common Carrier Obligation, and the liability protections its current definition provides railroads. Specifically, the vague word that currently helps define the standard for U.S. rail service quality: “reasonable.” The litigious nature of this U.S. rail policy issue is complex. But Canada has already dealt with this issue in the directionally correct way.
Canada’s Transportation Modernization Act of 2018 instructed its railroads to provide “the highest level of service” to fulfill their obligations, while taking into account railroad and shipper concerns.
Let’s focus on this idea of “highest level of service.” This is what railroads control. This is the realization and execution of our new North Star of growth: If railroads deliver the highest level of service they possibly can to their existing customers, those customers will entrust and pay railroads to move more of their freight. It is that simple of an idea, plan and strategy: maximize the happiness of our customers by earning their business with experiential satisfaction and merit. Time to load the tender for use in starting our new fire.
What is the current reputation of the rail industry as it exists in our society today? What did PSR truly do to this industry? What do non-railroaders, the general public, the venture community, the tech industry and even industry veterans themselves honestly think of our rail industry as it exists today? And most important, what does the youth of this industry think? The younger generation of railroaders are not counting down the days until retirement, but instead have been selected, groomed and positioned to be responsible for, execute and lead railroads into the next century. They are the railroaders whose responsibility it will be to execute the proposed Union Pacific-Norfolk Southern merger and actually do the work required to integrate two of the U.S.’s largest rail networks into one. The railroaders whose jobs it will be to help get that beast to function properly without an operational implosion. The railroaders whose professional futures, lives and families will be impacted because of this merger’s alteration of our rail industry forever, especially if it fails.
The youth of this industry does not care about professional legacies. We do not care about corporate-speak. We do not care about a short-term activist investor’s pressure campaign. And we do not care about this industry’s ways of old. Our concern is its future, not its past, specifically, its results, its growth, its well-being, its prosperity and its return to operational, economic and reputational dominance. Elite railroading is what we want. Prideful railroading. A restoration of respect and admiration for what we do daily for our industry, our nation, our economy and our society. On the tracks, in the office, on the road, in the hotels, in the locomotive cabs, in the mechanical shops, in the boardrooms and on the rails, every day, every night, every week and every year, in all weather conditions. We want a hot fire burning for the boiler, at the heart of this industry, within its locomotive, powering it forward, with fresh coal. With the ash of our old fire now dumped, and our tender loaded, it is time to ignite it.
The Canadians are directionally correct: Policy that eliminates bad service as being an operational option is needed. This industry’s worst temptations and behavior, exemplified by the Class I-caused chaos during the PSR era, are enabled when these huge, bureaucratic and rigid entities, like runaway trains, cannot stop themselves from smashing what the railroader I most respect in my generation calls “the railroad easy button”: relying on rules, regulations, market power, a lack of accountability and complacency to grow instead of doing the hard and necessary work of fixing the core problems to earn as much of their customers’ business as possible by providing them with the highest quality operational service experience.
To be clear, it is not easy to run these railroads. Railroading is not easy. These are fundamentally complex operations and organizations spanning large geographic territories, with large machinery, tens of thousands of employees, operating in all weather conditions, with lots impacting their operational execution they do not control. This is not easy. Especially when the still-massive majority of rail vehicles moving along the tracks today lack the real-time GPS monitoring required for railroads to operate at an elite level. Time for the new coal.
The claim of this merger is that by eliminating the apparently poor inter-carrier coordination challenge of executing a smooth and fast interchange at gateways that have historically struggled with congestion (despite CREATE, the Chicago Region Environmental and Transportation Efficiency project under way to fix Chicago), this newly formed railroad will be able to provide a higher quality service product to a select customer base that allegedly needs that lane’s transit time reduced by one to two days to justify allocating more of their existing freight, currently moving today by truck, onto this rail route. Doing this will apparently result in “$1.75 billion in revenue ‘synergies’ in year three primarily from the ‘watershed’ truck conversion, better service, more options for customers, and rail industry growth.” The belief in this plan is so deep that UP will spend $85 billion to bring it into reality. The confidence is also so high in this merger’s legality, regulatory approval and industry future track path merit that UP committed to a $2.5 billion dollar break-up fee if it fails. This merger also will apparently generate record-setting advisory deal fees for the banks that were retained to advise and assist in seeing this merger through. More coal.
