From the Chicago suburbs to short line railroad companies, proposed merger heightens concerns
When Karen Darch started agitating in 2007 for an underpass so U.S. Route 14 can pass beneath the Canadian National railroad tracks in Barrington, she had six children and no grandkids.
Nineteen years later, as workers are shattering the affluent quiet of her suburban street by pounding retaining walls for the underpass into place, she has seven grandchildren.
Darch says she can’t say how many grandchildren she’ll have when the half-mile, $94 million underpass is finally complete, hopefully by the end of next year.
But now, Darch is confronting a problem that could aggravate her grandchildren for decades to come.
That problem is a new round of mergers that’s putting the ownership structure of North American railroads through a blender and triggering a prolonged period of tension and uncertainty.
Union Pacific, in tandem with its $85 billion takeover bid for Norfolk Southern, has agreed to start running more trains over Canadian National’s suburban Chicago network. At the outset, this will include rerouting some trains now running through inner-city Chicago.
Darch, an attorney who served as Barrington’s village president for 20 years until last year, says she believes that sooner or later, the railroads will build a second freight track through Barrington, a suburb 35 miles northwest of Chicago. That’s because Canadian National has already spent years double-tracking the line to within 10 miles south of Barrington, she said.
In theory, rail experts say, this second track could mean dozens of additional Canadian National and Union Pacific freight trains rolling each day through downtown Barrington at 40 miles an hour, up from 20 currently.
That’s in addition to the 50,000 cars and trucks that converge on Barrington each day, and 800 daily school bus trips. Barrington also attracts 70 Metra commuter trains per day. Each of these blocks the main north-south and east-west streets through downtown for a few minutes as passengers come and go.
“If they build another track, there’s going to be a much greater impact than we’re feeling now, so more has to happen in response. We may need another underpass, or maybe two other underpasses,” said Darch in an interview last month. “And a greater portion of the funding should come from businesses that are benefiting from traveling the rail.”
For now, like everybody else associated with North American railroads, Darch is in suspended animation, waiting for corporate restructurings and regulatory deliberations that will profoundly affect their lives.
A case in point is Peter Gilbertson, chief executive and co-owner of Anacostia Rail Holdings Co., based in Chicago.
From his third-floor office overlooking the Art Institute of Chicago, Gilbertson owns and operates six small railroads and associated logistics companies in major U.S. cities like Chicago, Los Angeles and New York.
He started Anacostia from scratch in 1997. But today, he said, “our company could be at significant risk” because of strategic changes sweeping through the industry.
“Our main focus always has to be better service at a competitive rate,” Gilbertson said in an Aug. 3 interview. “And in fairness, Union Pacific says that’s one of the reasons they’re doing (the merger).
“On the other hand, I think most of the industry is focused now on these (restructuring) issues instead of trying to improve the product,” he said.
On Aug. 18, more than a year after Union Pacific first announced its Norfolk Southern bid, the federal Surface Transportation Board rejected the railroad’s request to withhold its traffic and market share modeling data. The STB also scheduled what could be an additional, yearlong review of the competitive impacts of the proposed takeover.
The combined company would have nearly 40% of the U.S. railroad market, but Union Pacific says its coast-to-coast service will lower costs so much that it can grab market share back from long-haul trucks.
According to Larry Gross, an independent analyst in Durango, Colorado, container trains captured just 10.3% of truck-size freight shipments longer than 600 miles in the U.S. in the first quarter of 2026, down from 12% in the second quarter of 2018.
“We are more confident than ever that creating America’s first transcontinental railroad is good for America,” Union Pacific CEO Jim Vena said in a June 27 news release. “The merger will provide our customers faster, more reliable, and efficient coast-to-coast service from day one.”
Underneath Vena’s salesmanship lies a harsh economic reality, said Rick Paterson, an independent railroad analyst in New York. “I think they understand the urgency to grow the business,” Paterson said. “We’ve had no material growth for 20 years in terms of industry volumes, which is obviously a problem that needs to be solved.”
On Aug. 11, seven state attorneys general — all Republicans — said Union Pacific hasn’t come close to showing how the merger will enhance competition, as STB rules require.
