Industry Analysis & Industry Trends
The Rail Freight Transport industry has expanded over the past five years due to increased downstream demand from miners, as coal and iron ore export volumes have risen. Industry profitability is strongest when heavy commodities are carried over long distances, as long-distance travel presents rail transport with a strong advantage in economies of scale and fuel efficiency. The bulk freight segment has strengthened over the past five years, as the Mining division shifted from a boom in prices (and investment) to a boom in output. Industry revenue is forecast to rise at a compound annual rate of 4.0% over the five years through 2015-16, to reach $8.1 billion. A substantial fall in the world price of iron ore in 2014-15 is projected to slow industry growth to 2.4% in 2015-16... purchase to read more
Industry Report - Industry Investment Chapter
Capital costs for the industry are high, due to the specific plant and equipment used by rail freight operators. IBISWorld estimates that the industry invests $0.57 in capital for every dollar spent on wages. Capital assets, including locomotives and wagons, have very large initial costs, but also long useful lives. Labour costs are more variable than capital costs and can be reduced by investing in automation, which increases capital costs.
The industry's capital intensity has increased slightly over the past five years. Depreciation has grown due to increased investment by rail freight operators in new rolling stock to meet demand... purchase to read more