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In the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
,
railroad Rail transport (also known as train transport) is a means of transport that transfers passengers and goods on wheeled vehicles running on rails, which are incorporated in tracks. In contrast to road transport, where the vehicles run on a prep ...
carriers are designated as Class I, II, or III, according to annual revenue criteria originally set by the
Surface Transportation Board The Surface Transportation Board (STB) of the United States is a federal, bipartisan, independent adjudicatory board. The STB was established on January 1, 1996, to assume some of the regulatory functions that had been administered by the Interstat ...
in 1992. With annual adjustments for inflation, the 2019 thresholds were US$504,803,294 for Class I carriers and US$40,384,263 for Class II carriers. (Smaller carriers were Class III by default.) There are seven Class I freight railroad companies in the United States including two
Canadian Canadians (french: Canadiens) are people identified with the country of Canada. This connection may be residential, legal, historical or cultural. For most Canadians, many (or all) of these connections exist and are collectively the source of ...
carriers with subsidiary trackage in the United States:
BNSF Railway BNSF Railway is one of the largest freight railroads in North America. One of seven North American Class I railroads, BNSF has 35,000 employees, of track in 28 states, and nearly 8,000 locomotives. It has three transcontinental routes that ...
,
Canadian National Railway The Canadian National Railway Company (french: Compagnie des chemins de fer nationaux du Canada) is a Canadian Class I freight railway headquartered in Montreal, Quebec, which serves Canada and the Midwestern and Southern United States. CN i ...
(via its subsidiary
Grand Trunk Corporation The Grand Trunk Corporation is the subsidiary holding company for the Canadian National Railway's properties in the United States. It is named for CN subsidiary railroad Grand Trunk Western Railroad. The Association of American Railroads has consi ...
),
Canadian Pacific Railway The Canadian Pacific Railway (french: Chemin de fer Canadien Pacifique) , also known simply as CPR or Canadian Pacific and formerly as CP Rail (1968–1996), is a Canadian Class I railway incorporated in 1881. The railway is owned by Canad ...
(via its subsidiary
Soo Line Corporation The Soo Line Railroad is the primary United States railroad subsidiary of the Canadian Pacific Railway , one of seven U.S. Class I railroads, controlled through the Soo Line Corporation. Although it is named for the Minneapolis, St. Paul and Sa ...
),
CSX Transportation CSX Transportation , known colloquially as simply CSX, is a Class I freight railroad operating in the Eastern United States and the Canadian provinces of Ontario and Quebec. The railroad operates approximately 21,000 route miles () of track. ...
,
Kansas City Southern Railway The Kansas City Southern Railway Company is an American Class I railroad. Founded in 1887, it operates in 10 midwestern and southeastern U.S. states: Illinois, Missouri, Kansas, Oklahoma, Arkansas, Tennessee, Alabama, Mississippi, Loui ...
,
Norfolk Southern Railway The Norfolk Southern Railway is a Class I freight railroad in the United States formed in 1982 with the merger of Norfolk and Western Railway and Southern Railway. With headquarters in Atlanta, the company operates 19,420 route miles (31 ...
, and
Union Pacific Railroad The Union Pacific Railroad , legally Union Pacific Railroad Company and often called simply Union Pacific, is a freight-hauling railroad that operates 8,300 locomotives over routes in 23 U.S. states west of Chicago and New Orleans. Union Paci ...
. (
Mexico Mexico (Spanish language, Spanish: México), officially the United Mexican States, is a List of sovereign states, country in the southern portion of North America. It is borders of Mexico, bordered to the north by the United States; to the so ...
's
Ferromex Ferromex (syllabic abbreviation of Ferrocarril Mexicano or "Mexican Railway") is a private rail consortium that operates the largest (by mileage) railway in Mexico with combined mileage (Ferromex + Ferrosur) of and is part of the North American ...
and
Kansas City Southern de México Kansas City Southern de México (KCSM), formerly Transportación Ferroviaria Mexicana (TFM), is a company dedicated to freight transportation using rail in the northeastern part of Mexico. KCSM is fully owned and operated by Kansas City Souther ...
would qualify as Class I, but do not operate within the United States.) In addition, the national passenger railroad in the United States,
Amtrak The National Railroad Passenger Corporation, doing business as Amtrak () , is the national passenger railroad company of the United States. It operates inter-city rail service in 46 of the 48 contiguous U.S. States and nine cities in Canada. ...
, would qualify as Class I if it were a freight carrier, as would Canada's
Via Rail Via Rail Canada Inc. (), operating as Via Rail or Via, is a Canadian Crown corporation that is mandated to operate intercity passenger rail service in Canada. It receives an annual subsidy from Transport Canada to offset the cost of operating ...
passenger service if it operated within the United States.


