STB: Only Norfolk Southern earned cost
of capital in 2008

The Surface Transportation Board (STB) announced 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.

The annual determination of revenue adequacy is made in accordance 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 percent," 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 Dec. 31, 2008." 

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

BNSF Railway Co.: 10.51 percent

CSX Transportation, Inc.: 9.34 percent

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

Kansas City Southern Railway Co.: 7.72 percent

Norfolk Southern Railway Co.: 13.75 percent

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

Union Pacific Railroad Co.: 10.46 percent

Source: Railway Age