Union Pacific at Baird Conference: Strategic Merger Insights

On Tuesday, 11 November 2025, Union Pacific Corporation (NYSE:UNP) participated in the Baird 55th Annual Global Industrial Conference, presenting a strategic overview of its operational and financial status. The highlight was the proposed merger with Norfolk Southern, aimed at enhancing competitive edge and operational efficiency. While the merger promises growth and improved service, it also faces scrutiny over competitive impacts.

Key Takeaways

• Union Pacific plans to merge with Norfolk Southern to create a coast-to-coast rail network.
• The company halted a $4.5 billion share buyback to focus on debt reduction.
• Union Pacific achieved the best operating ratio in the industry and improved safety metrics.
• The merger aims to reduce customer reliance on third-party logistics and enhance service efficiency.
• Union Pacific projects significant growth, both standalone and post-merger.

Financial Results

• Operating Ratio: Union Pacific reported the best operating ratio in the industry, indicating efficient cost management.
• Share Buyback: The company suspended its $4.5 billion share buyback program to prioritize financial stability.
• Debt Repayment: Union Pacific repaid $1 billion of debt in the last quarter.
• Growth Projections: As a standalone entity, the company anticipates high single-digit to low double-digit growth over the next three years.
• Dividend: The current dividend stands at $2.44.

Operational Updates

• Service Levels: Union Pacific maintains high service levels, with some metrics reaching 100%.
• Safety Improvements: The company has reduced its accident rate by over 20%, aiming to become the safest railroad in the U.S.
• Technology Use: Leveraging technology to boost efficiency remains a priority.
• Adaptability: Union Pacific shows adaptability in managing tariff policies and fluctuating coal volumes.

Future Outlook

• Merger Rationale: The merger with Norfolk Southern is designed to enhance competitiveness against the trucking industry and other major railroads.
• Growth Expectations: The merger is expected to drive growth beyond current projections, offering strategic advantages.
• Competitive Edge: Union Pacific aims to strengthen its position against competitors like Berkshire Hathaway (BNSF), CSX, Canadian Pacific, and Canadian National.

Q&A Highlights

• Merger Benefits: The merger will streamline operations, reduce customer friction, and eliminate the need for third-party logistics.
• Watershed Markets: Opportunities in central U.S. markets will expand by removing the need for short-hauling and interchange.
• Competitive Response: Competitors’ joint service announcements are seen as less reliable than a full merger.

Readers are encouraged to refer to the full transcript for a detailed account of the conference call.

Full transcript - Baird 55th Annual Global Industrial Conference:

Dan Moore, Senior Transportation Analyst, Baird: Moore, I'm the senior transportation analyst here at Baird. I'm part of the executive leadership team, a substantive part of the executive leadership team at Union Pacific that's joining us today. Very, very pleased to have you here. We're going to walk through some questions. I have a feeling it will have a way of taking it where it takes us, if history is any precedent. I wanted to start off just very big picture. Your arrival at Union Pacific several years ago as a consultant, and then ultimately as essentially Chief Operating Officer.

Jim Vena, CEO, Union Pacific: Did you just call me a consultant?

Dan Moore, Senior Transportation Analyst, Baird: I think there was a period there where you were described as a consultant, which I never really agreed with that view. In any event, I'd be curious to just frame the Union Pacific, the opportunities that you saw when you arrived, the things you wanted to achieve, the things you did achieve, and where Union Pacific is today relative to your initial views. Just kind of a post view of Jim Vena, and his arrival at UP, and where we find ourselves today.

Jim Vena, CEO, Union Pacific: OK. So listen, why don't we real quick, because I know we only have 30 minutes.

Dan Moore, Senior Transportation Analyst, Baird: Pardon me. We do have slideshow.

Jim Vena, CEO, Union Pacific: No, no, no.

Dan Moore, Senior Transportation Analyst, Baird: We're going right to the bottom.

Jim Vena, CEO, Union Pacific: That's right.

Dan Moore, Senior Transportation Analyst, Baird: If it takes us longer, Jennifer and I, than two minutes to tell you the story about the slides, then we do not know what we are talking about. This first one, you guys better read it. There are five pages of boilerplate now. It used to be one. Any time you go through a merger, there is somebody who wants to add about four pages. I think lawyers make a lot of money. Next page. Bottom line is, anybody that has followed us, best operating ratio, real good car velocity, real good operating ratio, number one in the industry for a while, service performance real high. Jennifer?

