2014-03-06 00:55:04 - Road - Rail - Industry Analysis - a new market research report on companiesandmarkets.com
The Railroad Industry is engaged in hauling freight. Rail operators enable the efficient flow of goods from producers to consumers, and are therefore a vital part of the broad economy. With roots dating back to the 1800s, moving freight by rail is an old-line business that remains capital-intensive and cyclical. Within North America, the industry is dominated by a handful of large operators, while countless short-line railroads provide regional and local service. Very few of the publicly held railroads are involved in ferrying passengers. However, they do generate certain noncore revenue and income steams, be it from haulage agreements (track usage fees) or railcar switching for industrial customers. Underpinned by the economic expansion that peaked in
late 2007, the railroads produced enviable profit growth and above-average investment returns. Consistent gains led many to posit that the industry had entered a period of sustainable growth. However, the ensuing recession had a sizable impact on freight demand (and on industry profits and share-price performance), which largely put to rest the new "less-cyclical rail" paradigm. With that in mind, patient investors, willing to maintain positions throughout the economic cycle, may continue to enjoy positive returns within the sector, especially as these companies focus on improving normalized earnings and the efficiency of operations. At the same time, novice and sophisticated investors alike are urged to survey the greater economic climate before committing funds.
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