Railroads covers North American freight railroads. MoatScope covers six companies here. Five have a wide moat and one has none, making it one of the most moat-dense industries in the market.
How the industry makes money
Railroads haul bulk commodities, containers, autos and industrial goods over networks they own. Moving freight by rail uses far less fuel per ton than trucking over long distances, and a railroad can raise prices when trucks are the only alternative.
Where the moats are
Efficient scale and cost advantages define the industry: nobody can build a competing transcontinental network today, so each region is served by one or two railroads.
- Union Pacific: the largest railroad in North America, covering the western two-thirds of the United States.
- CSX and Norfolk Southern: the two eastern railroads, competing mainly with each other and with trucking.
- Canadian National and Canadian Pacific Kansas City: cross-border networks reaching deep into the U.S. Midwest and South.
FTAI Infrastructure, which owns short-line railroads among other assets, carries no moat. The wide-moat railroads score between 57 and 68 on MoatScope's quality scale.
What wears moats down
Volumes follow industrial production and trade, coal traffic keeps declining, service problems push shippers to trucks, and regulators can limit pricing.
What to watch
- Freight volumes and pricing.
- Operating efficiency and service levels.
- Merger proposals and regulatory reviews.
Moat ratings and quality scores on this page update as companies report. Price versus fair value for every company in the industry is in the screener.