Jennifer, Union Pacific: My stuff is even quicker. Just a little timeline. Big week for us, though, this week on Friday is the shareholder meeting. It is for both us and Norfolk Southern. For Union Pacific, it is to approve our issuance of shares. After that, we will be working, obviously, we are already working on it. The next big milestone will be our application with the Surface Transportation Board. We are still expecting that to be early part of December, likely that first week. The process really begins then. We will be communicating with that. It is a very open process, so there will be a lot of opportunity for folks to understand what we are offering. Very convinced that it will be a strong, compelling case. Back to you.

Jim Vena, CEO, Union Pacific: The question you asked was interesting in that you said, with the work that you did with Union Pacific before, where are we today? What do I sort of see moving forward? Was that just the question?

Dan Moore, Senior Transportation Analyst, Baird: In essence, as a standalone, not as a merged company. The journey of where you started and where you find yourself today.

Jim Vena, CEO, Union Pacific: Right. Listen, I'd love people to be able to ask me questions, and Jennifer and I. That's why I come up to these things, is to get some questions asked. Let's pound through this as quick as we can. If you look at what we've done since I can only talk about when I showed up in 2019, I think Union Pacific operates at a way higher service level. In fact, our service numbers are very high. They're in the high 90s, and some of it at 100%. Remember, we measure what we sold the customer, not our own measure. It's, if we agreed to this, are we delivering that? Is there pockets that might have a problem? Yes. That sets us up pretty good as a standalone company.

Operationally, we figured out a way to be able to have the best margin, the best operating ratio in the business. We actually have a pretty complicated, I've worked at another railroad, not as many grades, not as much disbursement of traffic the way it moves, everything else. I think we've done a really good job of using technology and how we move ahead. We're very good, comfortable of where we are. You put those two, good service, good operations, financially in a good place, where we have good free cash flow. We stopped our share buyback. At the end of the day, otherwise, we were going to do about $4.5 billion this year of share buyback. We did that on purpose. We just paid back $1 billion of debt that came up last quarter on purpose.

It came up, and we had the cash to do that. Standalone, we stood to what we said at our analyst day that we were going to be high single digit to low double digit growth over the next three years. We had clear sight of that, no ifs, ands, or buts. That is who we are standalone. What we are standalone is high single digit. Let's just stay with that instead of the double digit. If we can be high single digit, our dividend this morning was at $2.44. You add the value of growth, EPS, plus what we have for I don't know. We're not a tech company. I think we're pretty good. We are a company that has assets, and heart, and value, and land, millions of acres of land. We were well set up all by ourselves.

Why are we doing this? Is that the next question? There, I answered the first one. I'm going to stop there. Otherwise, I could go on for another question.

Jennifer, Union Pacific: You mentioned safety, though, because that's been a good one.

Jim Vena, CEO, Union Pacific: Yes, absolutely. You have to be the three foundations. The foundations that we have to have is we also have to be safety. We are talking, we think the way the trend line is going this year, we are going to be the safest railroad in the United States of America when it comes to personal injuries. That is a heck of an improvement and a heck of a lot of work. We have dropped our accident rate down by over 20%. The trend line is accelerating. The slope is better. Good safety, in fact, great safety. Not that we are happy with exactly where we are. You always look for ways to improve it. Good fundamentals in the company financially. Good, great service. I would rate it as the best service in the industry.

You can see it from our car velocity and everything else we talk about. Operationally, I think we do a good job of being very efficient on how we use our assets and money. Anything else you want to add?

Jennifer, Union Pacific: No, you're good there.

Jim Vena, CEO, Union Pacific: Perfect.

Dan Moore, Senior Transportation Analyst, Baird: Operating metrics. You guys have got some great operating metrics. I think you've also shown yourselves to be really adaptive. I mean, you've worked through tariff policy, a tremendous amount of West Coast imports, been able to manage that really well. Coal volumes, up, down. I don't know that I've ever seen Union Pacific more adaptive, which probably puts you in a pretty good position to merge. That being said, we just maybe step back and talk a little bit about the rationale for the merger, the opportunity at 30,000 feet that you think it delivers, the network, customers, really the full value proposition that it offers.

Jim Vena, CEO, Union Pacific: OK. Fundamentally, everything that I just talked about in the answer to the first question had to be there. If you were not a safe operating railroad, if you were not efficient operationally, if you did not have the right service level, it would be a non-starter. You would never get it through the different regulatory groups, the FRA, and the STB, and politically be able to do that. We needed to have that. I think we have done a good job. We have done that by saying you need to have a buffer. A buffer means on assets and on what the railroad capacity is to be able to handle the swings up and down. We have done that. We are good where we are. If you take a look at it and frame where we are as a railroad industry, there are no ifs, ands, or buts.

