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The U.S. railroad industry is poised to expand capacity and improve service performance by increasing infrastructure investments, according to a Fitch Ratings report. This year, the four U.S. Class Is’ capital spending budgets total $7.3 billion, a 20 percent increase compared with 2005 and 34 percent rise compared with 2004.

“A combination of economic and market factors have increased demand for rail transport services, creating one of the strongest revenue environments since the rail industry was deregulated in 1980,” the report states. “Yet this increase in demand has produced capacity constraints in the U.S. rail network, leading to reduced train speeds and a drop in on-time departures and arrivals.”

A majority of the Class Is’ planned capital expenditures will go toward installing track, improving signal systems, acquiring locomotives and upgrading information technology. Railroads have learned from over-capacity issues of the past and, despite current expansion plans, continue to show relative restraint, officials from Fitch Ratings — a bond rating agency — believe.

For details on the Class Is’ and other freight and passenger railroads’ capital spending plans, see the listings on ProgressiveRailroading.com’s home page or the maintenance-of-way 2006 coverage in Progressive Railroading’s April issue.