Background

Initially (in 1911) the
Interstate Commerce Commission The Interstate Commerce Commission (ICC) was a regulatory agency in the United States created by the Interstate Commerce Act of 1887. The agency's original purpose was to regulate railroads (and later trucking) to ensure fair rates, to elimina ...
(ICC) classified railroads by their annual
gross revenue In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business. Commercial revenue may also be referred to as sales or as turnover. Some companies receive reven ...
. Class I railroads had an annual operating revenue of at least $1 million, while Class III railroad incomes were under $100,000 per annum. All such corporations were subject to reporting requirements on a quarterly or annual schedule. If a railroad slipped below its class qualification threshold for a period, it was not necessarily demoted immediately. In 1925, the ICC reported 174 Class I railroads, 282 Class II railroads, and 348 Class III railroads. The $1 million criterion established in 1911 for a Class I railroad was used until January 1, 1956, when the figure was increased to $3 million. In 1956, the ICC counted 113 Class I line-haul operating railroads (excluding "3 class I companies in systems") and 309 Class II railroads (excluding "3 class II companies in systems"). The Class III category was dropped in 1956 but reinstated in 1978. By 1963, the number of Class I railroads had dropped to 102; cutoffs were increased to $5 million by 1965, to $10 million in 1976 and to $50 million in 1978, at which point only 41 railroads qualified as Class I. In a special move in 1979, all switching and terminal railroads were re-designated Class III — even those with Class I or Class II revenues. In early 1991, two Class II railroads,
Montana Rail Link Montana Rail Link is a privately held Class II railroad in the United States. It operates on trackage originally built by the Northern Pacific Railway and leased from its successor BNSF. MRL is a unit of The Washington Companies and is hea ...
and Wisconsin Central, asked the
Interstate Commerce Commission The Interstate Commerce Commission (ICC) was a regulatory agency in the United States created by the Interstate Commerce Act of 1887. The agency's original purpose was to regulate railroads (and later trucking) to ensure fair rates, to elimina ...
(ICC) to increase the minimum annual operating revenue criteria (then established at US$93.5 million) to avoid being redesignated as Class I, which would have resulted in increased administrative and legal costs. The Class II maximum criterion was increased in 1992 to $250 million annually, which resulted in the
Florida East Coast Railway The Florida East Coast Railway is a Class II railroad operating in the U.S. state of Florida, currently owned by Grupo México. Built primarily in the last quarter of the 19th century and the first decade of the 20th century, the FEC was a p ...
having its status changed to Class II. The thresholds set in 1992 were: *Class I: A carrier earning revenue greater than $250 million *Class II: A carrier earning revenue between $20 million and $250 million *Class III: A carrier earning revenue less than $20 million Since dissolution of the ICC in 1996, the
Surface Transportation Board The Surface Transportation Board (STB) of the United States is a federal, bipartisan, independent adjudicatory board. The STB was established on January 1, 1996, to assume some of the regulatory functions that had been administered by the Interstat ...
(STB) has become responsible for defining criteria for each railroad class. The STB continues to use designations of Class II and Class III since there are different
labor Labour or labor may refer to: * Childbirth, the delivery of a baby * Labour (human activity), or work ** Manual labour, physical work ** Wage labour, a socioeconomic relationship between a worker and an employer ** Organized labour and the la ...
regulations for the two classes. The bounds are typically redefined every several years to adjust for inflation and other factors. Class II and Class III designations are now rarely used outside the rail transport industry. The
Association of American Railroads The Association of American Railroads (AAR) is an industry trade group representing primarily the major freight Rail transport, railroads of North America (Canada, Mexico and the United States). Amtrak and some regional Commuter rail in North Am ...
typically divides non–Class I companies into three categories: *
Regional railroad In the United States, a regional railroad is a railroad company that is not Class I, but still has a substantial amount of traffic or trackage (and is thus not a short line). The Association of American Railroads (AAR) has defined the lower boun ...
s: operate at least or make at least $40 million per year. *Local railroads: smaller than a regional railroad, but engage in line-haul service. *
Switching and terminal railroad A switching and terminal railroad is a freight railroad company whose primary purpose is to perform local switching services or to own and operate a terminal facility. Switching is a type of operation done within the limits of a yard. It genera ...
s: mainly switch cars between other railroads and/or provide service in a common terminal.