The trucks are getting and going to be more efficient as they get more autonomous. They are testing them. This is not a pipe dream that you have pie in the sky and you think it might happen. It is happening. In the next few years, we are going to see that competition. The employee that drives the truck is a large piece of the cost that is tied to trucking. I am not saying that the railroads will replace everything a truck can do. In the markets that we are pretty good at right now, and the markets that we think we can grow, we need to be able to be better. That is why it is good for America. That is one. Two is, and we get, listen, I find it humorous.

I really do that we get railroads that operate across their country from one end to the other and have 90% of the railroad business for two railroads would have a problem if the United States of America would have the same thing, seamless coast-to-coast movement. I truly find it, I find it disconcerting. It bothers me that some people would be that vocal against this. OK? At the end of the day, people can say whatever they want. That's a bit. That's a benefit. Think about it. I don't know how many of you flew into Chicago and went to Midway or O'Hare. If you had to go to LA and you had to get off at the airport here, change airport, go from Midway to O'Hare to go to LA as you came from the east somewhere, how many of you would love to do that?

How many of you would have thought twice about, do I really want to go listen to these people? Think about the time and effort. I do not even want to ask you how many of you actually checked luggage because you were absolutely sure that that connection would have worked. OK? At the end of the day, it is good for America. We are able to compete better with the world. A lot of the products that we have that we move are not just competitive within the U.S. We are competing against others that have end-to-end network systems that want to move. We compete every day with ports in Canada.

Last time I looked, there's hundreds and hundreds of containers that come to the Canadian ports, and some of them from Halifax, all the way into the U.S., and are able to be then handed off and trucked to final destination because there's an advantage in Canada from going end-to-end, and whether it's from Vancouver. What we're going to be able to do is place our business, our ports, our employees in a much more competitive position to be able to compete against others. That is why we want to do that. Financially, absolutely. If we were going to, if we went through all of this and all we ended up with was that we were going to be at high single digit growth, then why do it? We wouldn't do it.

Makes no sense to go through this kind of transaction to end up with a railroad that's going to return to our shareholders exactly what the non-combined railroad is going to do. We see the benefit of this in long-haul moves and also moves from both sides of the Mississippi to open up markets for us to move. That is why we're doing this. I could keep on going for the other 17 minutes. One other point. It is good for America. Is it good for our customers? Absolutely. The more we dig into the details, it's truly amazing how many customers we remove touch points where we have to hand it off to somebody else, and they add 24-48 hours to it. We can move not just intermodal, but the boxcar and the tank car business and the merchandise business quicker. And employees?

If you guys can on the side, tell me about a railroad that guaranteed a job for every unionized employee when they're going through something like this. Please come up and tell me. Do not tell me about the one where the STB forced them to. Tell me about the ones that came out. I was not born naive. The reason we're doing this is we see the growth, and we see how we move ahead and grow the business, and we need the employees. We will use natural attrition if we have to sort of fix some of the bumps as we get more efficient. Good for customers, good for our employees, great for the country. It is, you know, when I talk to very senior people in the administration, and I tell them the story about what we're doing, they get it. They understand it.

All politics aside, they see they cannot believe, Dan. They go, you mean you do not operate from one end of the country to the other? No. We go to Chicago. We go to Memphis. We go to New Orleans. You mean if we want to move something, if we want to move copper from Arizona to the east, you have to hand it off to somebody else? Yes. Really? There are 1,000 trucks today that are going to move in Chicago from one railroad to the other by truck. When you tell them the facts and get away from the noise, right, people get it across the entire spectrum, even our customers. It is sort of fun. It is a great story. I cannot believe we did not do this 10 years ago. What do you think, Dan? We should have done it. You think it is a good idea, right?

I guess I don't get to ask you questions, do I?

Dan Moore, Senior Transportation Analyst, Baird: You can ask me any question you want. It seems like it's well-timed, right people, right place, right time. You've hit on a lot of what I'm about to ask. Maybe just taking it a step further, we've argued that if we saw one M&A transaction, we would almost certainly see a second. We haven't seen a second at this point. We've also argued that a transcontinental rail delivers a value proposition, potentially a significantly lower landed cost over time, lower variable cost, capital efficiency, fixed cost. You also go to the market with a singular marketing strategy. It's hard to place a I don't know what that means because we've never seen it before. I'd love for you to talk to that.

Technology is another thing, the seamless technology, the ability to have visibility over the entire network point to point. There is a lot here that we have not touched on, the watershed markets, the growth opportunities that exist. Can we take it one step further and talk about some of these other areas that should inherently be benefits that stem from the combination?

