Times are good for American railways

FEW INDUSTRIES are more vulnerable to events that depress revenues and increase expenses than America’s railways. The basic business model is to lug lots of stuff to offset the high fixed costs of owning fleets of locomotives and maintaining thousands of miles of track. That has been hard as America’s supply chain has come unglued, first because of covid-19 and then as it has waned. Ports are gridlocked, warehouses over-stuffed and labour unavailable. It has unquestionably been a tough time to be a rail company and, it turns out, a remarkably good time to be one.Volumes and profits at the listed companies that run America’s tracks and trains used to be tied as closely as a locomotive to its cargo. No longer. Traffic has yet to recover from pre-pandemic peaks, according to the Association of American Railroads, a trade group. But the financial equivalent of a train crash that such a slump would once have presaged has not arrived. On the contrary, America’s major freight carriers are on their way to record annual profits. Their share prices in recent weeks have helped stockmarkets there chug to new highs.