Rail Cargo Transportation Services Procurement Category Market Research Report from IBISWorld has Been Updated

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The rail cargo transportation service market’s concentrated structure gives carriers considerable pricing power, allowing carriers to raise rates at a moderate pace over the past few years in response to an increase in shipping volumes and growth in maintenance and repair costs. For these reasons and to help procurement professionals make better buying decisions faster, business intelligence firm IBISWorld has updated a report on the procurement of Rail Cargo Transportation Services in its growing collection of procurement category market research reports.

IBISWorld industry market research
Improved pipeline infrastructure will mitigate some price growth of rail cargo transportation services

Rail cargo transportation services have a buyer power score of 2.8 out of 5. The market's concentrated structure is the main contributor to weak buyer power. Only seven Class 1 railroads operate in the United States, and only a few large railroad holding companies dominate the regional and short-line railroads, the largest of which purchased the second largest in 2012. As such, “low and declining competition among railroads limits shippers' choices,” says IBISWorld research analyst Anna Son, adding, “Location also constrains choice because shippers only have access to railroads that serve the routes they ship over. Generally, only two or even one carrier serves a given route, creating a duopoly or ‘captive’ shippers, respectively.” Captive shippers have lower buyer power than the market average. Major vendors include Burlington Northern Santa Fe Corp., CSX Corp., Norfolk Southern Corp. and Union Pacific Corp.

High market share concentration and growing demand have enabled rail cargo transportation service carriers to increase prices moderately during the three years to 2014. Moderate price growth has occurred despite contractions in carriers' two largest costs: wages and fuel. According to Son, price growth is expected to proceed at a moderate, but slightly slower rate during the next three years. Although extreme growth in crude-by-rail shipping has helped spur recent price gains, increased pipeline availability will limit growth in this service over the next three years. The prices that individual shippers will pay for transport will continue to vary widely due to carriers' differential (i.e. customer-specific) pricing model.

Shippers whose facilities offer competitive access to multiple railroads and whose goods can also be transported by truck have higher buyer power than the market average. If such shippers create leverage through freight volume, bundling their routes or convincing a railroad that their business suits its operational goals, they receive substantial discounts. These discounts often amount to half the price that captive shippers pay. For more information, visit IBISWorld’s Rail Cargo Transportation Services procurement category market research report page.

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IBISWorld Procurement Report Key Topics

This report is intended to assist buyers of rail cargo transportation services, which are provided by Class 1, 2 and 3 railroads. Respectively, these railroads offer long-haul intercity, regional and short line (i.e. local) service. Railroads are also called rail carriers in this report and buyers are referred to as shippers. This report does not include passenger rail transportation.

Executive Summary
Pricing Environment
Price Fundamentals
Benchmark Price
Pricing Model
Price Drivers
Recent Price Trend
Price Forecast
Product Characteristics
Product Life Cycle
Total Cost of Ownership
Product Specialization
Substitute Goods
Regulation
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Imports
Competitive Environment
Market Share Concentration
Market Profitability
Switching Costs
Purchasing Process
Buying Basics
Buying Lead Time
Selection Process
Key RFP Elements
Negotiation Questions
Buyer Power Factors
Key Statistics

About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
IBISWorld Inc.
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