• Why hasn't there been more consolidation among shortlines?

  • A general discussion about shortlines, industrials, and military railroads
A general discussion about shortlines, industrials, and military railroads

Moderator: Aa3rt

  by SouthernRailway
I'm aware of Genesee & Wyoming, Iowa Pacific and others that have accumulated "chains" of shortline railroads over the years, but there are slews of other shortlines out there, most of which I assume are independent or form parts of a company that owns just a few railroads.

Question: why haven't these independent/small chains of shortlines been acquired by larger buyers? I'd think that there would be significant efficiencies to be found if those shortlines banded together and were owned by one owner.

Are most of those shortlines just not profitable enough or is their equipment too mismatched to be of interest to a large-scale acquiror?

  by Deval
It's really a matter of time. I remember when RailTex started in 1986 with the Austin & Northwestern Railroad. Railtex was bought out by Rail America which was recently bought out by Genesee & Wyoming. Now you can't go anywhere without seeing G&W - and it seems that every short line that was once independent is now part of some big conglomerate.

G&W is not alone - the Wisconsin and Southern was picked up by Watco - and in the places that G&W does not operate, Watco does. And then there is Pioneer Rail Corp, which I'm sure will be picked up by somebody soon

So, just be patient. All of these small shortlines you speak of will soon be gobbled up by some big conglomerate and will be worked into oblivion.
  by Desertdweller
The marginal ones will be worked into oblivion. They will be cash cows to be milked by their holding companies, then sold to next-lower-level operators or abandoned.

The successful ones will be bought by next-higher-level operators, or by Class Ones.

If a short line or regional becomes very successful, it is likely to wind up in the hands of a Class One, either the original owner or one of its former owners competitors.