In June 2025, RailPulse, a rail industry-owned tech startup of which Union Pacific is a part owner, testified before the U.S. House of Representatives T&I Subcommittee on Railroads, Pipelines, and Hazardous Materials stating that getting to full railcar fleet adoption required “additional investment” and therefore “urged Congress to provide financial incentives to help railcar owners equip railcars faster.” Put differently, RailPulse urged Congress to provide additional taxpayer dollars, via resources like CRISI grants, to help justify the cost of equipping all railcars on the rail network with GPS. Commercial-grade GPS devices can cost anywhere from $50 per sensor to a few hundred dollars. While not inherently wrong, this request seems contradictory and hypocritical, given the execution, justification claims, apparent urgency of and the price of this merger.
Why would we not finish equipping the railcar fleet with GPS to see if that helps fix interchange coordination (hint: it will) faster before spending $85 billion on a peer railroad? The only mode of commercial transportation that does not fully use, embrace or view real-time location information for all vehicles as an operating requirement, in 2025, is the rail industry. This is a fixed cost of doing business in our modern transportation economy now. It is not an “investment” decision.
This means that the Canadians again are correct, specifically Keith Creel. He, Joe Hinrichs and Katie Farmer are (and now unfortunately were given Joe’s disgraceful replacing) all right: There are other ways and options to improve interchange coordination and performance before needing to merge. While this merger may be an option, it is not the best, easiest, smartest or fastest immediate option available. More coal.
Why? Zoom out. Ignore the names, the people and the color schemes. Let’s look at the rail system in its entirety. Regardless of trackage rights, ownership and operating rules, there are bedrock facts that are true. First, the track network is one physically connected network. Second, like a stone thrown into a pond, there is a ripple effect on the global network when a disruption occurs anywhere on it. This concept is called schedule delay propagation: Like a wreck on a highway forcing cars to slow, when a disruption occurs on a rail network, regardless of the cause, the schedule delay causes “traffic,” i.e. other trains on the system, getting delayed.
For a railroad, unlike a city street network with alternate route options available to route around the delay by turning left or right on a side street, rail delay schedule propagation is more rapid and consequential. Like a glass cup is more prone to breaking and shattering when dropped than a plastic one, rail network delay propagation has a more disruptive impact on the traffic flows of a rail network than a car wreck does on the flows within a city. While a traffic jam may be caused by a wreck on a street, with advance knowledge a delivery driver can take a different route to avoid it. Doing so mitigates the impact of the blocked street and maintains on-time performance quality for the driver, and for the delivery service. A rail network does not have that physical luxury.
The best way to grow a delivery service is to maximize and optimize for the only delivery service customer satisfaction quality metric that matters: on-time performance. Our rail system as it exists today does not and currently cannot do this. But it could and should. Why? Our final scoop of coal into the firebox. It is time to begin releasing the power and potential of U.S. rail.
Railroads have a reputation of being abrasive, unreliable, complacent, shortsighted, myopic, monopolistic and decaying companies dominated by old ideas, old ways and legacy technology they never want to change and therefore cannot grow. While harsh, I believe this industry has much greater potential. The rail system today is fragmented into isolated regional operating fiefdoms, like ancient castles, with closely guarded moats and gates. They seem to believe their castle moat, which is isolation and control, via a preference of ownership and self-sufficiency of almost all mission-critical systems, innovations, business processes and spending priorities, will not have to meaningfully change, despite the decade of decline, to ignite trajectory-changing growth. That belief is wrong. Many customers have already given up on rail. Some of the best minds in the industry have left or are leaving. Rail integrity has been seemingly lost, and its reputation has been damaged. No one really wants to work for railroads anymore. The PSR-caused non-financial costs and decay in morale, reputations, relationships, turnover, layoffs, experiential knowledge loss, perceptions, trust, and the spirit of this industry that made it so great when I joined it, have been huge. When leaders fail to or are not allowed to lead properly, the long-term consequences are severe. This is the rail industry right now. And this merger is the surrender, not securing, of our industry’s growth future. Our fire is ready. Time to start the air compressor and unleash the steam.