Jim Vena, CEO, Union Pacific: Yeah, you bet. Let's start with if you have a railroad that goes across the United States of America and touches the coast. Let's start with technology. OK? From the customer side, the customer point of view, what the customer is going to be able to do is have one relationship with one bill, with one touch point, and be able to see if that cross-country gives them, which it will, a faster service that drops their asset costs and also is able to have them carry less inventory. That's there. We will take the best of Union Pacific and the best of what Norfolk Southern has and implement it. Our gate technology, where people today can get into our facilities, like some of them do not even have to stop.

UP Go app, all the information in, go to one of our terminals where we're not talking about three trucks coming in. OK? They're streaming in. They walk right in. They know where they're going, where do they drop off, and they know where to come to pick it up. Those are all things we implemented net control a year ago, January. I joke around about it. I did say to them, why didn't you guys do that before I came back to work? Basically, they told me if they made a mistake, we were going to be in big trouble because you cannot turn the old system back on easily. OK? We did that because of all the work that the team did. We have the team that did. That is a big deal.

That's the fundamental system that runs everything else off of it, collecting money, real important, paying bills, keeping track of the cars, making sure that the regulated commodities are in the right place on the train, you name it, that system did it. We did it with no noise. I rather laugh, and I do. I find it humorous that some railroad who had a problem on their merger are sitting there talking about, oh my god, what happens if Union Pacific? I think we're smart enough to be able to go through this. Other people talk about 1995 and the SP. Any of you want to see the picture? I brought one with me because I've told people that I had big black hair, black curly hair, and a mustache. OK? That is a lifetime ago. Today's Veterans Day. OK?

Very important day for us to stop and think about everything that's happened in the 1900s. But son of a gun, do we still go back and think of what happened in 1914 or 1917? Yes, we should learn from it, and we should make sure we never make those mistakes again. But today, I think we understand at Union Pacific how we move ahead to do the things that are right. And I find it humorous but frustrating. But I guess if you don't have a good story, that's what my mother always told me. If you don't have a good story, try to tell another story that's a bunch of bunk and see if somebody else if it'll stick on the wall. OK? Jennifer, anything you want to add?

Jennifer, Union Pacific: Maybe one thing. No. Kind of piggybacking on the thing about you're reducing friction points for the customers. Right now, unfortunately, a number of our customers employ third-party logistics companies to have them stitch together that view of the end-to-end transportation, to have them review the bills that they're putting together end-to-end. We're eliminating that need. We're giving them the tools that they need, the one-stop shopping that they desire. That is why many go to trucking for short-haul moves or even spot moves, because it's much easier to just pick up that phone and call a broker and then have it handled end-to-end. We'll be able to do that now on an end-to-end basis that will give them the cost savings, the safety, the public benefits of rail that they're not able to access today as easily. It is a big deal.

Dan Moore, Senior Transportation Analyst, Baird: Watershed markets have been an area of focus. Could you just frame that one more time for us so we're clear on what the opportunity is for growth there?

Jennifer, Union Pacific: Yeah. When we talk about the watershed, we're really talking about that center part of the country where either side of the Mississippi or the Missouri, pick a river, whichever one you want, but where you're essentially being, if you're a customer who's in close proximity to one of those areas, one of the railroads is going to end up, we'll call it, short-hauling themselves. It might be a 200-mile move on UP's side, but maybe it's a 500- or 600-mile move on the NS today. You've got fixed costs on both railroads that need to be covered with that. It becomes very difficult economically for us to price that for that 200-mile move to cover our fixed costs.

When you think about the interchange that has to happen in between there and the time for that, that's something else that is money for our customers because that time that that freight has to spend there, there's a cost to that. That's not free. You eliminate that time piece. You eliminate having the two sets of fixed costs. It becomes much more economical for us and for the shipper to do that. That's a big market opportunity that we see opening up for us as part of this merger.

Jim Vena, CEO, Union Pacific: Right. Now, part of your question was about one merger or maybe going to another. At the end of the day, every company needs to decide what's the best for them and how they want to spend some capital and whether it's a good return. We've done the homework. And for Union Pacific, we're very comfortable. I think what we'll find when the votes all in this Friday and we announce it, I think our shareholders are going to understand what it is that we're doing and understand at a real high level from the preliminary numbers that we're getting that we're in a good place. At the end of it, do I think down the road the competition, what are we going to do to competition? We're going to be able to compete harder against Berkshire.

We're going to be able to compete harder against CSX, against Canadian Pacific, and against Canadian National. If we can put, and we know we can do that, faster service, real low incident rate, real safe railroad. We're going to be able to show the value to our customers in that any time they cross the Mississippi, they're going to have fewer assets they need and less inventory. That saves them money. Even if we just increase the rates at the regular whatever number it is that the market sort of will allow us to do that, they're going to benefit from that. They know that. We're going to open up markets for customers that today it's tough for them, like Jennifer was saying, to go from one side to the other. We are going to do that. There's no if.

