Letter from the Editor

By Mark Szakonyi

The US West Coast in the last two years has stemmed the bleed of discretionary cargo.

The planned transcontinental merger of two major US railroads may incentivize more US West Coast routings and increase competition with the Port of Vancouver for Midwest markets. That would come after West Coast ports over the past decade lost share to East and Gulf coast gateways and to ports in Western Canada.

The efficiencies from merging Union Pacific Railroad( UP) and Norfolk Southern Railway( NS) would make cross-country shipments from the West Coast to markets east of Chicago more cost feasible. The merger, if approved by regulators, would also allow the combined entity to directly serve markets in Detroit and Indiana currently served from the West Coast via Canadian National Railway’ s( CN) connection to Vancouver.

A single transcontinental operator could open so-called watershed markets in the Ohio Valley and the region straddling the Mississippi River thanks to more efficient operations in Chicago and other Midwest hubs without needing interchanges, said Vann Cunningham, a former associate vice president of economic development at BNSF Railway. Merging the two networks, including their IT systems, would eliminate interchange moves that normally take 24 to 48 hours, cutting operating costs and offering shippers a faster option than the all-water route via the Panama Canal to East Coast ports, Cunningham said.

The merger would give the Port of Los Angeles“ access to the most populous third of the nation that has been otherwise stitched together through hands-offs,” Gene Seroka, executive director of the busiest US container port, told the American Journal of Transportation in August.

UP-NS could drive more volume through the Alameda Corridor, and the impact on single-line operations and pricing is being analyzed, said Michael Leue, CEO of the Alameda Corridor Transportation Authority. But Leue cautioned that the authority would work to ensure that any cross-country networks don’ t take the focus away from converting more truckload freight to rail volumes in the West.

“ The eastern carriers have successfully grown their [ inland point intermodal ] share by developing logistics centers and short-haul markets,” he said.

The US West Coast in the last two years has stemmed the bleed of discretionary cargo to all-water routing through the Panama Canal, largely due to the labor threats that hobbled East and Gulf coast ports in late 2024, as well as US importers rushing to get imports into the country ahead of tariff deadlines.

In the first eight months of 2024 and 2025, about 59 % of laden US imports from Asia landed on the US West Coast, up from with 56 % in the same 2023 period, the lowest share in the last decade, according to PIERS, a sister product of the Journal of Commerce within S & P Global. In 2015, nearly 65 % of US imports came through the US West Coast.

How much greater traction US West Coast ports can gain in watershed markets also hinges on rail flow at their terminals. West Coast ports in the last two years have handled peak season volumes better than in previous years thanks to increased cooperation among stakeholders, better demand forecasting and infrastructure improvements.

Those gains can easily slip if Western railroads don’ t provide enough railcars, causing congestion at the marine terminals. A merged entity reaching a Midwest market via the US West Coast may force CN and Vancouver to become more competitive, but there’ s no guarantee that it would target such international intermodal business.

Rail analyst Paul Tonsager was skeptical that the merger will affect West Coast ports, arguing that a transcontinental line may actually encourage East Coast routings. Potential deals between medium-sized East Coast ports and carriers could incentivize routings, he said.

Ultimately, ocean carriers focus on price over services, and the low margins from international rail business pale compared to higher-paying chemical and other bulk business, disincentivizing bold intermodal moves and investments, said Tonsager, a former executive at CN and Maersk.

The cost to move an ocean container cross-country via rail is over $ 2,000 versus $ 600 to $ 700 for trucking it from an East Coast port into the Ohio Valley area, according to estimates from various sources. With ocean container rates approximately $ 1,000 higher for East Coast versus West Coast routings, a merged railroad would need more operational savings and to be willing to pass it to ocean carriers and their customers.

In the meantime, the other Class I railroads have rushed to launch jointly operated services to better compete with a merged UP-NS. While such arrangements can attract more cargo, they can’ t deliver the interchange efficiency of a single transcontinental operator, and eventually, the balance of benefits to both railroad partners favors one network over the other, several rail analysts told the Journal of Commerce. Grinding operating efficiencies out of a single transcontinental line is ultimately more beneficial, but that’ s just one factor in the equation favoring West Coast routings.

email: mark. szakonyi @ spglobal. com

4 Journal of Commerce | October 6, 2025 www. joc. com