Drop the fight over the common carrier obligation. Support an updated and quantified common carrier obligation, with a reasonable but ambitious on-time performance target as the quantification metric used to define the standard for rail service quality in not only the U.S. but also Canada and Mexico. Unlike this $85 billion merger, the upfront cost of doing this, to all railroads, is basically $0. Yes, it will require investment to adapt, evolve and adjust to the new standard, but this investment is no longer an option if rail ever wants to meaningfully grow. The decision to support doing this can be made immediately and communicated accordingly within a week from reading this. Yes, the industry will also need to evolve technologically. But the down payment for this digital evolution has been made, and this evolution has been under way for years thanks to the rail tech ecosystem. And it will pay off.
That one signal to the entire market, and that one decisive action, by the employees who are largely and currently responsible for this industry’s future prosperity, will ignite the growth era, and secure our rail industry’s future forever.
Railroads, and specifically rail operational leadership, don’t want or like this kind of accountability. The railroads have fought this update litigiously with intensity for a long time. But growth must be earned. And accountability is not only needed but also required for growth. Without real action with conviction toward change and progress, rail customers will never be the advocates the railroads need in the marketplace to grow. This mindset must change. Why? Do you hear the steam?
Meritorious, transparent and accountable railroading is required to, and will, unleash rail growth. Elite railroading is required to grow. To a rail customer, or to anyone purchasing the services of any delivery service, the true thing you want is for it, whatever it may be, to arrive on time. Need to catch your flight? You plan how early you need to be there and plan your delivery service trip request from a service like Uber accordingly, to be there on time. The speed of the transport is not what matters above all else, nor will a reduction in a few days at a few interchanges spark massive growth for one railroad, much less the rail system, or its ecosystem, in its entirety. The rail industry’s most potent and exploitable marketplace advantage is not speed, it is reliability. It is on-time performance. But that is not possible without system-wide real-time location information, which exists today in every other modal transport option on Earth thanks to cellphones. Had UP leadership understood this, RailPulse would not be asking Congress for taxpayer dollars for GPS. It would be paying for it themselves.
The new rail tech industry formed because of and in the era of PSR. The constriction of spending left rail technological progress underserved and undeveloped. Barely any innovative and new technology was being built to help railroads grow with. No risk for progress was happening. Young railroaders like me saw this and filled the gap. Short lines enabled us to do so. We build and explain what railroads need to use to grow, not what they want to use to operate as they always have. We aren’t disrupting for disruption’s sake. We aren’t some of the most vocal railroaders in this industry for no reason. Our futures are already extremely attached to this industry’s prosperity. Until Class I railroads feel the same healthy pressure we do to improve, build and progress, they never will, and this industry’s growth future will be lost.
The PSR era, and the financial results of the PSR era, would never have happened if railroads were liable, at some reasonable level, for the many severe and expensive operational failures they caused. Until real accountability exists in the U.S. rail system, forcing railroads to identify and fix their hardest problems, the businesses will continue to exploit and at worst abuse their worst monopolistic market power temptations, like runaway trains.
To insert absolutely necessary rhetorical precision into this historical moment: UP will have more options; no one else will. UP will grow, the industry will not. This is not inherently wrong, for JimVena is doing his job. But words matter, just like the one in the Common Carrier obligation that holds this industry back: “reasonable.”
In July 2025, the 7th Circuit Court vacated the STB’s rulemaking attempt to enforce objective reliability standards via reciprocal switching. Quantifying the Common Carrier obligation with on-time performance, and holding U.S. railroads to a high-quality service standard, is the correct and only answer to the question: how to get the American rail industry, the North American rail system, and the entire rail ecosystem full of stakeholders who want it to prosper, to grow. Not a merger. Time to get rolling and blow the train horn.
Alex Luna is the Founder and CEO of AlphaRail, a 2020 Creative Destruction Lab Quantum Computing Stream graduate and the only rail-focused founding member of the United States Quantum Economic Development Consortium (QED-C). Alex started his rail career as an intern on Norfolk Southern’s Ag Marketing team. After modeling and renewing $1.6 billion in rail customer contracts as the Market Manager for Norfolk Southern’s sweeteners commodity franchise, the railroad’s’ most profitable agriculture franchise, Alex left to start AlphaRail to bring high performance algorithmic and computing technology into the rail industry to improve the quality of rail service that rail customers experience. Alex holds a BS in Supply Chain Management and Business Analytics from The University of Tennessee, Knoxville, an MBA from Vanderbilt University, and Venture Capital Executive Education from The University of California Berkeley. He also serves on the Use Case Technology Advisory Committee for the US QED-C.
