The STB releases its Railroad Revenue Adequacy list….for 2019. Yes, the Surface Transportation Board released its list of those rails whose returns (ROIC) exceeded their Cost-of-Capital, and the total was five. The very announcement points out the inadequacies of the list itself, with the greatest of respect (it is slow/late; it counts only the US as per the STB being, of course, and American government body even if the freight rail system is continental and it shows that ROIC/CoC is very much an art, maybe even a dark art, and not a science. For example, is the CoC really 9.34%? Isn’t that perhaps one-third too high? Yes, it seems closer to the mark than 12.2% for last (2018) year. Does this matter? Well, maybe not today. But with the very nature - and use - of “revenue adequacy” up for debate in the future, it does bear watching.
Note that the two Canadian lines system-wide would have ranked number 1 & 2….Anyway, those getting passing grades were:
- UNP 15.6%
- CSX 12.8%
- BNSF 12%
- NSC 11.6%
- Soo Line (AKA “CP-USA”)
Both the KSU (6.2% - assuming US only and yet still seeming unrealistic), and CN-USA (7.4%) fell below the….target.