The tier 1 rails in the United States may be a conservative investment for the long-term.  The land grants that they control cannot be replicated – making them natural monopolies.  A near-term risk with the rails is tied to the overall health of the economy as revenues will fluctuate with the economic cycle of the country.  Over the decades the rails have been able to become highly efficient at managing their costs by adopting new technologies.  One new technology that we may be seeing more of is the hybrid LNG/diesel locomotive.  This could be the single greatest efficiency change to occur to the rails since the hybrid diesel/electric locomotive.  The amount of LNG required to fuel new hybrid locomotives will transform the existing production and supply pipes of LNG across the U.S.  Time will tell what actually unfolds in the industry but it appears that LNG fuel may not be too far off for mainline routes.

 

 

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