Now is a Good Time to Invest in the Railroad Industry

For over 150 years the railroad industry has been an important part of American Society. Before cars, airplanes, and freight trucks, all cross country travel and transporting of goods had been done by trains. The railroad industry grew strong, powerful, and rich. It was an investor's pot of gold. However, over time the railroad industry has taken the back seat to the modern forms of travel and transport.

Now there are new forms of passenger travel and goods transport. There are a lot of airplane companies that provide passenger air travel across country and within regions. Passenger long distance travel is reduced to a few hours. Now more people also travel by car and bus due to the construction of interstate and cross country highways. Modern automobiles are being made more comfortable and have high tech navigation and entertainment systems that make travel easy and fun.

The trucking industry offers convenience to manufacturers and warehouses by providing door to door and on demand delivery. Shipping companies, such as UPS and Federal Express, have their own fleet of airplanes and trucks for shipping and transporting goods to long and remote distances within a minimum amount of time. Even the US postal service, which once transported mail by train, now has its own trucks and airplanes.

As more people and businesses were attracted to the modern forms of transportation, the railroad industry began to decline. A few freight train companies, such as Union Pacific Railroad and CSX remained in business. They shipped items such as autos, and dangerous chemicals. Amtrak, America's sole provider of passenger train service, had declining business during the 1990s. The company almost went out of business and had to get special funding from the federal government to stay a live. The railroad industry lost the interest of investors.

The ill fate of the railroad industry seemed to change at the start of the 21st century. After the 9/11 terrorist attack there has been an increase in travel security at all airports across the United States. However, the heighten security measures became an instant nuisance and inconvenience to airplane passengers. Long lines resulted from security checks of each passenger and inside every piece of carry on luggage.

There has been countless complaints of security personnel stealing money and other valuable items from travelers' luggage and persons. Travelers have even complained of indecent touching, sexual harassment, humiliation, and racial discrimination from security personnel. As a result more people have been traveling by Amtrak, which allows them to travel without being required to go through security checks.

Then the cost of crude oil rose. As a result gas now costs an average of $3.20 per gallon throughout the United States. This has raised the cost of shipping by truck which has in turn increased the cost of consumer goods. The cost of shipping goods by air has increased as result of high gas costs as well.

Travelers frustrated with airlines travel and the high cost of transporting goods by truck and air has renewed the demand for railroad travel and transport. Amtrak rider ship for the fiscal year of 2007 increased to 25,847,531 passengers. This is a consecutive gain of passengers, and the most passengers using Amtrak service since it started operation in 1971. Freight Rail transports have cheaper shipping costs compared to truck and air transport, which in turn lowers the prices of goods being transported. Freight rail is able to haul more goods in a shorter amount of time. This new demand for railroad service is causing railroad companies to invest in freight cars, engines, and repairing tracks.

Warren Buffett, America's investment wizard, recently disclosed that he owns a sizable stake in railroad operator Burlington Northern Sante FE. Buffett feels that for the first time in a long time the railroad industry is improving.

Since the future of the railroad industry is looking bright now is a good time to invest in the industry. Some suggested railroad companies to invest in are CSX, Burlington Northern Sante Fe, American Rail Car Industry Inc., Union Pacific, and Amtrak. Amtrak, the only cross country passenger rail company in America, has enacted a five year initiative plan to improve the reliability and comfort of their trains, facilities, and tracks. Since 2001 Amtrak's earning have been increasing steadily.

Burlington Northern Sante Fe has expanded its business operations internationally as well as in the United States. CXS and Union Pacific, due to increase demand for their service, they are purchasing new rail cars, repairing and expanding tracks, and purchasing fuel efficient engines. The American Rail Car Industry Inc. Which build rail cars, has been receiving an increasing amount of orders for rail cars from railroad companies. The company has increased its rail car production. Its sales and earnings have increased and remained steady since 2003.

At present investing in the railroad industry is a good idea. There is an increase in demand for the industry's service. Like all investments, investing in the railroad industry can be risky. However, with the proper financial advice and by researching the different rail railroad companies, investing in the industry can be rewarding.

References:
"Solving the Freight Rail Transportation Bottleneck" by The Heatland Institude

http://www.fool.com/investing.htm?source=ifltnvpnv0000001

http://www.railserve.com/

www.amtrak.com

www.csx.com

www.bnsf.com

www.uprr.com