Retail’s logistics playbook is being rewritten. Again. Union Pacific’s proposed $85 billion acquisition of Norfolk Southern may seem like a rail-specific development, but it’s part of a larger pattern industry leaders can’t afford to ignore. It is yet another major adaptation for a supply-chain system already under pressure. If approved, the deal would create the first coast-to-coast freight railroad in the United States, reshaping how goods move across the country. But the implications go beyond rail.
It joins a crowded field of disruptors: labor strikes, reshoring, trade wars, Red Sea rerouting, and a logistics system still recalibrating from a pandemic-era whiplash. Retailers have spent the past few years rethinking how and where their products are made, stored, and shipped. This new deal is one more variable to consider. The ground is still shifting beneath retailers, and the companies that treat the transcontinental link as part of a broader logistics network, not an isolated event, will be better positioned to adapt.
Retailers with rail-heavy networks may need to reevaluate their long-term exposure. That doesn’t mean abandoning rail altogether, but it does require stress-testing the network for vulnerabilities and building in alternative routes and modes where possible.
Freight Network by the Numbers
For all the buzz about automation, air cargo, and autonomous trucks, the majority of retail goods in the U.S. still move the old-fashioned way by land: on railcars, trucks, and in containers stitched together in a national freight grid. That grid, however, is under increasing strain from volatility, consolidation, and conflicting priorities. Retailers aren’t relying solely on one mode anymore: they’re blending them, often dynamically, with varying success.
Rail moved nearly 27 percent of U.S. freight by ton-miles in 2023, making it indispensable for long-haul and bulk shipping. Yet its inflexibility with fixed routes, slower speeds, and limited digital visibility can make it a liability for time-sensitive retail inventory. Trucking, by contrast, accounted for around 41 percent of ton-miles in the same year, offering unmatched flexibility. But that flexibility comes with price swings tied to fuel, labor shortages, and regulatory shifts. These pressures have only intensified post-Covid.
What once felt stable is now part of an uncertainty. Cracks are showing across these networks: chokepoints at terminals, labor uncertainty, mismatched investment in infrastructure, and significant rate volatility have exposed vulnerabilities. The next phase of supply chain planning will depend on how business leaders adapt to a freight landscape that keeps evolving.
Tariffs, Trade, and New Logistics Math
Retailers are no longer planning supply chains around capacity and cost alone. Trade policy and tariffs now factor directly into routing decisions and network design. Tariff codes and customs classifications were once treated as back-office compliance matters. That’s no longer the case. In an era of shifting sourcing strategies and unpredictable trade policy, tariffs have become a frontline variable in supply chain planning, and freight networks are now expected to adapt in kind.
The proposed merger between Union Pacific and Norfolk Southern enters this landscape at a moment when many companies are already reconfiguring how and where they move goods. While tariffs on Chinese imports remain in effect, recent executive action added sweeping reciprocal duties: 35 percent on Canadian goods, 25 percent on Indian imports, and rates up to 50 percent on Brazilian, Taiwanese, and EU-bound products. These actions are significantly increasing landed cost risk for apparel, electronics, auto components, and other imported goods.
Brands are responding by diversifying sourcing, some nearshoring in Mexico and Central America, others toward Southeast Asia or India. As a result, inland intermodal routes, where rail plays a central role, are becoming critical to controlling customs entry points and duty timing, not just transit cost. But here’s the catch: Fewer rail operators could mean fewer routing options. That has consequences not just for transit times, but for tariff exposure. Retailers using bonded warehouses, free trade zones, or port-specific tariff strategies depend on tight control over where and when goods enter customs clearance. Slight delays or misrouting can shift tariff liabilities significantly, especially for seasonal or fast-moving goods.
Policy uncertainty adds another layer. As trade enforcement becomes more active and exemptions or reclassifications evolve, the friction between policy and operations becomes harder to ignore. Logistics isn’t just about moving goods anymore; it’s about managing regulatory risk, optimizing cost structures, and responding quickly when trade policy shifts mid-year. For executives leading sourcing, merchandising, or global operations, the key question isn’t just how tariffs affect product margins. It’s how freight strategy either supports or constrains their ability to respond.
How the Merger Could Reshape Retail Supply Chains
Past rail mergers, such as BNSF, Union Pacific, and Conrail, promised scale and efficiency. In practice, they often delivered short-term disruption and long-term bargaining power shifts. For retail leaders, this one raises familiar concerns: fewer partners to negotiate with, less pricing visibility, and more pressure on already-fragile timelines. In short, what’s at risk for retail leaders is cost predictability, speed, leverage, and flexibility. Even if rail isn’t your primary mode, the effects will ripple across contracts, inventory planning, and freight strategy.