Major chemical and grain shippers have announced their opposition.
“At the very least, towns like Barrington shouldn’t have to wait 19 years to get relief from a rail merger,” said Ron Batory, the retired former head of Conrail and the Federal Railroad Administration.“ “Affected communities should study what happened in Barrington to preclude history from repeating itself.
“ The STB focuses on the public interest, thus the need to enhance competition is a key component,” Batory said. “Consolidating the diminishing roster of railroads regardless of evolving size could threaten the scale of options as known today and suffocate competitive innovation going forward.”
Growing short lines
The six Anacostia railroads Peter Gilbertson operates from downtown Chicago are called short lines because they operate on 760 miles of track in total. But they’re not for the faint of heart.
His railroads move freight every day through the dense industrial neighborhoods of Chicago, Los Angeles, New York, Houston, New Orleans and Louisville.
A former railroad lawyer in Washington, D.C., Gilbertson bought or acquired access to these small chunks of railroads that still seemed indispensable, even as a wave of railroad deregulation meant the U.S. was abandoning a third of its tracks starting in 1980.
All told, 603 short lines similar to Gilbertson’s operate in North America, according to their trade association. They grew their volume by 3.4% last year, according to Progressive Railroading magazine, while major or Class 1 railroads stayed roughly the same.
Short lines are growing, Gilbertson said, because they offer service that’s flexible, competitive and personal.
Gilbertson made his first acquisition when he bought the Chicago South Shore & South Bend Railroad out of bankruptcy court in 1990. Today the railroad has 60 employees and 182 miles of track and trackage rights along the southern shore of Lake Michigan. Its principal business is hauling high-value finished steel for Cleveland-Cliffs and U.S. Steel, but it has a dozen other customers who make building materials, chemicals and food products. It’s a separate legal entity from a commuter railroad, known as the South Shore Line, that also operates south of the lake.
The threat to the South Shore & South Bend comes from the pricing power that Vena’s Union Pacific may be able to wield if government officials approve its Norfolk Southern takeover.
Steelmakers and other major industrial customers may be able to get a better initial price by shipping directly on the combined railroad, said Todd Nuelle, Anacostia’s chief commercial officer.
The South Shore & South Bend also depends on being able to switch freight freely among all railroads operating on the Chicago network, Gilbertson said, and this could be adversely affected if the industry gets more concentrated.
Gilbertson said he’s not sure whether such losses, if they occur, would be offset by new opportunities that open up for Anacostia with a combined Union Pacific and Norfolk Southern.
He can’t answer these big, strategic questions because, 13 months after proposing the merger, Union Pacific still hasn’t filed an updated operating plan that would allow him to assess the impact on his railroads.
“I frankly hope the growth Union Pacific is proposing occurs. We really need it, and we want to be a partner there,” Gilbertson said. “But if their growth is simply taking away my business, that’s not doing anything for the industry.”
A mechanic works underneath a Chicago South Shore & South Bend Railroad freight locomotive at its rail yard in Michigan City, Indiana, on July 28, 2026. (Brian Cassella/Chicago Tribune) In another curveball, Gilbertson is also facing the loss of his contract to run dockside rail operations at Los Angeles and Long Beach, which together form North America’s busiest port complex. He’s held the contract since 1998.
Gilbertson’s involvement in the ports grew out of a series of chaotic mergers that in the 1990s led to endless disputes among shippers and the railroads about whose cargo would move first. The disputes grew so bad that the ports spent $370 million to buy back dockside tracks from the railroads, and then to hire Gilbertson’s company, Pacific Harbor Line, to act as an independent operator on the docks.
But in February, after a nine-month selection process, Gilbertson received a two-sentence email saying he’d lost his bid for a renewed contract. The winning bidder turned out to be a 50-50 joint venture between Union Pacific and BNSF. Warren Buffett’s Berkshire Hathaway owns BNSF, and the railroad is a fierce critic of Vena’s takeover bid for Norfolk Southern.
Gilbertson says he’s comforted by the fact that the joint venture called the Alameda Belt Line will hire many of his employees. But says he can’t see how Alameda Belt Line will be able to do any better than he’s done in running what he calls “the spaghetti bowl” of tracks in North America’s busiest ports.
