John D. Boyd, Associate Editor | Nov 03, 2011 5:11PM EDT
The U.S. agency that regulates economic issues between railroads and shippers says Union Pacific Railroad was the only major carrier that pulled in sufficient revenue in 2010.
That’s the result of the latest annual “revenue adequacy” calculations by the Surface Transportation Board, which uses a regulatory formula that can be disconnected from actual profits and earnings reports but can help determine how much certain rail freight rates can increase.
Although all seven Class I railroads operating in the U.S. posted sizable profits for 2010, the STB looked at separate measures for their costs of capital, both interest rates on debt and a return necessary to woo stock investors.
The STB said those top-tier railroads needed to make at least an 11.03 percent return on net investment in 2010, but judged six of them to fall short.
It can use the revenue adequacy calculation in several regulatory processes, including when freight shippers challenge rail rates for the limited types of cargo subject to STB oversight.
-- Contact John D. Boyd at jboyd@joc.com. Follow him on Twitter www.twitter.com/jboydjoc