Union Pacific Corporation

We view Union Pacific’s moat as primarily efficient scale and cost advantage on long‑haul bulk and intermodal corridors across 23 western states. Reproducing rights‑of‑way and terminals is impractical, and network density lowers per‑unit costs versus trucking for heavy freight.

Component scores (weights in parentheses): Efficient scale 95 (35%), Cost advantage 85 (25%), Switching costs 85 (20%), Intangibles/rights‑of‑way and franchise 70 (10%), Network effects 60 (10%). Weighted average ~85. Durability is high due to physical network and regulatory barriers.

Risks to moat erosion include sustained trucking cost deflation from autonomous/EV trucks, stricter open‑access rules, or mandated reciprocal switching, though the STB’s 2024 switching rule was vacated by the Seventh Circuit in July 2025. The pending NSC merger could strengthen network reach but may be conditioned by regulators (potentially limiting pricing or requiring access concessions).