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.

The combination of two large rail companies would create the first coast-to-coast network, but the deal could reduce competition.

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