Transporting Crude Oil by Rail

Train TracksCarriers and freight forwarders are rejoicing in the comeback of intermodal shipping in North America. The reason is because of the energy industry. Rail has been very important for the oil boom in the US and Canada because rail can move crude oil where pipelines are not available. For example, in 2008, the rail industry made $25.6 million moving oil. Last year, they brought in $2.15 billion from oil. This nearly 100x increase in just five years is simply amazing. Thus, the intermodal industry and the energy sector depend on each other heavily in North America.

There have been rumors recently of a potential merger between Canadian Pacific Railroad, the 2nd biggest rail company in Canada, and CSX, the 3rd largest rail carrier in the United States. The reason for the possible merger is because of the high demand for oil. Canadian Pacific Railroad already receives about 1/3 of their revenue from oil. They are expected to ship about 120,000 carloads this year and next year’s projection is about 200,000 carloads.

This type of merger would have a tremendous impact on energy shipping and for those who ship domestic cargo. Their combined revenue would be worth over $60 billion and it would put both businesses on the forefront of the North American oil boom. CSX already has rail access that span from the refineries on the US East Coast to the major hubs in the Midwest. They are missing access to the North Dakota oil fields, which Canadian Pacific Railroad already has access. There could be roadblocks preventing such a merger, due to US law and the US Surface Transportation Board having a say.

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