2014 Hagestad Sandhouse Rail Group Annual Luncheon

The Race is On! Service, Capacity, Capex, and the Railroad Renaissance

On Tuesday, December 9, 2014, Anthony B. Hatch of ABH Consulting was the guest speaker at the annual NUTC Hagestad Sandhouse Rail Group luncheon. 

Anthony B. HatchHatch spoke at length on what he sees as a renaissance going on in the rail industry. The overall economic themes, he says, support rail more than nearly any other industry. For one, green industries have a far longer shelf-life, particularly with oil prices being high (even taking into consideration recent drops, oil is still a rapidly depleting resource, he said). Due to these factors, industries like trucking are falling, particularly due to the advent of near-sourcing and in-sourcing of goods.

One of the reasons Hatch believes the 21st Century will herald a railroad renaissance is that the industry consistently beats market projections. This has particularly been true throughout the Great Recession and its tepid recovery, during which rail has outperformed every single Wall Street estimate—this despite losing many of the more traditional rail-oriented industries like coal, which has seen a steep drop-off in the last decade. 

Hatch acknowledged that government regulatory barriers and a lack of support for infrastructure initiatives will cause challenges in rail. However, he firmly believes that by targeting specific sectors, rail will not only survive in a changing economy; it will thrive. Among these industries primed for rail growth are in grain, which has limitless potential throughout the Midwest “bread basket,” and intermodal shipping, which can be done internationally as well as domestically. He also noted that rails are re-gaining market share from highways; this has a powerful effect both on commercial transport (as has been seen in other countries) and on material transit.

While he thinks there are some privately held rail corporations that stand to see the highest profit margins due to their ability to quickly diversify, Hatch emphasized that, should his projections hold, all rail companies stand to benefit. “The rail network,” he explained, “must step up.” Doing so will ensure that the rail industry achieves a 21st century rebirth.