A yellow Union Pacific locomotive, number 6377, leading a train of double-stacked shipping containers past trees · Tyler Silvest from Olathe, Kansas, via Wikimedia Commons · CC BY 2.0

Article · 2026-10-23 · 3 min read · Railroads · Stocks

Union Pacific's fuel bill climbs as its merger review runs into 2027

Fuel costs weighed on a record quarter, and the Norfolk Southern deal still has no ruling on its merits; final briefs are due May 2027.

By the desk. Researched and written by an AI model from the sources listed at the end; nothing here restates another publication's text.

UNP Union Pacific Corp.direct NSC Norfolk Southern Corp.direct CSX CSX Corporationadjacent

What happened

Union Pacific reported on Thursday 22 October that its third-quarter revenue was up 15 percent to $7.2 billion, and its quarterly report filed the same day updated its Norfolk Southern merger review. ^{[1, 2]}

Why it matters

Fuel was the line that moved most: fuel expense was $1,040 million, against $616 million a year earlier. The company said higher fuel prices worsened its operating ratio by 140 basis points, or 1.4 percentage points. The merger still has no ruling on its merits from the Surface Transportation Board, and the 10-Q expects completion in the second half of 2027. ^{[1, 2, 3, 4]}

Where the review stands

The board, the federal regulator of railroad mergers, found the first application incomplete on Friday 16 January and accepted a revised one effective Thursday 28 May. On Tuesday 18 August it set a schedule and lifted the hold on the case, saying that step was not a ruling on the merits. ^{[2, 3]}

On Friday 18 September the board denied motions from BNSF Railway, CSX Transportation and a group of shipper associations asking it to reject the application early. The board said the decision was no endorsement of the railroads' arguments. ^{[2, 4]}

Union Pacific booked $22 million of merger-related expense in the quarter, against $41 million a year earlier, and $93 million in the first nine months of 2026. Either railroad may owe the other a $2.5 billion fee if the agreement ends in circumstances it describes, the 10-Q said. ^[2]

The quarter in the record

Net income was $2.1 billion, against $1.8 billion a year earlier. The operating ratio, operating costs as a share of revenue, was 59.1 percent against 59.2 percent; without the merger costs it was 58.8 percent. Revenue carloads grew 6 percent to 2.29 million, and intermodal loads, containers and trailers moved by rail, grew 11 percent to 956,000, the company and FreightWaves reported. ^{[1, 6]}

The company reported paying an average of $4.21 a gallon for locomotive fuel, against $2.56 a year earlier, and its 10-Q said fuel prices 'climbed to record levels amidst continued supply chain pressures'. Higher fuel surcharges, the charges passed on to customers as fuel costs change, were one reason it gave for the higher revenue. It burned 2 percent less fuel for the weight it moved. ^{[1, 2]}

What settles it next

Comments on the application are due Wednesday 18 November and responses Tuesday 16 February 2027, the board said. Union Pacific's account of the schedule adds preliminary comments from the Justice and Transportation departments by Thursday 3 December, a public hearing after Monday 29 March and final briefs on Friday 28 May 2027. ^{[3, 4, 5]}

The final decision is due within 90 days of the close of the record, a date not yet set, Union Pacific said. The press reads that differently: FreightWaves wrote that it pushes a decision well into the second half of 2027, while WOWT reported a final decision in the second quarter. ^{[5, 7, 8]}

Who it reaches

Union Pacific (UNP) is direct: it reported the quarter and is the buyer in the merger. Norfolk Southern (NSC) is direct: it is the railroad to be acquired, and its own board runs it until the deal closes, the 10-Q said. CSX (CSX) is adjacent: its rail unit filed one of the motions the board denied. ^{[2, 4]}

Sources

Every stock is a company; the desk grades the company behind the stock. This article describes; it does not recommend. Adjacent means the company is not named in the event and the path by which it is reached is stated above.

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