Class I railroad
Encyclopedia
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
, or a Class I rail carrier in Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, is a large freight railroad company, as classified based on operating revenue
Revenue
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
.
Smaller railroads are classified as Class II
Class II railroad
A Class II railroad in the United States is a mid-sized freight-hauling railroad, in terms of its operating revenue. , a railroad with revenues greater than $20.5 million but less than $277.7 million for at least three consecutive years is considered a Class II railroad...
and Class III
Class III railroad
A Class III railroad, as defined by the Surface Transportation Board, is a railroad with an annual operating revenue of less than $20 million . The term only applies to United States railroads, but is sometimes applied to other countries...
. The exact revenues required to be in each class have varied over time, and they are now continuously adjusted for inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
.
Current criteria
The Surface Transportation BoardSurface Transportation Board
The Surface Transportation Board of the United States is a bipartisan, decisionally-independent adjudicatory body organizationally housed within the U.S. Department of Transportation. The STB was established in 1996 to assume some of the regulatory functions that had been administered by the...
(STB) defines a Class I railroad in the United States as "having annual carrier operating revenues of $250 million or more" after adjusting for inflation using a Railroad Freight Price Index
Price index
A price index is a normalized average of prices for a given class of goods or services in a given region, during a given interval of time...
developed by the Bureau of Labor Statistics
Bureau of Labor Statistics
The Bureau of Labor Statistics is a unit of the United States Department of Labor. It is the principal fact-finding agency for the U.S. government in the broad field of labor economics and statistics. The BLS is a governmental statistical agency that collects, processes, analyzes, and...
(BLS). According to the Association of American Railroads
Association of American Railroads
The Association of American Railroads is an industry trade group representing primarily the major freight railroads of North America . Amtrak and some regional commuter railroads are also members...
(AAR), Class I railroads had minimum carrier operating revenues of $346.8 million (USD) in 2006, $359 million (USD) in 2007, $401.4
million (USD) in 2008 and $378.8 million (USD) in 2009.
In Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
a Class I rail carrier is defined (as of 2004) as a company that has earned gross revenues exceeding $250 million (CAD) for each of the previous two years.
The establishment of the criteria in the United States has always been subjective, since different regulations apply to the different classes. In early 1991 both Montana Rail Link and Wisconsin Central asked the Interstate Commerce Commission
Interstate Commerce Commission
The Interstate Commerce Commission was a regulatory body in the United States created by the Interstate Commerce Act of 1887. The agency's original purpose was to regulate railroads to ensure fair rates, to eliminate rate discrimination, and to regulate other aspects of common carriers, including...
(ICC) to increase the minimum annual operating revenue criteria (then established at $93.5 million USD) in order to avoid being re-designated as Class I, due to increased administrative and legal costs resulting from different regulations. This criterion was increased in 1992 to $250 million annually, which resulted in the Florida East Coast Railway
Florida East Coast Railway
The Florida East Coast Railway is a Class II railroad operating in the U.S. state of Florida; in the past, it has been a Class I railroad.Built primarily in the last quarter of the 19th century and the first decade of the 20th century, the FEC was a project of Standard Oil principal Henry Morrison...
having its status changed to Class II. Rail carriers with less than $20 million in revenue remained in Class III.
Currently eleven railroads in North America are classified as Class I, eight of which operate in the United States.
Canada, with no trackage in the United States:
- Via RailVIA RailVia Rail Canada is an independent crown corporation offering intercity passenger rail services in Canada. It is headquartered near Montreal Central Station at 3 Place Ville-Marie in Montreal, Quebec....
Trackage in both the United States and Canada
- AmtrakAmtrakThe National Railroad Passenger Corporation, doing business as Amtrak , is a government-owned corporation that was organized on May 1, 1971, to provide intercity passenger train service in the United States. "Amtrak" is a portmanteau of the words "America" and "track". It is headquartered at Union...
- BNSF RailwayBNSF RailwayThe BNSF Railway is a wholly owned subsidiary of Berkshire Hathaway Inc., and is headquartered in Fort Worth, Texas. It is one of seven North American Class I railroads and the second largest freight railroad network in North America, second only to the Union Pacific Railroad, its primary...
- Canadian National RailwayCanadian National RailwayThe Canadian National Railway Company is a Canadian Class I railway headquartered in Montreal, Quebec. CN's slogan is "North America's Railroad"....
- Canadian Pacific RailwayCanadian Pacific RailwayThe Canadian Pacific Railway , formerly also known as CP Rail between 1968 and 1996, is a historic Canadian Class I railway founded in 1881 and now operated by Canadian Pacific Railway Limited, which began operations as legal owner in a corporate restructuring in 2001...
