The Americas had the third-highest rail freight traffic worldwide, behind Asia, Oceania, and the Middle East, as well as Europe. However, North America boasted an extensive railroad infrastructure, with the United States recording the largest network worldwide in 2019, amounting to over twice the size of the Chinese rail network. The total recorded length of rail lines in Canada was lower in recent years, with forecasts tipping a slow and steady reduction of the countries’ rail network through 2025.
U.S. railroads lead the market
The United States was the largest market in North America, with Class I railroads consistently ranking among the leading freight transportation companies. In 2020, BNSF Railway, Union Pacific Corporation, the CSX Corporation, and Norfolk Southern were firmly in the global top 20 freight companies based on freight revenues. Class I railroads were also among the largest railway companies worldwide in mid-2021, surpassing railway companies in the Asia-Pacific region.By 2021, freight railroads in North America had started to recover from the negative impacts of the COVID-19 pandemic. With around 20.2 billion U.S. dollars in freight revenue, Union Pacific’s 2021 economic performance was back to pre-pandemic levels. A similar growth was observable across other Class I railroads.
To remain competitive in the region, Canadian Pacific completed its acquisition of rival Class I railroad Kansas City Southern in December 2021. The merger was forecast to increase the company’s operations across the three main countries of the region, with close to half its revenue expected to come from its business in the United States and Mexico.
A market propelled by national incentives
The United States-Mexico-Canada Agreement (USMCA) replaced the North American Free Trade Agreement (NAFTA) in July 2020 in order to facilitate trade between the three main countries in the North American region. The rail networks between the countries are intricately linked, due to the operation of Class I railroads across borders. Propelled by the mining industry as well as by coal consumption in the United States—which has the largest coal consumption worldwide—coal was the leading commodity hauled across North America. Over 3.7 million carloads of the commodity were transported in 2021.Non-railway vehicles were the largest commodity traded by rail between USMCA countries, with the U.S.-Canada trade of such goods worth just under 33.6 billion U.S. dollars in 2020. However, motor vehicles and parts ranked seventh in the commodities by carloads hauled by North American railways, amounting to approximately 1.1 million carloads in both 2020 and 2021. In July 2021, U.S. President Joe Biden issued an executive order promoting competitiveness in freight, which led to a slump of more than six percent in CSX, Kansas City Southern, and Norfolk Southern stocks.
