This is the second in a five-part series about railroad growth coming from truck conversions. Given Union Pacific’s proposed acquisition of Norfolk Southern, the Dec. 19, 2025 application predicts there will be more than two million trucks converted to rail from this new network within three years. Based on my professional experience as a former Union Pacific executive focused on growth over much of my tenure, I wanted to analyze and opine based on my own experiences. In Part 1, we established that a 0.75% carload growth goal over five years (UP says three) could be achievable. From my own professional analysis performed from 2016 through 2018, the Watershed markets do provide underpenetrated opportunity, but the amount of time to reap those conversions is likely much longer than the five years I postulated, let alone the three years positioned by the application. The Carload Watershed Market is roughly 150 miles west and 100 miles east of the Mississippi River Valley, where major East/West rail interchanges such as Chicago, St. Louis, Memphis and New Orleans are located. A shipper located in Texas on the UP moving goods to the East will ship to one of these four principal Interchanges for connection to an eastern carrier. (More about this in Part 4 regarding competition and why it would be decreased in this transaction as currently prescribed.) The Watershed is formed largely due to the practicality of railroad costs and resulting pricing. Before insiders cry foul, no, I’m not saying railroads perform cost-based…
