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If Warren Buffett is betting on something, it may be worth taking seriously.

When the celebrated investor put $26 billion for the Burlington Northern Santa Fe Corp in late 2009, he made a clear indication that he believed the U.S. rail system would be a key player in the country’s economic future.

Of course, this would not be an overnight process, but with gas prices only predicted to climb in the future, betting on a low-maintenance, more energy efficient system of transportation (Buffett boasts that a ton of goods can move 470 miles on one gallon of diesel fuel), seems like a prudent move.

Like the overall economy, rail took a huge hit in 2009, but the Association of American Railroads is reporting that in the first 25 weeks of 2010 on 13 reporting U.S., Canadian and Mexican railroads totaled 9,208,258 carloads, up 10.4 percent from last year, and 6,507,218 trailers and containers, up 12.9 percent from last year.

The association now takes weekly measures and pits them against 2009 and 2008 numbers. As it appears with the majority of economic indicators, numbers are consistently better than 2009, but still lagging behind 2008.

In its latest report, U.S. railroads originating 284,716 carloads for the week ending June 26, 2010, up 11.4 percent compared with the same week in 2009, but down 13.2 percent from 2008.

Numbers are trending positive, but it would be a stretch to say that they are ideal for what would be considered a healthy economy.

However, despite the industry’s hurdles, optimism is still the outlook of most rail operators as the Wall Street Journal reports that during this recession the rail industry has invested close to $20 billion in capital improvements.

That is probably music to Mr. Buffett’s ears.

Tags | industrial, Transportation

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