Only four Class Is were 'revenue adequate' in 2014, STB says

The Surface Transportation Board (STB) yesterday issued a decision finding that BNSF Railway Co., Grand Trunk Corp. (CN), Norfolk Southern Corp. and Union Pacific Railroad were the only Class Is deemed to be "revenue adequate" in 2014.

The designation means the four Class Is achieved a rate of return on net investment (ROI) equal to or greater than the STB’s calculation of the freight-rail industry's average cost of capital. The board previously determined that the rail industry's 2014 cost of capital was 10.65 percent.

The STB calculated the following ROIs for the four revenue-adequate Class Is in 2014: UP, 17.35 percent; BNSF, 12.88 percent; NS, 11.69 percent; and Grand Trunk Corp. (including CN's U.S. affiliates), 11.3 percent. The three non-revenue-adequate Class Is and their ROIs were CSX Corp. at 10.18 percent, Kansas City Southern at 8.18 percent and Soo Line Corp. (including Canadian Pacific's U.S. affiliates) at minus-0.42 percent.

The Soo Line's negative ROI was calculated using values submitted by the Class I and in part was impacted by a one-time loss associated with the 2014 sale of the Dakota, Minnesota & Eastern Railroad Corp.'s lines west of Tracy, Minn., STB officials noted in their decision.