Commerce Secretary Howard Lutnick said he’d support consolidation as a means to make the U.S. freight rail industry more efficient, a potential boost for Union Pacific's $72 billion takeover of Norfolk Southern.

The rail industry’s current system of interchanges in the middle of the country creates bottlenecks that should be alleviated, Lutnick said in a CNBC interview on August 19. 

“Whether that should be through a merger or in any other way, I’ll leave that to the regulators and the overseers,” Lutnick said. “But the concept of making it more efficient to get across the country is obviously something that we applaud.”

Union Pacific announced an agreement in July to purchase Norfolk Southern for roughly $72 billion in cash and stock. Combining Union Pacific’s network in Western states with Norfolk Southern’s East Coast tracks would create the first continuous transcontinental U.S. railroad, a tie-up the companies have said will enhance competition with the trucking industry and Canadian railroads.

The agreement is now set to be reviewed by the U.S. Surface Transportation Board, the rail agency’s economic regulator. U.S. rules require rail mergers to show that a deal would serve the public interest and enhance competition, a step beyond merger requirements applied to other industries. The companies are aiming to complete the deal by early 2027. 

Lutnick said the review process wasn’t “my place to weigh in” and would let the agency and other parties do so themselves.