Panelists at our recent Railroad Roundtable projected weak demand for 2026. Tightening truckload capacity is encouraging but not impacting rates enough yet to gain confidence in rail pricing cycle. The Union Pacific/Norfolk Southern merger application is expected to pass Surface Transportation Board (STB) review, but our panel acknowledged the application is lacking in some details, especially on Committed Gateway Pricing (CGP). Reciprocal switching could enhance competition, but its final form and timing remain uncertain at this time. Our panelists unanimously expect weak core demand trends in 2026. A panelist from the largest Class II/III parent company sees tariff clarity and easier rates as necessary for underlying volume trends. Two shippers—chemical and building materials—attested to a weak demand environment, with the building materials shipper still cautiously optimistic for a better 2H26 vs. 1H26, but the chemical shipper has hopes pinned on 2027. The intermodal outlook was relatively subdued as well. Indeed, volume expectations appear to be anchored fairly low to start the year. On low throughput expectations, the panelists believe rail service should hold up well. The UNP/NSC merger application is expected to pass STB review per our panelists, though delays in approval would not be surprising. Even panelists that expressed concerns believe the application will ultimately pass. Our Class II/III panelist thinks additional detail is necessary for him to get confidence on competitive impacts, especially as it relates to the proposed Committed Gateway Pricing (CGP). Similar pricing schemes on the I-5 corridor have had very little uptake from shippers (also…