- CSX TransportationCSX TransportationCSX Transportation operates a Class I railroad in the United States known as the CSX Railroad. It is the main subsidiary of the CSX Corporation. The company is headquartered in Jacksonville, Florida, and owns approximately 21,000 route miles...
- Norfolk Southern RailwayNorfolk Southern RailwayThe Norfolk Southern Railway is a Class I railroad in the United States, owned by the Norfolk Southern Corporation. With headquarters in Norfolk, Virginia, the company operates 21,500 route miles in 22 eastern states, the District of Columbia and the province of Ontario, Canada...
United States, with no trackage in Canada or Mexico
- Kansas City Southern RailwayKansas City Southern RailwayThe Kansas City Southern Railway , owned by Kansas City Southern Industries, is the smallest and second-oldest Class I railroad company still in operation. KCS was founded in 1887 and is currently operating in a region consisting of ten central U.S. states...
- Union Pacific RailroadUnion Pacific RailroadThe Union Pacific Railroad , headquartered in Omaha, Nebraska, is the largest railroad network in the United States. James R. Young is president, CEO and Chairman....
Mexico, with no trackage in the United States:
- FerromexFerromexFerromex is a private rail consortium that operates the largest railroad in Mexico.-Description:...
- Kansas City Southern de México, wholly owned by the Kansas City Southern RailwayKansas City Southern RailwayThe Kansas City Southern Railway , owned by Kansas City Southern Industries, is the smallest and second-oldest Class I railroad company still in operation. KCS was founded in 1887 and is currently operating in a region consisting of ten central U.S. states...
History
The classification of railroads in the U.S. as Class I, II or III was started by the Interstate Commerce CommissionInterstate Commerce Commission
The Interstate Commerce Commission was a regulatory body in the United States created by the Interstate Commerce Act of 1887. The agency's original purpose was to regulate railroads to ensure fair rates, to eliminate rate discrimination, and to regulate other aspects of common carriers, including...
in the 1930s. Initially Class I railroads were defined as railroads with operating revenue of at least $1 million (equal to $ today). There were 132 Class I railroads in 1939.
The $1 million figure was used until 1956 (at which time there were 113); however since that time it has increased faster than inflation. In 1956 it was increased to $3 million (equal to $ today). By 1963 the number of Class I railroads had dropped to 102. By 1965 the cut-off had increased to $5 million (equal to $ today), to $10 million in 1976 (equal to $ today) and to $50 million in 1978 (equal to $ today), at which point only 41 railroads were still Class I. The Class III
Class III railroad
A Class III railroad, as defined by the Surface Transportation Board, is a railroad with an annual operating revenue of less than $20 million . The term only applies to United States railroads, but is sometimes applied to other countries...
category was dropped in 1956, but reinstated in 1978. In 1979 all switching and terminal railroads, even those with Class I or Class II revenues, were re-designated as Class III.
Currently the Class II and Class III designations are rarely used outside the rail transport industry. The Association of American Railroads
Association of American Railroads
The Association of American Railroads is an industry trade group representing primarily the major freight railroads of North America . Amtrak and some regional commuter railroads are also members...
typically divides non-Class I companies into three categories:
- Regional railroadRegional railroadIn the United States, a regional railroad is a railroad company that is not Class I, but still has a substantial amount of traffic or trackage . The Association of American Railroads has defined the lower bound as of track or $40 million in annual operating revenue...
s operate at least 350 miles or make at least $40 million per year. - Local railroads are non-regional railroads that engage in line-haul service.
- Switching and terminal railroadSwitching and terminal railroadA switching and terminal railroad is a freight railroad company whose primary purpose is to perform local switching services or to own and operate a terminal facility. Switching is a type of operation done within the limits of a yard...
s mainly switch cars between other railroads or provide service from other lines to a common terminal.
In the United States the Surface Transportation Board
Surface Transportation Board
The Surface Transportation Board of the United States is a bipartisan, decisionally-independent adjudicatory body organizationally housed within the U.S. Department of Transportation. The STB was established in 1996 to assume some of the regulatory functions that had been administered by the...
continues to use the designations of Class II and Class III since there are different labor regulations for the two classes.
See also
- List of U.S. Class I railroads
- Timeline of Class I railroads: 1910-1929, 1930-1976, 1977-present
- Rail transport in the United StatesRail transport in the United StatesPresently, most rail transport in the United States is based on freight train shipments. The U.S. rail industry has experienced repeated convulsions due to changing U.S. economic needs and the rise of automobile, bus, and air transport....
- Rail transport in CanadaRail transport in CanadaCanada has a large and well-developed railway system that today transports primarily freight. There are two major privately owned transcontinental freight railway systems, the Canadian National and Canadian Pacific Railway. Nation-wide passenger services are provided by the federal crown...