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December 2011

Rail News: Rail Industry Trends

Rail industry data and trends from Progressive Railroading December 2011


STB Determines Only One Class I Was 'Revenue Adequate' In 2010

Only one U.S. Class I — Union Pacific Railroad — was "revenue adequate" in calendar year 2010, according to the Surface Transportation Board's (STB) annual calculation of the freight-rail industry's average cost of capital. All other Class Is were found to be "revenue inadequate" for the year, the STB announced Nov. 3.

Still, 2010 was a better year than 2009, when the STB determined no Class I met the revenue adequacy threshold.

The STB considers a railroad to be revenue adequate if it achieves a rate of return on net investment equal to at least the current cost of capital for the industry, which the board determined to be 11.03 percent in 2010, STB officials said in a prepared statement.

UP's board-determined rate of return on net investment was 11.54 percent in 2010. The other Class Is' rates were: Norfolk Southern Railway, 10.96 percent; CSX Transportation, 10.85 percent; Kansas City Southern, 9.77 percent; BNSF Railway Co., 9.22 percent; CN (all U.S. affiliates), 9.21 percent; and Canadian Pacific (all U.S. affiliates), 8.01 percent.

Class Is Increase Hiring

U.S. Class Is have continued their hiring trend in late 2011. STB data showed that, as of mid-October, the freight railroads employed 160,251 people, up 0.1 percent from September and 3.9 percent from October 2010. On a year-over-year basis, all job sectors showed gains: transportation (train and engine), 4.3 percent; transportation (other than T&E, 2.5 percent; maintenance of equipment and stores, 0.7 percent; maintenance of way and structures, 4.5 percent; professional and administrative, 0.8 percent; and executives and staff assistants, up 3 percent. In June, Association of American Railroads President and Chief Executive Officer Ed Hamberger said Class Is anticipated hiring 15,000 workers in 2011 to accommodate traffic growth and replace retiring employees.

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