The North American railroad sector continues to undergo transformational change, but the execution is not without risk. These companies are overhauling what have been described as ‘dense spaghetti networks’. Find out more from Global Listed Infrastructure Senior Analyst Jessica Johnson, who shares insights from her recent trip to the US.

In December I spent two weeks visiting infrastructure companies in the United States. It was a busy couple of weeks with over 50 company visits across five cities including meetings with tower companies, energy companies, utilities, railroads, regulators, politicians and much more.

This note focuses on my learnings from the North American railroad sector which has seen significant operational changes.


  • The North American railroad sector continues to undergo transformational change. Implementation of Precision Scheduled Railroading (PSR) has resulted in a step-change in efficiency that has delivered exceptional improvements in company profitability and shareholder returns. 
  • Execution of PSR is not without risk. It requires a mature workforce to embrace cultural change. Customers are forced to adapt to a system where they are no longer the only priority. Complaints may lead to political and regulatory intervention.
  • The market has been sceptical that all railroads can implement PSR. Recent meetings with US railroad management, the STB regulator, shippers, and PSR experts have raised our conviction that Union Pacific (UNP) is on the right track.
  • The portfolio has positions in UNP and Norfolk Southern (NSC). These are high quality companies trading at reasonable valuations that rank highly in our process.