Annualgain

Finding Opportunity in Buffett's Burlington Northern Buy

I agree with PON. Rail has its advantages, but only for certain kinds of goods. Rail has always been cheaper when measuring cost per mile, but its on-time performance has been lousy compared to trucks and airfreight. If a manufacturer has to idle its plant or a retailer has to leave shelves empty because of the poor service that rail has always provided, saving a few cents per mile is just not worth it.

Since 1910 market share has gone to the highway and away from the railway. Airfreight has also taken share as manufacturers get better at using just-in-time inventory.

However, the more commodity-like a good is, the more it make sense to use rail. That's why coal represents about 25% of rail volumes, and grains/ag are another large chunk. These goods will never leave the railways.

High value, high margin goods are just the opposite. You don't see many MacBooks delivered via rail.

Good luck with your market share play, Mr. Kaminis.