Grain Industry Pushes Back on Union Pacific-Norfolk Southern Merger

Reuters found some transportation companies, like Union Pacific (UNP), collected more in fuel surcharges than they spent on fuel. UNP's Q2 2026 fuel surcharge revenue exceeded costs by $91.1M, adding $83.2M to profit. UPS and FedEx also raised surcharge percentages, but both say they're tied to fuel-price benchmarks. The investigation raises questions about how closely surcharges track actual fuel costs.

Union Pacific and Norfolk Southern submitted a merger application to the STB, claiming it meets regulatory thresholds and benefits the public. The companies argue the merger will improve efficiency, reduce emissions, and create jobs. The STB has set a procedural schedule for review. Both CEOs emphasized the merger's benefits for customers, employees, and the environment. The application includes customer protections and competition commitments.

Union Pacific (UNP) and Norfolk Southern (NSC) defended their proposed merger, stating it meets Surface Transportation Board (STB) requirements and benefits customers, employees, and the economy. They urged regulators to proceed with a full review, citing extensive evidence and potential savings. The STB's review process is ongoing, with a decision expected in late 2027.

Union Pacific collected $91.1 million more in fuel surcharges than it paid for fuel in Q2, boosting profits. The company is seeking regulatory approval for an $85 billion acquisition of Norfolk Southern, aiming for 42% market share. Critics argue the merger could reduce competition and increase shipping costs. Union Pacific's fuel surcharge revenue exceeded costs by $56.4 million in the first half of 2026, while rivals like BNSF faced higher fuel costs.

Norfolk Southern (NSC) stock has risen 21% over the past year, outperforming the S&P 500 and its industry ETF. Analysts expect 1.4% EPS growth for 2023, with a 'Moderate Buy' consensus. Wells Fargo set a $385 price target, implying a 5.1% upside. The company gained 2% after regulatory approval for a coast-to-coast freight network with Union Pacific.

Union Pacific (UNP) reported a $91.1M surplus from fuel surcharges in Q2, attributing $0.14 to EPS. This surpasses rivals like Norfolk Southern and CSX. UNP's proposed $85B acquisition of Norfolk Southern may face scrutiny due to this surplus, which opponents argue could indicate pricing power.