In the United States, railroad carriers are designated as Class I, II, or III, according to size criteria set by the Surface Transportation Board in 1992 and adjusted for inflation annually. The annual revenue threshold for Class I rail carriers for 2019 was $504,803,294. According to said classification there are seven US Class I freight railroad companies including two Canadian carriers with subsidiary trackage in the US.
The seven Class I freight carriers are BNSF Railway, Canadian National Railway with its subsidiary Grand Trunk Corporation, Canadian Pacific Railway with its subsidiary Soo Line Corporation, CSX Transportation, Kansas City Southern Railway, Norfolk Southern Railway, and Union Pacific Railroad.
In addition, the national passenger railroads in the US and Canada—Amtrak and Via Rail— would both qualify as Class I if they were freight carriers. Similarly, Mexico would have two Class I railroads, Ferromex and Kansas City Southern de México.
Initially, the Interstate Commerce Commission (ICC) classified railroads by their annual gross revenue. Class I railroads had an annual operating revenue of at least $1 million, while Class III railroad incomes were under $100,000 per annum. All such corporations were subject to reporting requirements on a quarterly or annual schedule. If a railroad slipped below its class qualification threshold for a period, it was not necessarily demoted immediately. For instance, in 1925, the ICC reported 174 Class I railroads, 282 Class II railroads, and 348 Class III railroads.
Since dissolution of the ICC in 1996, the Surface Transportation Board (STB) has become responsible for defining criteria for each railroad class. The bounds are typically redefined every several years to adjust for inflation and other factors.
The initial $1 million criterion established in 1911 for a Class I railroad was used until January 1, 1956, when the figure was increased to $3 million. In 1956, the ICC counted 113 Class I line-haul operating railroads (excluding "3 class I companies in systems") and 309 Class II railroads (excluding "3 class II companies in systems"). The Class III category was dropped in 1956 but reinstated in 1978. By 1963, the number of Class I railroads had dropped to 102; cutoffs were increased to $5 million by 1965, to $10 million in 1976 and to $50 million in 1978, at which point only 41 railroads qualified as Class I.
In a special move in 1979, all switching and terminal railroads were re-designated Class III, including those with Class I or Class II revenues.
Class II and Class III designations are now rarely used outside the rail transport industry. The Association of American Railroads typically divides non–Class I companies into three categories:
- Regional railroads: operate at least 350 miles (560 km) or make at least $40 million per year.
- Local railroads: non-regional but engage in line-haul service.
- Switching and terminal railroads: mainly switch cars between other railroads or provide service from other lines to a common terminal.
In the United States, the Surface Transportation Board categorizes rail carriers into Class I, Class II, and Class III based on carrier's annual revenues. The thresholds, which were set in 1992, defines
- Class I carriers as any carrier earning revenue greater than $250 million,
- Class II carriers as those earning revenue between $20 million and $250 million, and
- Class III carriers as those earning revenue less than $20 million.
In early 1991, two Class II railroads, Montana Rail Link and Wisconsin Central, asked the Interstate Commerce Commission (ICC) to increase the minimum annual operating revenue criteria (then established at US$93.5 million) to avoid being redesignated as Class I, which would have resulted in increased administrative and legal costs. The Class II maximum criterion was increased in 1992 to $250 million annually, which resulted in the Florida East Coast Railway having its status changed to Class II.
In Canada, a Class I rail carrier is defined (as of 2004) as a company that has earned gross revenues exceeding $250 million (CAD) for each of the previous two years.
Class I railroads are more fuel efficient than truck transport – on average, they move one ton of freight (0.91 metric tons) more than 470 miles (756 kilometers) per gallon (3.8 liters) of diesel fuel.
|Canadian National Railway||Yes||Yes
|Canadian Pacific Railway||Yes||Yes
|Kansas City Southern Railway||No||Yes||Yes|
|Norfolk Southern Railway||Yes||Yes||No|
|Union Pacific Railroad||No||Yes||No|
- Amtrak meets the revenue specifications for Class I status, but is not technically a Class I railroad due to being passenger-only with no freight component.
- Operated by Grand Trunk Corporation, a wholly owned subsidiary of Canadian National Railway.
- Operated by Soo Line Corporation, a wholly owned subsidiary of Canadian Pacific Railway.
- Operated by Kansas City Southern de México, a wholly owned subsidiary of Kansas City Southern.
- Via Rail meets the revenue specifications for Class I status, but is not technically a Class I railroad due to being passenger-only with no freight component.
A Class II railroad in the United States hauls freight and is mid-sized in terms of operating revenue. Switching and terminal railroads are excluded from Class II status.
Railroads considered by the Association of American Railroads as "Regional Railroads" are typically Class II. An example of a Class II would be the Florida East Coast Railway.
Current Class II criteria
The last major change of the upper bound for a Class II railroad was in 1992, when the Florida East Coast Railway was changed from a Class I railroad to Class II. A previous change in 1991, which prevented two railroads—Montana Rail Link and Wisconsin Central—from becoming Class I, was made at the request of the two railroads, as they did not wish to take on the extra cost and paperwork associated with Class I status. Changes since then have been adjustments for inflation.
Class III railroads are typically local short-line railroads serving a small number of towns and industries or hauling cars for one or more railroads; many Class III railroads were once branch lines of larger railroads or abandoned portions of main lines. Many Class III railroads are owned by railroad holding companies such as Genesee & Wyoming, Watco Companies and Iowa Pacific Holdings.
Continued use of the class system
In the United States, the Surface Transportation Board continues to use designations of Class II and Class III since there are different labor regulations for the two classes.
- List of U.S. Class I railroads
- List of U.S. Class II railroads
- Rail transport in Canada
- Rail transport in Mexico
- Rail transport in the United States
- Timeline of Class I railroads: 1910–1929, 1930–1976, 1977–present
- "Surface Transportation Board: Economic Data".
- New ICC classification becomes effective Railway Age February 8, 1965 page 7
- "Surface Transportation Board Economic Data". Retrieved February 17, 2021.
- Arrivals and Departures, Trains March 1991
- Branch, Legislative Services (June 3, 2019). "Consolidated federal laws of canada, Transportation Information Regulations".
- "Freight Rail & Preserving the Environment". Association of American Railroads. 2020. p. 1. Retrieved September 6, 2020.
- "Arrivals and Departures". Trains. November 1992.
- Surface Transportation Board FAQs – Economic and Industry Information
- STB Ex Parte No. 647
- Stover, John F. (1999). The Routledge Historical Atlas of the American Railroads. New York, NY: Routledge. ISBN 0-415-92140-6.