When Congress passed the Bipartisan Infrastructure Bill, Americans were promised modernization of the country’s transportation network. Roads, bridges, ports, and supply chains were all supposed to emerge faster, stronger, and more competitive.
Several years later, the results do not match the promise.
Projects are slow to materialize, costs have ballooned, and much of the funding has been absorbed by planning, compliance, and state-level bottlenecks rather than visible improvements.
Spending bills allocate money, but they do not create incentives for cost control, integration, or operational efficiency. In practice, many of those incentives arise outside the federal funding framework.
By contrast, freight railroads are privately owned and financed. Investment decisions are driven by market demand and shareholder discipline rather than federal appropriations. Over the past decade, railroads have invested tens of billions of dollars annually in track, signaling systems, terminals, and intermodal capacity. Projects proceed only when they improve efficiency, reliability, or network performance.
Despite moving roughly 40% of the U.S. long-distance freight by ton-mile, freight rail received little direct benefit from the infrastructure bill. At the same time, a proposed private merger between Union Pacific and Norfolk Southern now requires federal approval from the Surface Transportation Board (STB). The review focuses on whether integration would improve or impair service quality, shipper access, and competition, especially in light of service disruptions following prior consolidation. The Board has paused the transaction while it evaluates the merger’s effects on congestion, network performance, and pricing for shippers.
While the transaction involves no federal funding, it has significant implications for how freight moves across the national rail network— implications that align closely with the objectives Congress articulated in the infrastructure bill.
Supporters of the merger argue that integrating the east-west rail systems would reduce interchange delays, lower dwell times at transfer points, and reduce network bottlenecks. Fewer handoffs and smoother coordination reduce operating costs and improve reliability for shippers. Economically, the proposal builds rail capacity by improving how existing infrastructure is coordinated, rather than by building new public assets.
That outcome aligns with the infrastructure bill’s stated objectives of improving transportation efficiency, strengthening supply-chain resilience, and reducing congestion. In this case, those gains would come from private coordination rather than federal spending.
From an economic perspective, consolidation matters if it adversely affects price and service quality. The relevant question for the STB is whether this merger would increase market power over shippers or reduce costs by eliminating coordination failures and operational friction.
Here, the economics point in the latter direction. Integrating the two rail systems would reduce transaction costs embedded in the current network, including delays from interchanges, repeated handoffs, and fragmented routing. Eliminating these frictions lowers operating costs and improves service reliability. When costs fall in competitive freight markets, those savings are passed through to shippers and consumers. On economic grounds, a transaction that lowers costs and improves performance is welfare-enhancing.
What makes this case particularly compelling is that these gains come without federal spending. The merger would expand effective transportation capacity using existing infrastructure rather than new taxpayer-funded construction.
And the uncomfortable truth is that Washington has struggled to deliver infrastructure at scale, even with historic funding levels. Environmental reviews, procurement rules, labor mandates, and overlapping jurisdictional approvals slow projects to a crawl. The result is not only delay, but diminished ambition, as agencies optimize for compliance rather than performance.
Private infrastructure investment occurs where demand is clear, efficiencies can be realized, and long-term returns justify the upfront cost. Freight railroads cannot pursue symbolic projects or absorb persistent inefficiencies. Investments must improve reliability or lower costs, or they fail financially and impose real consequences on management and shareholders.
None of this suggests that regulatory scrutiny is unnecessary. Oversight remains essential to protect competition, ensure fair access for shippers, and prevent abuses of market power. The role of the STB is to ensure that integration improves service and lowers costs and does not restrict competition.
On economic terms, the proposed merger is positioned to deliver the type of infrastructure improvement policymakers passed four years ago, without relying on public funds.
Danielle Zanzalari is an Assistant Professor of Economics at Seton Hall University. She is a financial economist whose work bridges academic research and real-world policy. Before joining Seton Hall University, she served as a Financial Economist at the Federal Reserve Bank of Boston, where she contributed to the design and validation of econometric models used in bank stress testing across the Federal Reserve System. She later worked as Vice President of Credit and Portfolio Risk at Citigroup, managing model risk oversight for CCAR submissions. Dr. Zanzalari’s research focuses on banking, financial markets, public policy, and regulatory outcomes. She conducts policy work on New Jersey’s economic and regulatory challenges, including fiscal reform, energy policy, and health care—including a focus on improving the financial sustainability of New Jersey’s teacher retirement plan. Her peer-reviewed publications appear in journals such as Applied Economics, Public Finance Review and the Review of Financial Economics.
