Tom Murray

Railroad Companies: Good, Better, Best

In the last paragraph the author says, "Who has the privilege to move the PRB coal? Checking the railroad network map, you will find BNI almost has exclusive coverage in the area." This ignores the fact that UNP has access to ten mines in the Southern PRB. For a list, see www.uprr.com/customers..., and compare this with BNI's list at www.bnsf.com/markets/c....

In addition, both BNI and UNP serve other coal origins outside the PRB. In 2008, BNI handled 2.5 million carloads of coal, generating almost $4 billion in revenue. In the same year, UNP handled 2.35 million carloads in its "energy" category, which is almost all coal, generating $3.8 billion in revenue. The two railroads are, in fact, very closely matched in the western coal market.

The author also favors BNI and UNP over CSX and NSC because of their proximity to China. This has been a big advantage for both railroads over the past decade but is becoming less so in today's changing global trade environment. Shipping lines have begun to shift some of their Asia-U.S. routes to the east coast over the past five years. NSC executives have recently said that about 50% of their container business now comes in through east coast ports, as opposed to only 20% a few years ago. The port situation on the west coast has changed, too, with the opening of modern container facilities at Prince Rupert, B.C. (served by Canadian National [CNI]) and Lazaro Cardenas, Mexico (served by Kansas City Southern [KSU]).