Capital Expenditures as % of Revenue for Selected Economic Sectors

Capital Expenditures as % of Revenue

Source: Census Bureau, EEI, AAR.

Rail transportation is one of the most capital intensive activity, particularly in North America where rail operators (Class I) own and operate their networks. Thus, maintenance and improvement costs tend to be high. Comparatively, other transport sectors are facing a different financing context. Roads are often provided and subsidized by public agencies, as well as ports and airport with user charges being the standard business model. Thus, if a maritime shipping company or an airline decides to lower or cut its services to a terminal, there are essentially no financial penalty in doing so. However, a rail operator seeing a decline of its traffic will still have similar maintenance costs along its network. Abandoning tracks is seen as a last resort measure.