Railroads Industry Profile

The US railroad industry includes about 360 railroads with combined annual revenue of about $55 billion. Major freight railroads include Union Pacific, Burlington Northern Santa Fe, CSX, Norfolk Southern, and Kansas City Southern. Amtrak is the sole nationwide passenger rail service. The industry is highly concentrated: the top 5 companies account for about 90 percent of revenues.

The US government classifies freight railroads by operating revenue. The government's revenue standards are periodically adjusted for inflation; as of 2008, Class I railroads had revenue exceeding $401.4 million, according to the Association of American Railroads. Seven line-haul Class I railroads, including two Canada-based lines (Canadian National Railway and Canadian Pacific Railway), operate in the US. Class I carriers account for more than 90 percent of the industry revenue and about two-thirds of overall track mileage. About 30 regional Class II railroads typically operate routes of about 500 miles between two to four states. More than 500 shortline Class III railroads haul cargo 350 or fewer miles on local rail lines.

Commuter, switching and terminal, and tourist railroads are not included in the industry.

COMPETITIVE LANDSCAPE

Demand is driven by sales of bulk commodities and other items best transported by rail. The profitability of individual companies depends on operating efficiently and controlling maintenance expenses. Large companies have advantages in owning systems that connect numerous markets and enable them to serve national customers. Small companies can ...