FreightWaves Classics: TTX owns 10+% of all North American railcars

The North American railroad industry is about 190 years old. According to the railroad industry, there were over 1,620,000 railcars in North America at the beginning of 2020.

However, earlier this year it was estimated that as many as 24% of North America’s  railcars were “parked” or in storage of one kind or another. That percentage has no doubt fluctuated throughout a year that has been heavily impacted by the global pandemic and economic dislocations.

Of the 1.62 million railcars in North America, more than 10% of that total is owned by a single company. Founded 65 years ago and well-known within the railroad industry and with those that follow the industry closely, its name is a short acronym. 

What company is this? TTX. 

As stated on its website, “Since 1955, TTX has been a unique and creative provider to the rail industry. Throughout the United States, Canada and Mexico, the signature yellow cars of TTX Company move along North America’s railroads carrying containers, trailers, automobiles, lumber, steel, paper and a long list of other goods and raw materials that consumers and companies rely on every day.”

As it also states on the TTX website, “…TTX is not a railroad. And, it is not a railcar leasing company.”

So what is TTX? It is a “railcar pooling company,” but that is not why it was founded.

TTX was founded by the Pennsylvania Railroad (PRR), Norfolk & Western (partially owned by the PRR) and Rail-Trailer Corporation as Trailer Train Company in 1955. Trailer Train revolutionized the railroad industry by using flatcars that could haul truck trailers, beginning the intermodal era. Other railroads bought stock in Trailer Train/TTX. In 1974 the companies that jointly owned TTX sought to establish company distribution principles under a “pooling agreement,” which was approved by the Interstate Commerce Commission (ICC). Since its founding in 1877 the ICC had regulatory authority over the railroads, and would until deregulation in 1980.  

TTX ownership 

The seven Class I railroads – BNSF, Canadian National, Canadian Pacific, CSX, Kansas City Southern, Norfolk Southern and Union Pacific – along with Ferromex and PanAm – own TTX. 

TTX is the “industry’s railcar cooperative,” and  operates under a pooling authority from the Surface Transportation Board, which is the regulatory agency that supplanted the ICC when it was dismantled. 

Because of TTX’s ownership, its goal is to “maximize railcar efficiency and not margins.” 

The TTX focus is a “right-sized, well-maintained fleet, with the lowest possible costs that serve the railroads’ customer’s needs.”

TTX members also have their own railcars, which are branded with their own names and logos. They are not obligated to use TTX railcars; most of the trains they move are a mix of their own railcars, railcars owned by other railroads and TTX railcars. A key advantage of using TTX railcars, however, is that a TTX member railroad only pays for the use of a TTX railcar when it is needed. 

According to the TTX website, “Pooling means that railroads share the railcars,” which generates multiple benefits: 

• Railroads can respond to changes in market conditions because the fleet is already established.
• Railroads do not waste resources switching out and returning empty railcars, eliminating supply chain inefficiencies. 
• The railroads’ capital expenditures are reduced. TTX purchases the railcars, which lowers railroads’ operating costs, thereby reducing railroads’ risk. 
• Railroads, therefore, are more competitive, benefiting shippers. 

TTX markets itself as “THE RAILCAR EXPERTS℠.” The company assists its railroad owners by “providing, tracking and maintaining railcars in an efficient, pooled environment.” 

While TTX is not owned by all the railroads operating in North America, its fleet serves not only the large Class I railroads, but also the smaller regional and short-line railroads. The TTX marketing/advertising tagline is “Next Load, Any Road.” It supports TTX’s core mission, which is to provide “railcars that can be reloaded at destination, reducing empty miles and saving the industry millions in operational costs each year.” TTX railcars move freely among not only the Class I railroads, but hundreds of short-line and regional railroads. These TTX railcars deliver freight across North America.

In Part 2 of this series, the history of TTX will be explored in more depth.