Transportation
Last updated: April 2008

Industry Codes
  • NAICS - 482111 – Line-Haul Railroads
  • NAICS - 482112 – Short-Line Railroads
  • SIC - 3743 – Railroad Equipment
  • SIC - 4011 – Railroads, Line-Haul Operating

Overview

The U.S. Department of Transportation (DOT) projects that total freight transportation demand will rise 92% from 2002 to 2035. In turn, significant reinvestments into infrastructure have been made. Money has been poured into improving tracks, building new routes, and straightening curves. These investments should increase speed and accessibility of rail options, thereby increasing demand.

Rail is the most fuel efficient mode of land transportation. On just one gallon of fuel, trains move one ton of freight 423 miles. Because of this, the industry has been much less affected by the rising price of oil than its biggest competitor, long-haul trucking. It is predicted that the longer fuel prices remain high, the more market share rail companies will be able to gain.

Despite the positive projections made by the DOT, there are concerns that rail car deliveries in 2008 will be down and locomotive deliveries will be flat. There are reports indicating freight shipments were down in 2007 in nearly every category. Car loads were down, and ton-miles were down.

The effect that new environmental standards announced by the EPA in March 2008 will have on the industry are yet unknown. These tough new standards mandate that particulate matter emissions decrease by as much as 90% and nitrogen oxide emissions by as much as 80%.

The industry is very concerned about efforts in Congress to reregulate it. They argue that this move will significantly adversely affect profits and, in turn, make it impossible to fund infrastructure improvements. There is no doubt that the entire industry will be monitoring The Railroad Competition and Services Improvements Act of 2007 closely.

Industry Condition – Fair to Average


Key Industry Indicators

  • Rail Freight: Revenue Ton-Miles
    In the third quarter of 2007, rail freight revenue ton-miles were up 0.16% over the same quarter in the previous year.
    Rail Freight: Revenue Ton-Miles. If you are a user with disability and cannot view this image, use the table version. If you need further assistance, call 800-853-1351 or email answers@bts.gov.
  • Index of Railroad Fuel Prices
    In December 2007, indexed railroad fuel prices were up 38.05% from the same month in the previous year.
    Index of Railroad Fuel Prices. If you are a user with disability and cannot view this image, use the table version. If you need further assistance, call 800-853-1351 or email answers@bts.gov.
  • Value of U.S. – Canada and U.S. Mexico Trade
    In December 2007, the value of U.S. - Canada trade by rail increased 1.63% over the same month in the previous year. The value of U.S. - Mexico trade by rail decreased, by 5.50% over the same time period.
    Value of US – Canada Trade
    Value of U.S. - Canada Trade. If you are a user with disability and cannot view this image, use the table version. If you need further assistance, call 800-853-1351 or email answers@bts.gov.
    Value of U.S. Mexico Trade
    Value of U.S. - Mexico Trade. If you are a user with disability and cannot view this image, use the table version. If you need further assistance, call 800-853-1351 or email answers@bts.gov.
  • New railcar pricing flat
  • DOT Freight Index
    The DOT reported that the freight transportation services index (TSI) remained at 111.5 in February, unchanged over the previous month. The index, which measures freight activity in the railroad, air freight, and trucking industries, was 66.6 when it was introduced in January 1990. It reached a high mark of 113.1 in November 2005. It has increased 9.2% over the past 5 years.
  • Carload Trafficking
    Carload freight on U.S. railroads was at 335,865 cars for the week ended April 26. This was 0.3% higher than one year earlier. This increase is being supported by strong grain and coal shipments.

Secondary Market

Overview

For the past several years, the value of used railcars has been supported by the escalating cost of new railcars and good volume. With concerns that the market has reached its peak, used equipment values are trending downward. Older equipment with higher levels of technological obsolescence is at greatest risk and much higher quantities of this equipment are expected to hit the used market in 2008. Some dealers report there has already been some slippage in the value of used locomotives of about 5% to 10%.

Used Equipment Values – Fair

  • Supply of used railcars – Increasing
  • Demand for used railcars – Decreasing

Industry Experience

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Success Stories

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