Railroads
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 613 railroads in the US transport cargo within a rail network, and include line haul railroads and short line railroads. Major types of rail freight include energy products (18% of industry freight revenue), motor vehicles and equipment (17%), food and beverage products (15%), chemicals (10%) and plastics and rubber (10%). Non-freight related revenue includes fees for rail car switching, rail car hire and rental services, and demurrage (when shippers or receivers hold railcars beyond the contracted period of time).
High Capital Requirements
Rail transport is a highly capital-intensive industry, with most companies having significant investments in tracks, terminals, underlying property, locomotives, and rail cars.
Competition From Alternative Carriers
Railroads compete with alternative modes of transportation, such as trucks, barges, ships, and pipeline operators.
Industry size & Structure
The US freight rail transportation industry consists of 613 railroads, which employ 146,600 workers and generate $80 billion annually in freight revenue.
- The Association of American Railroads (AAR) classifies rail operators into one of three categories: Class I, regional, and local. Seven Class I railroads generate revenue of $74 billion annually. Regional and local railroads generate $4.6 billion in revenue.
- Collectively, railroads operate nearly 140,000 miles of track.
- The average Class I railroad employs 17,000 workers, has 247,000 freight cars and 3,500 locomotives in service, and generates about $10-11 billion annually in freight revenue.
- The average regional or local railroad employs 24 workers and generates about $10 million in annual revenue.
- The industry is concentrated at the top; the top seven Class I railroads account for 94% of industry revenue.
- The seven Class I railroads are Union Pacific, CSX Transportation, BNSF Railway, Canadian National Railway, Kansas City Southern Railway, Norfolk Southern Railway, and Canadian Pacific Railway.
- Domestic firms, including non-Class I carriers, may have operations in foreign countries.
- Canadian and Mexican-owned railroads have a significant presence in the US. Both countries operate railroads in the US with enough revenue to qualify for Class I classification.
- The industry includes Amtrak, a federally-chartered company that provides national passenger rail services. Amtrak receives financial support from the federal government and fifteen state governments.
Industry Forecast
Railroads Industry Growth
Recent Developments
Mar 3, 2025 - Railroads Brace for North American Tariff Impact
- North American railroads are bracing for the negative impact of the Trump administration’s imminent tariffs on the $203 billion worth of goods that cross the US/Mexico/Canadian borders every year. The trade dispute threatens railroads’ immediate bottom line and US consumers by hampering trade of key products including auto parts, petroleum, lumber, agricultural products, and chemicals, among others. Long term ramifications of a prolonged trade dispute will also affect infrastructure repair and expansion if the larger economy suffers, creating an economically challenging cycle. The Association of American Railroads reports railroads invested about $26.8 billion back into infrastructure in 2024. Tariffs could also adversely impact employment in the industry in states with the highest amount of freight workers - Texas, Illinois, Nebraska, California, and Georgia.
- There is ongoing degradation of trades-type jobs that keep railroads running, according to Peter Swan, a former railroader and retired Penn State professor. “There has been a shift in management from people to systems,” said Swan. “Automation in track maintenance, equipment, and operations means skill degradation for the ‘blue collars’. Manual track inspection is being replaced by sensors, and car inspection may be done entirely by machine. Locomotive engineers may be replaced by monitors, from two-person to one-person to no-person, crews. The long trains now being run with distributed power are more difficult to handle, and the skillset of an engineer may not be as important in the future as it was in the past.”
- A new federal rule requires railroads to provide details of hazardous cargo immediately after a derailment. The rule aims to ensure that first responders can find out what hazardous chemicals are on a train almost immediately after a derailment so they can respond appropriately. The local fire chief in charge of the response to the 2023 Norfolk Southern derailment in East Palestine, OH, said that it took him 45 minutes to learn exactly what was in the 11 burning tank cars on the train, but some firefighters from neighboring departments that came to help said they didn’t know what they were dealing with until two hours after the crash. First responders need to know exactly which hazardous materials are on a train so they can look it up in the government’s official guidebook and make sure they have the right protective gear and firefighting tools, said Tristan Brown, deputy administrator of the Pipelines and Hazardous Materials Safety Administration agency that proposed the rule.
- Railroad industry sales are forecast to grow at a 2.31% compounded annual rate from 2024 to 2028, slower than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc. Railroads slightly increased their prices during the first nine months of 2024, according to the US Bureau of Labor Statistics (BLS). Railroad industry employment decreased slightly during the first nine months of 2024, according to the BLS.
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