Union Pacific , the largest U.S. railroad operator, said on Thursday it is in advanced talks with rival Norfolk Southern , signaling that a deal to form a $200 billion coast-to-coast rail company could be close - and potentially trigger further consolidation among remaining freight rail giants.

Stagnant volumes that have shifted to the trucking sector over the years appear to support the arguments for railroad consolidation.

Union Pacific and Norfolk Southern could announce a tentative merger agreement as early as this week, according to a published report. Bloomberg cited sources familiar with the talks in its report on Friday.