Monday, October 26, 2009

STB: Only Norfolk Southern earned cost of capital in 2008

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The Surface Transportation Board announced Monday that only one Class I railroad, Norfolk Southern, achieved revenue adequacy for the year 2008. All others were found to be "revenue inadequate" last year.

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The annual determination of revenue adequacy is made inaccordance with standards and procedures developed after passage of the Staggers Rail Act of 1980, which substantially deregulated railroads. A main goal of Staggers was to restore the railroad industry to a return on investment that would at least match its cost of investment capital.

"In Railroad Cost of Capital — 2008, STB Ex Parte No. 558 (Sub-No. 12) (STB served Sept. 25, 2009) we determined that the 2008 railroad industry cost of capital was 11.75%," STB said in its announcement Monday. "By comparing this figure to the 2008 ROI data obtained from the carriers’ Annual Report R-1 Schedule 250 filings, we have made revenue adequacy calculations for each of the Class I freight railroads that were in operation as of December 31, 2008." 

Following is STB's summary of the Returns on investment forall Class I railroads in 2009:

BNSF Railway Co.: 10.51%

CSX Transportation, Inc.: 9.34%

Grand Trunk Corp. Consolidated (including all Canadian National U.S. affiliates): 9.89%

Kansas City Southern Railway Co.: 7.72%

Norfolk Southern Railway Co.: 13.75%

Soo Line Railroad Co. (including all Canadian Pacific U.S. affiliates): 9.29%

Union Pacific Railroad Co.: 10.46%