Shortline railroad

A shortline railroad is a small or mid-sized railroad company that operates over a relatively short distance relative to larger, national railroad networks. The term is used primarily in the United States and Canada. In the U.S., railroads are categorized by operating revenue, and most shortline railroads fall into the Class III or Class II categorization defined by the Surface Transportation Board.

Shortlines generally exist for one of three reasons: to link two industries requiring rail freight together (for example, a gypsum mine and a wall board factory, or a coal mine and a power plant); to interchange revenue traffic with other, usually larger, railroads; or to operate a tourist passenger train service. Often, short lines exist for all three of these reasons.

In the beginning of the railroad age, nearly all railway lines were shortlines, locally chartered, financed and operated; as the railroad industry matured, local lines were merged or acquired to create longer mainline railroads.

Especially since 1980 in the U.S. and 1990 in Canada, many shortlines have been established when larger railroad companies sold off or abandoned low-profit portions of their trackage. Shortline operators typically have lower labor, overhead and regulatory costs than Class I railroads and therefore are often able to operate profitable lines that lost money for their original owners.

Because of their small size and generally low revenues, the great majority of shortline railroads in the U.S. are classified by the Association of American Railroads as Class III. As defined by the Surface Transportation Board, a Class III is a railroad with an annual operating revenue of less than $28 million. In Canada, Transport Canada classifies short line railroads as Class II.

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