Railroads of the 1990s

1990s Railroad Mergers

The super-railroads of today are a reflection of other U.S. mergers and mega-companies of the modern era. As railroad companies merge, they are able to concentrate more authority in fewer managers, dictating orders across a wider area.

As is often the case, unproductive parallel rail lines and antiquated equipment typically become surplus after a merger. In the case of many mergers, these surplus lines quickly become fodder for regional railroads, shortlines, and railroad museums. Regionals and shortlines often succeeded where the super-railroads failed, due to lower costs and less restrictive work rules.

Several of these lines have found a niche. Montana Rail Link, for example, began operating Burlington Northern's former Northern Pacific line, no longer needed because of plenty of capacity on the paralleling Great Northern line. Today, Montana Rail Link is a healthy company, with almost 1,000 miles of track and almost 100 diesel locomotives moving paper, forest products, grain, and other commodities. Other companies, such as RailTex, of San Antonio, Texas, operate several shortlines of less than 100 miles each from one central headquarters.

The efficiency of the super-railroad is a stunning example of American business at work. Railroad stocks have outperformed the overall U.S. stock market since 1991. At the same time, freight rates have fallen in inflation-adjusted dollars. The industry has begun to take back traffic it lost to trucks and barges in the years since World War II. Freight shipments reached record levels for seven years in a row through 1994. The railroads' share of intercity freight rose to 39.2 percent in 1994, up from 38.1 percent in 1993 and 37.5 percent in 1992.

Even before they adopted a new paint scheme on their locomotives, the Burlington Northern and Santa Fe went to work immediately after their merger in 1995 to streamline their operations and launch an intermodal train service between California and the Southeast. The new service bypassed the Burlington, whose lines were packed with coal trains bound from the Powder River Basin in Wyoming to utility plants in the South, in favor of the higher-speed Santa Fe lines across the West. The improvement sliced 24 hours from the scheduled run between San Bernardino, California, and Atlanta, Georgia.