SIC 6517 Lessors of Railroad Property

SIC 6517

Establishments in this classification are primarily engaged in leasing railroad property.

NAICS CODE(S)

531190

Lessors of Other Real Estate Property

This industry consists of lessors of new and used rail car equipment (single and double-stack), locomotives, and often, as part of the lease agreement, the refurbishment and maintenance of these items. Rail cars are categorized as grain cars (covered hopper cars most often carrying grain), boxcars, gondolas, and intermodal cars, which carry products in a trailer or container. Three types of leases are common: short (which includes per diem), middle, and long term. Leases commonly run between two and five years. At the end of 2004 approximately 275,000 tank cars and 1.4 million freight cars were owned and leased in North America.

Rail property lessors primarily provide transport of such commodities as grain; farm products; metallic ores; coal; crushed stone; nonmetallic minerals; grain mill products; food and kindred products; primary forest products; lumber and wood products, pulp, paper, and allied products; stone, clay, and glass products; military equipment; and waste and scrap materials.

The railroad industry is subject to complicated safety, environmental, structural, and financial regulations. A deregulation movement in the 1980s resulted in loosened restrictions that had a positive impact on the vigor of the leasing industry. Deregulation permitted negotiated, rather than statutory, freight rates and terms. This trend culminated in the abolition of the Interstate Commerce Commission (ICC) effective January 1, 1996, which eliminated some regulatory functions altogether. Prior to 1996, the ICC was a key regulatory agency overseeing the industry, but in its demise the remaining functions that were not abolished reverted to the U.S. Department of Transportation. The Federal Railroad Administration within the Department of Transportation deals with safety issues surrounding the industry, rehabilitation of rail passenger services, consolidation of federal funding, and support of research and development. The Association of American Railroads, a trade organization, represents the interests of the vast majority of Class I railroads, including the leasing of railroad property, through legislative activity and support. The Equipment Leasing Association of America represents the equipment leasing and finance industry in general, including many...