Classes

In the United States, the
Surface Transportation Board The Surface Transportation Board (STB) of the United States is a federal, bipartisan, independent adjudicatory board. The STB was established on January 1, 1996, to assume some of the regulatory functions that had been administered by the Interstat ...
categorizes rail carriers into Class I, Class II, and Class III based on carrier's annual revenues. The thresholds, last adjusted for inflation in 2019 are: *Class I: A carrier earning revenue greater than $504,803,294 *Class II: A carrier earning revenue between $40,387,772 and $504,803,294 *Class III: A carrier earning revenue less than $40,387,772 In
Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by to ...
, a Class I rail carrier is defined () as a company that has earned gross revenues exceeding $250 million (CAD) for each of the previous two years.


Class I

Class I railroads are the largest rail carriers in the United States. In 1900, there were 132 Class I railroads, but as the result of mergers and bankruptcies, the industry has consolidated and , just seven Class I freight railroads remain.
BNSF Railway BNSF Railway is one of the largest freight railroads in North America. One of seven North American Class I railroads, BNSF has 35,000 employees, of track in 28 states, and nearly 8,000 locomotives. It has three transcontinental routes that ...
and
Union Pacific Railroad The Union Pacific Railroad , legally Union Pacific Railroad Company and often called simply Union Pacific, is a freight-hauling railroad that operates 8,300 locomotives over routes in 23 U.S. states west of Chicago and New Orleans. Union Paci ...
have a
duopoly A duopoly (from Greek δύο, ''duo'' "two" and πωλεῖν, ''polein'' "to sell") is a type of oligopoly where two firms have dominant or exclusive control over a market. It is the most commonly studied form of oligopoly due to its simplicit ...
over all transcontinental freight rail lines in the Western United States, while
CSX Transportation CSX Transportation , known colloquially as simply CSX, is a Class I freight railroad operating in the Eastern United States and the Canadian provinces of Ontario and Quebec. The railroad operates approximately 21,000 route miles () of track. ...
and
Norfolk Southern Railway The Norfolk Southern Railway is a Class I freight railroad in the United States formed in 1982 with the merger of Norfolk and Western Railway and Southern Railway. With headquarters in Atlanta, the company operates 19,420 route miles (31 ...
operate most of the trackage in the Eastern United States, with the
Mississippi River The Mississippi River is the List of longest rivers of the United States (by main stem), second-longest river and chief river of the second-largest Drainage system (geomorphology), drainage system in North America, second only to the Hudson B ...
being the rough dividing line.
Canadian National Railway The Canadian National Railway Company (french: Compagnie des chemins de fer nationaux du Canada) is a Canadian Class I freight railway headquartered in Montreal, Quebec, which serves Canada and the Midwestern and Southern United States. CN i ...
(via its subsidiary
Grand Trunk Corporation The Grand Trunk Corporation is the subsidiary holding company for the Canadian National Railway's properties in the United States. It is named for CN subsidiary railroad Grand Trunk Western Railroad. The Association of American Railroads has consi ...
) and
Kansas City Southern Railway The Kansas City Southern Railway Company is an American Class I railroad. Founded in 1887, it operates in 10 midwestern and southeastern U.S. states: Illinois, Missouri, Kansas, Oklahoma, Arkansas, Tennessee, Alabama, Mississippi, Loui ...
operate north-south lines near the Mississippi River.
Canadian Pacific Railway The Canadian Pacific Railway (french: Chemin de fer Canadien Pacifique) , also known simply as CPR or Canadian Pacific and formerly as CP Rail (1968–1996), is a Canadian Class I railway incorporated in 1881. The railway is owned by Canad ...
(via its subsidiary
Soo Line Corporation The Soo Line Railroad is the primary United States railroad subsidiary of the Canadian Pacific Railway , one of seven U.S. Class I railroads, controlled through the Soo Line Corporation. Although it is named for the Minneapolis, St. Paul and Sa ...
) has a comparatively small footprint in the
Upper Midwest The Upper Midwest is a region in the northern portion of the U.S. Census Bureau's Midwestern United States. It is largely a sub-region of the Midwest. Although the exact boundaries are not uniformly agreed-upon, the region is defined as referring ...
and
Northeastern United States The Northeastern United States, also referred to as the Northeast, the East Coast, or the American Northeast, is a geographic region of the United States. It is located on the Atlantic coast of North America, with Canada to its north, the Southe ...
. In addition, the national passenger railroads in the US and Canada —
Amtrak The National Railroad Passenger Corporation, doing business as Amtrak () , is the national passenger railroad company of the United States. It operates inter-city rail service in 46 of the 48 contiguous U.S. States and nine cities in Canada. ...
and
Via Rail Via Rail Canada Inc. (), operating as Via Rail or Via, is a Canadian Crown corporation that is mandated to operate intercity passenger rail service in Canada. It receives an annual subsidy from Transport Canada to offset the cost of operating ...
— would both qualify as Class I if they were freight carriers. Similarly, Mexico's
Ferromex Ferromex (syllabic abbreviation of Ferrocarril Mexicano or "Mexican Railway") is a private rail consortium that operates the largest (by mileage) railway in Mexico with combined mileage (Ferromex + Ferrosur) of and is part of the North American ...
would qualify as a Class I railroad if it had trackage in the United States.