For retailers, brands, and importers, the potential impacts of the merger span across six key areas:
- Lead Times: Theoretically, a unified coast-to-coast network could reduce dwell times at major interchanges like Chicago and Memphis. But in practice, rail integrations are slow and bumpy. Past mergers have led to short-term delays that disrupted inventory flow for quarters, not weeks.
- Costs: With fewer Class I carriers left, shippers may face less bargaining power and more exposure to rate increases. History shows that while rail carriers typically capture cost synergies, those savings rarely trickle down to the customers.
- Labor Risks: Every major rail merger has triggered workforce reductions and scheduling overhauls leading to union resistance and, in some cases, strike threats. This remains a high-risk area for retailers with narrow delivery windows or seasonal flows.
- Infrastructure Alignment: Merging two networks requires more than routing maps—it means aligning capital investments, yard operations, and intermodal terminals. Retailers relying on time-sensitive replenishment need clarity on how these assets will evolve, and whether upgrades will follow promises.
- Sustainability Implications: A larger, more efficient rail network could reduce carbon output per shipment. But without investment in cleaner engines or electrified lines, ESG benefits remain theoretical. Retailers seeking measurable emissions reductions will need more than a marketing slide.
- Operational Complexity: Integration often introduces more layers of communication and decision-making, especially during the transition. For importers managing port-to-shelf movement, the risk isn’t just delays, it’s missed signals, lost containers, and finger-pointing across disconnected systems.
The Surface Transportation Board (STB), chaired currently by Patrick Fuchs, an appointee of the Trump administration, will ultimately decide whether the merger serves the public good. While the board has signaled openness to consolidation in the past, for businesses that depend on freight daily, the more pressing question is whether this merger supports the speed, flexibility, and transparency modern supply chains require.
Strategic Signals Retail Leaders Should Track
Whether or not the merger clears regulatory hurdles, its announcement alone signals a shift in how freight will be negotiated, priced, and prioritized in the coming years. For retailers, brands, and importers, the key is to be proactive.
As rail networks consolidate, the number of partners at the negotiating table shrinks. That changes the balance of power, particularly for mid-sized and seasonal shippers who may have relied on regional carriers or competitive rate structures. The question isn’t just how to move goods, but how to maintain leverage in a market where options narrow and switching costs grow.
Retailers with rail-heavy networks may need to reevaluate their long-term exposure. That doesn’t mean abandoning rail altogether, but it does require stress-testing the network for vulnerabilities and building in alternative routes and modes where possible.
There’s also a broader question of engagement. Mergers of this scale are subject to regulatory review and public comment. The Surface Transportation Board may be the one issuing rulings, but shippers have the opportunity, through industry groups, public filings, and direct outreach, to make their supply chain priorities part of the review process. If you’re not at the table in STB reviews or trade coalitions, you’re reacting, not shaping.
For executives overseeing omnichannel growth, merchandising, or global sourcing, the logistics function is no longer just a cost center. It’s a barometer of risk. The most resilient organizations will be the ones watching these signals closely:
- Freight market consolidation
- Tariff and trade friction
- Infrastructure gaps and chokepoints
- Labor volatility
- The tightening link between ESG reporting and transport strategy
The freight system is shifting. Logistics planning is no longer just an operational task; it’s part of long-term business strategy. Companies that treat it accordingly will be better equipped to manage disruption and adjust with intention rather than urgency.
Tracking What’s Ahead
The Union Pacific–Norfolk Southern merger may take years to secure regulatory approval, but the signal is immediate: logistics is now a leading indicator of retail health. Supply chain choices shape everything from margin protection to product availability. For executive teams, the mandate is clear: treat freight not just as a function to manage, but as a strategic lens for navigating uncertainty.
For retailers, brands, and importers, the timeline is less important than the trajectory. Freight consolidation is accelerating. The implications of this deal won’t play out overnight. But they will surface through changing rate structures, shifting transit times, and evolving expectations around service and sustainability.
The decisions made now, around network design, partner diversification, and policy engagement, will determine how well companies are positioned for what comes next. Supply chain strategies can’t be static. This merger is one more reminder that logistics is no longer just a means to an end. Freight planning requires its own strategic plan.