This is not an if discussion. This is an absolutely that's there and possible. If anybody thinks I make up these, yes, we're going to do that, go listen to the first call in 2019 when I showed up in January. On the 14th of January, sorry, 7th of January, they announced me. I was on the first call. What I said was, this is what we're going to do. If somebody listened, go check those off. We are going to have the fastest service across the United States of America. We are going to have the least touch points where something can lose your luggage across the United States of America.

We're going to allow customers to win in the marketplace and win against people like Brazil that are trying to sell more soybeans into Mexico or trying to get a foothill into the U.S. in the eastern parts of the U.S. We're going to compete harder and have our customers and the states and the people that work for Union Pacific win coming across moving products. That is all there. Up to Berkshire if they want to do something. They have the cash. I think last time I looked, my wife, I asked my wife this morning, how much cash are they carrying? Because she's been a longtime shareholder. They are a great company. They made some great decisions. They made a couple of bad ones. I think on this one here, I'll leave that alone. I'll let somebody else decide that one.

Bottom line is they got $330 billion of cash available. If they wanted to buy something, they have it. It is up to them. As hard as they have come out of the gate telling things that are just completely like they put out a two-pager, and I have got it sitting in my bathroom wall next to the sink with the toothpaste. It is on the bathroom wall that says we are going to shut down 300 lanes. I go, really? Why would we shut off 300 lanes? First of all, we do not have 300 lanes like in Intermodal. There is not that many lanes, like one that goes north out of LA, another one that goes to Chicago, another one that goes to Memphis, another one goes to Atlanta. Like, what the heck lanes do we have?

I had to ask Kenny, are you hiding 290 lanes from me that I do not understand? They said we are going to shut down that many. I laugh. I find it interesting that Berkshire is coming after us that hard. In fact, why do I call them Berkshire? I will be honest so anybody can hear it. We are actually Union Pacific and we own a railroad. I am the CEO of Union Pacific and the CEO of Union Pacific Railroad. What is humorous about it is some people at Burlington Northern Santa Fe were taken aback that I would call them Berkshire. Last time I looked, that is the publicly traded company just like Union Pacific. I have to have some fun too. OK.

Dan Moore, Senior Transportation Analyst, Baird: I have another question I want to ask, but I'd also like to present the gallery with an opportunity to ask a question if anyone would care to ask one. Fair enough.

Jim Vena, CEO, Union Pacific: You know the way I think, Dan, and I've said this to the group, if all of you who heard me speak and have a little bit of fun, because we do have a little fun at Union Pacific. If you don't have any questions for me, you've agreed with everything I have to say. OK? I don't want to hear anybody write stuff that's against us going into it.

Dan Moore, Senior Transportation Analyst, Baird: Real quick, we've got two minutes left. One of the consequences of the proposed merger has been a flurry of joint service announcements, collaborations in the East from some of your competitors. Said differently, it seems like competition in the East is enhanced. Competition in the East has increased. What does that mean for the domestic intermodal market? What are the consequences of some of these announcements? How is Union Pacific responding to those announcements? That's all I got.

Jim Vena, CEO, Union Pacific: It is a great question. The timing is perfect for them. They have sat down and looked at it. They said, what happens when Union Pacific and Norfolk Southern get together? How do we compete against that railroad? They are trying to do service agreements. They are good. Service agreements are good. You can see what happened with the service agreement that Norfolk Southern had with Canadian Pacific over the Meridian Speedway. Kansas City forever used to allow an 11,000-foot train to operate. All of a sudden, when Canadian Pacific took over, and in the last few months, they decided to cut back the train size that was always handled before the merger and even since the merger. At the end of the day, that is the problem with those. Kansas City is saying to us, you are going to have to run two trains at Union Pacific.

We are going, if we have to, we will run two trains. That is the way it is. The first question we asked them was, why? What changed from five years of being able to run an 11,000-foot train from LA all the way into that market, and now you cannot? That is what you have to be careful with with some of those deals, is they break down and people look internally.

Dan Moore, Senior Transportation Analyst, Baird: Fair enough. I want to thank you for being here.

Jim Vena, CEO, Union Pacific: Thanks for having us.

Dan Moore, Senior Transportation Analyst, Baird: Appreciate the opportunity to ask questions. I hope the rest of the conference goes well for you. Safe travels.

Jim Vena, CEO, Union Pacific: Listen, thank you very much.

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