Railroads
Description
Companies in this industry transport freight and passengers by rail. Major companies include Amtrak, BNSF Railway, CSX, Norfolk Southern, and Union Pacific (all based in the US), along with Deutsche Bahn (Germany), East Japan Railway (Japan), RZD (Russia), and SNCF (France).
The global rail transportation market is forecast to reach about $436 billion by 2030, at a 5.5% compound annual growth rate (CAGR), according to Grandview Research.
The US railroad industry includes about 600 freight railroads with combined annual revenue of about $80 billion, according to the Association of American Railroads (AAR). 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 compete effectively by serving local markets.
The US government classifies freight railroads into three classes, based on operating revenue. Six line-haul Class I railroads -- BNSF Railway, CSX Transportation, Norfolk Southern, Union Pacific, Canadian National Railway, and CPKC -- operate in the US, according to the Genesee & Wyoming Inc.
Freight railroads compete mainly with barges, pipelines, and trucks to transport commodities, and with trucks to transport finished goods. Passenger train services typically compete with airlines, bus services, and automobiles.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major services are the transport of commodities, including coal, grain, crushed rock, and chemicals; containers of consumer goods; automobiles; and passengers. The overwhelming majority of railroad revenue comes from transporting commodities. Container transport, also known as intermodal rail traffic, moves consumer goods to ships and trucks without unloading the freight from containers between modes of travel.
Moving commodities by rail begins at the source of raw materials. Trains typically carry only a single commodity from its origin to the line's terminus. Intermodal rail travel typically begins at port with cranes moving mixed consumer goods in containers from ship to railcar. The trip terminates at a classification yard, where cargo is diverted or unloaded, and train cars are uncoupled and either moved to storage tracks or reassembled for a new route. The time required for this final process, known as terminal dwell, is an important measure of railroad efficiency. Class I trains spend an average of 24 hours in terminal dwell.
Freight cars come in many forms. Autoracks are multi-level cars that transport automobiles. Well cars are designed to carry shipping containers; some cars allow containers to be double-stacked. Tank cars carry bulk liquids and gases. Boxcars are versatile cars used to transport general freight. Flatcars hold loads that are too large to be enclosed in boxcars. Hoppers have opening doors on the underside of the car to transport and discharge loose commodities such as coal, grain, ore, and ballast. The average freight car capacity is between 70 and 100 tons.
Important operating metrics include average line-haul speed or velocity, a measure of train efficiency, and ton-miles, the movement of one ton a distance of one mile. Average velocity for a Class I railroad is about 25 miles per hour. Revenue ton-miles, on the other hand, are the total number of ton-miles moved within the industry or by a single company. The railroad industry moves around 1.6 billion tons annually across about 140,000-miles of privately owned infrastructure, according to AAR.
Railroads invest heavily in infrastructure needs: steel, concrete, wood, and rock ballast for rail lines; signal cables; new locomotives and rail cars; and switch and cross ties. State governments often subsidize the investment in track infrastructure. Amtrak, the sole nationwide passenger travel service in the US, operates mainly over lines controlled by freight railroads.
The global rail transportation market is forecast to reach about $436 billion by 2030, at a 5.5% compound annual growth rate (CAGR), according to Grandview Research.
The US railroad industry includes about 600 freight railroads with combined annual revenue of about $80 billion, according to the Association of American Railroads (AAR). 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 compete effectively by serving local markets.
The US government classifies freight railroads into three classes, based on operating revenue. Six line-haul Class I railroads -- BNSF Railway, CSX Transportation, Norfolk Southern, Union Pacific, Canadian National Railway, and CPKC -- operate in the US, according to the Genesee & Wyoming Inc.
Freight railroads compete mainly with barges, pipelines, and trucks to transport commodities, and with trucks to transport finished goods. Passenger train services typically compete with airlines, bus services, and automobiles.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major services are the transport of commodities, including coal, grain, crushed rock, and chemicals; containers of consumer goods; automobiles; and passengers. The overwhelming majority of railroad revenue comes from transporting commodities. Container transport, also known as intermodal rail traffic, moves consumer goods to ships and trucks without unloading the freight from containers between modes of travel.
Moving commodities by rail begins at the source of raw materials. Trains typically carry only a single commodity from its origin to the line's terminus. Intermodal rail travel typically begins at port with cranes moving mixed consumer goods in containers from ship to railcar. The trip terminates at a classification yard, where cargo is diverted or unloaded, and train cars are uncoupled and either moved to storage tracks or reassembled for a new route. The time required for this final process, known as terminal dwell, is an important measure of railroad efficiency. Class I trains spend an average of 24 hours in terminal dwell.
Freight cars come in many forms. Autoracks are multi-level cars that transport automobiles. Well cars are designed to carry shipping containers; some cars allow containers to be double-stacked. Tank cars carry bulk liquids and gases. Boxcars are versatile cars used to transport general freight. Flatcars hold loads that are too large to be enclosed in boxcars. Hoppers have opening doors on the underside of the car to transport and discharge loose commodities such as coal, grain, ore, and ballast. The average freight car capacity is between 70 and 100 tons.
Important operating metrics include average line-haul speed or velocity, a measure of train efficiency, and ton-miles, the movement of one ton a distance of one mile. Average velocity for a Class I railroad is about 25 miles per hour. Revenue ton-miles, on the other hand, are the total number of ton-miles moved within the industry or by a single company. The railroad industry moves around 1.6 billion tons annually across about 140,000-miles of privately owned infrastructure, according to AAR.
Railroads invest heavily in infrastructure needs: steel, concrete, wood, and rock ballast for rail lines; signal cables; new locomotives and rail cars; and switch and cross ties. State governments often subsidize the investment in track infrastructure. Amtrak, the sole nationwide passenger travel service in the US, operates mainly over lines controlled by freight railroads.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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