In 2024, Gilbertson moved 2.9 million containers through the ports, and 47,800 carloads of assorted other shipments, including fully assembled automobiles, according to Oliver Wyman, a New York-based management consulting firm. Of the $2,939 cost of moving a container from the Pacific Ocean through to Chicago, Gilbertson’s portion for moving the containers through the ports was just $13 apiece, according to Oliver Wyman.
Gilbertson said he hasn’t raised his rates since 1998, except for inflation.
“The ports of LA and Long Beach are the largest traffic generators either railroad has on the West Coast,” said Andrew Fox, a Pacific Harbor line board member, referring to Union Pacific and BNSF.
“It’s just in the railroads’ DNA to want to exert as much control over them as possible,” said Fox, who ran Gilbertson’s dockside operations in Los Angeles and Long Beach for 13 years, ending in 2010.
“They sold out their control 30 years ago, and now they want it back,” Fox said. “And no institutional memory exists at either the railroads or the ports as to how bad it was before we got there.”
Art Marroquin, spokesman for the Port of Long Beach, said the two ports are still engaged in a competitive selection process for a short line rail operator and declined further comment.
Irresistible lure
In a swirling age of coast-to-coast railroad mergers, the freight tracks that run through Barrington are suddenly one of the hottest stretches of track in North America.
For most of their lives, the tracks were a sleepy industrial bypass known as the Elgin, Joliet & Eastern Railway. They run in a 164-mile arc through the Chicago suburbs from Waukegan in the north to Joliet in the south to Gary, Indiana, in the east.
U.S. Steel acquired the EJ&E in 1901 as a convenient way to move Wisconsin coal and iron ore around Chicago and into its Gary blast furnaces.
Darch started her railroad activism when Canadian National proposed buying the EJ&E in 2007. The acquisition boosted traffic to 20 trains a day through Barrington, up from three previously. They carry grain, ethanol and tar sands crude oil from Western Canada, plus containers straight from the Pacific Ocean port of Prince Rupert, British Columbia.
Darch remembers the emotional shock waves that rolled through Barrington during the Christmas holidays of 2008. That’s when the STB approved the Canadian National takeover of the EJ&E and ruled that Aurora and Lynwood would qualify for partial federal payments to pay for grade separations to keep trains safely away from land traffic — but not Barrington.
Darch became a fixture on the local television news. She helped raise at least $2 million in private donations for a legal fund. On one memorable night, she led 5,000 protesters who packed an STB hearing at Barrington High School.
Finally, in 2019, state and federal officials approved a $94 million underpass. Canadian National paid $5.1 million of this amount, Darch said, in keeping with a long-standing rule-of-thumb that railroads receive about 5% of the benefit of a grade separation, with the general public receiving the rest.
Union Pacific said in July it will start running an additional one to three trains a day on the EJ&E. The railroad plans to use Canadian National’s existing capacity for now, easing some congestion in Chicago. But the railroad acknowledged it’s considering capital investments to increase traffic on the line even more.
In a pair of linked agreements, the railroad gave Canadian National access to key stretches of track in Kansas City and along the Texas border with Mexico.
The EJ&E is proving an irresistible lure because today Canadian National can move freight across the Chicago region in just 12 hours, compared with 35 for other railroads that must pass through inner-city Chicago, according to Trains magazine. This turbocharges movement not just from the Atlantic to the Pacific oceans, but between Canada and Mexico as well.
Darch knows she can’t stop the increased traffic but insists trains and land traffic must be separated. That’s the same conclusion Chicago reached during the run-up to the 1893 World’s Fair. Hundreds of people were getting killed every year at street-level crossings, and to quell the public outcry, the railroads scrambled to elevate freight tracks citywide at their own expense.
The problem hasn’t become that extreme in the Chicago suburbs today. But Darch says it’s growing because certain sets of tracks, including the old EJ&E through Barrington, are becoming superhighways for North America’s transcontinental freight.
“The train has been wonderful for Barrington,” Darch said. “It would take the milk from the farmers into the city. And then it brought all those commuters.
“We live by the train, but I always say we don’t want to die by the train, too.”
John Lippert is a freelancer.