STB judges Norfolk Southern “revenue adequate”
(The following article by Gregory Richards was posted on the Virginian-Pilot website on October 24.)
NORFOLK, Va. – The Surface Transportation Board said Monday that Norfolk Southern Railway Co. was the only big U.S. railroad last year earning a rate of return on its investment judged “revenue adequate.”
The board calculated the weighted cost of financing and operations – known as the cost of capital – at 12.2 percent for the railroad industry. That expense mainly consists of the cost of accessing money through the debt and equity markets.
Norfolk-based Norfolk Southern beat that with a 13.2 percent rate of return on net investment, the ratio of railroad operating income to capital investments. The second-best railroad was the Burlington Northern Santa Fe Railway Co. of Fort Worth, Texas, at 10.3 percent. Third was the Soo Line Railroad Co., the U.S. operations of Canadian Pacific Railway, at 8.9 percent.
Being a revenue-adequate railroad can affect the rates charged by the railroads in certain cases, according to the federal Surface Transportation Board.
Norfolk Southern was also the only railroad in 2004 to be revenue adequate, according to the board.
It has been difficult for railroads to meet that standard because until recent years, they’ve been saddled with low rates and slow growth, making it difficult to pay for big investments in track and trains, said Anthony B. Hatch, an independent railroad consultant based in New York.
Norfolk Southern would not disclose its individual cost of capital, company spokesman Richard W. Harris said.
In a separate matter, Norfolk Southern Railway’s parent company, Norfolk Southern Corp., announced Monday that its regular dividend of 18 cents per share of common stock will be payable on Dec. 11 to shareholders of record on Nov. 3.
From BLET Site