Class II

A Class II railroad in the United States hauls freight and is mid-sized in terms of operating revenue. Switching and terminal railroads are excluded from Class II status. Railroads considered by the
Association of American Railroads The Association of American Railroads (AAR) is an industry trade group representing primarily the major freight Rail transport, railroads of North America (Canada, Mexico and the United States). Amtrak and some regional Commuter rail in North Am ...
as "Regional Railroads" are typically Class II. An example of a Class II would be the
Florida East Coast Railway The Florida East Coast Railway is a Class II railroad operating in the U.S. state of Florida, currently owned by Grupo México. Built primarily in the last quarter of the 19th century and the first decade of the 20th century, the FEC was a p ...
.


Class III

Class III railroads are typically local short-line railroads serving a small number of towns and industries or hauling cars for one or more railroads; often they once had been branch lines of larger railroads or even abandoned portions of main lines. Some Class III railroads are owned by railroad holding companies such as
Genesee & Wyoming Genesee & Wyoming Inc. (G&W) is an American short line railroad holding company, that owns or maintains an interest in 122 railroads in the United States, Canada, Belgium, Netherlands, Poland, United Kingdom and formerly Australia. It operates ...
or
Watco Watco Companies, L.L.C. (Watco) is a transportation company based in Pittsburg, Kansas, formed in 1983 by Charles R. Webb. Watco was composed of four divisions: transportation, mechanical, terminal and port services, and compliance. Watco is th ...
.


See also

* List of U.S. Class I railroads * List of U.S. Class II railroads *
Rail transport in Canada Canada has a large and well-developed railway system that primarily transports freight. There are two major publicly traded transcontinental freight railway systems, Canadian National (CN) and Canadian Pacific (CP). Nationwide passenger servic ...
* Rail transport in Mexico *
Rail transport in the United States Rail transportation in the United States consists primarily of freight shipments, with a well integrated network of standard gauge private freight railroads extending into Canada and Mexico. Passenger service is mainly mass transit and commute ...
* Timeline of Class I railroads: 1910–1929, 1930–1976, 1977–present


References


Citations


Sources


Surface Transportation Board FAQs – Economic and Industry Information

STB Ex Parte No. 647
*


External links





retrieved April 24, 2005.

{{DEFAULTSORT:Railroad classes Former Class I railroads in the United States Rail transportation in the United States Rail transport classification systems