BNSF Railway Transportation Article Example | Topics and Well Written Essays - 1500 words

BNSF Railway Transportation - Article idealThe services offered by the fabrication are bulk cargo, intermodal services, passenger services and switching and terminal hale services (IBISWorld, 2011). According to statistics from the U.S. Department of Transportation, freight shipments have increased from 27% of the ton-miles of U.S. freight in 1980 to 38% in 2005 (Laurits R. Christensen Associates, Inc., 2009). This increase shows the growing significance of the role of lines in the U.S. economy. Among the cargo being shipped through the lines, char represents the largest proportion in terms of tons (Laurits R. Christensen Associates, Inc., 2009). Other commodities transported by railroads include chemicals, farm products, non-metallic minerals and miscellaneous confused shipments. Over the years, the railway industry has experienced consolidations that have reduced the number of Class I from astir(predicate) 40 railways to the current seven. The seven major players in the ra ilway industry are Union peace-loving Corporation (UP), Burlington Northern Santa Fe Corporation (BNSF), CSX Corporation, Kansas City Southern (KCS), Canadian National Railway (CN), Canadian Pacific Railway (CP) and Norfolk Southern Corporation (NS). In terms of operating revenues of the major North American railroad, the Union Pacific posted the highest revenue with $15.5 million. It is followed by BNSF with operating revenue of $14.8 million, NS with $9.4 million, CSX with $8.6 million, CN with $6.8 million, CP with $4.1 million and KCS with $0.87 million (Association of American Railroads, 2008) . ostiariuss Five Forces Like any other industry, the railway industry is influenced by Porters five draw off plays model which shape the strategies of companies, as shown in Figure 1 (Porter, 2008). The first force identified by Porter is the threat of new entrants. This force is the possibility of new companies entering the industry. This force is not very influential in the strategy of a company in the railway industry because of several barriers to entry. The barriers to entry in the railroad industry are (1) huge capital requirement demand (2) restrictive government policy which is being regulated by the Surface Transportation Board and (3) the availability of the infrastructure needed to compete with existing ones. In the early, it is expected that mergers will continue in the future and may even reduce the present seven companies to two transcontinental railroads because of the uncertainty of the structure of the railroad industry (IRS, 2007). Fig. 1 Porters Five Forces Model The second force identified by Porter is the bargaining power of suppliers. Suppliers of the railway industry include the manufacturers of tracks, railway equipment, structural metal products, freight cars, locomotives and construction companies who build the tunnels and bridges. Investors in railway companies can be considered as suppliers of the much needed financing to improve t he industry. Recently, billionaire Warren Buffet invested in BNSF by buying it for $26 billion while Microsofts Bill Gates now owns 10% of CN railway. Investment of these two prominent personalities says much of the future of the railway industry (North Americas Corridor Coalition, Inc., 2010). To illustrate clearly, the supplier power according to Porter includes (1) charging of high prices (2) limiting the quality of the