RailAmerica, Inc.: From Inception To G&W Acquisition

Published: August 4, 2024

RailAmerica was established in 1986 by Gary O. Marino and John H. Marino, visionary railroaders who recognized the potential of expanding into the short line industry. Based in Boca Raton, Florida, the company initially focused on acquiring and rehabilitating underperforming and neglected short line railroads, transforming them into profitable enterprises.

This strategy allowed RailAmerica to carve out a unique niche within the broader railroad industry. The company’s early acquisition was the Huron and Eastern Railway in Michigan, an 83-mile component of former Pere Marquette/Chesapeake & Ohio trackage acquired from the newly formed CSX Transportation in 1986.

This takeover set the stage for its ambitious expansion throughout that remainder of that decade and into the 1990s.

When the Florida East Coast was an RA interest... Here, SD70M-2 #105 is in RA colors leading a southbound freight at Sunbeam, Florida on October 27, 2010. Technically the FEC was never in the RA portfolio was under the Fortress Investment umbrella when it controlled RailAmerica. Doug Kroll photo.

Rapid Expansion

Throughout the late 1980s and 1990s, RailAmerica aggressively expanded its portfolio by acquiring numerous short line railroads across the United States.

This era marked significant milestones, including the acquisition of the San Diego and Imperial Valley Railroad and the Ventura County Railroad in California. RailAmerica's growth was characterized by a strategy of revitalizing neglected rail lines, improving service offerings, and creating operational efficiencies.

In 1999, RailAmerica took a noteworthy step by acquiring RailTex, another major short line operator, which added 26 railroads and substantially increased RailAmerica's scale and presence in North America. This purchase positioned RailAmerica as one of the largest short line railroad operators in the United States.

In its 2000 annual report the railroad conglomerate noted it controlled 39 short line and regional railroads worldwide, operating over 11,000 route miles in the United States, Canada, Australia, and the Republic of Chile. Its total operating revenue at that time was $357.936 million with total assets of $839.703 million.

Going Public and Diversifying

RailAmerica went public in 1992, trading on the NASDAQ, which provided the company with the capital necessary to support its expansion and acquisition strategies. The influx of funding enabled RailAmerica to continue diversifying its portfolio, not only geographically but also in terms of services offered.

By the early 2000s, RailAmerica had branched out beyond North America, acquiring rail operations in Australia and Canada. These acquisitions extended RailAmerica's footprint into international markets and illustrated its ambition to become a global leader in the rail industry. Notably, the purchase of Australia’s Freight Australia in 2000 marked the company's largest international venture, although RailAmerica later exited the Australian market in 2004.

Strategic Focus and Streamlining

In the mid-2000s, RailAmerica shifted its strategy towards streamlining operations and focusing on its core markets in North America. This period was marked by a series of divestitures of non-core and underperforming assets, aiming to consolidate and strengthen its primary operations. The company also invested in enhancing the infrastructure and service capabilities of its existing lines to boost efficiency and reliability.

In 2007, RailAmerica was acquired by the Fortress Investment Group LLC, a private equity firm, for approximately $1.1 billion. This acquisition provided RailAmerica with substantial financial backing, which facilitated further investments in infrastructure and acquisitions. Under Fortress's ownership, RailAmerica continued to grow, acquiring several additional short lines and expanding its influence in the North American rail market.

Acquisitions and Operational Growth

During the late 2000s, RailAmerica continued to strategically acquire short line railroads that complemented its existing network. These acquisitions were driven by the desire to enhance connectivity and service offerings across its lines.

The company's portfolio grew to include over 40 railroads, making it one of the largest operators in the short line and regional rail industry in North America. In 2009 it reported operating revenues of $410.6 million.

RailAmerica’s operational growth was also characterized by significant investments in rail infrastructure, including upgrading track quality, enhancing signaling systems, and procuring newer locomotives and rolling stock. These improvements aimed to increase the capacity, safety, and efficiency of RA’s network, thereby attracting more customers and increasing freight volumes.

Central of Indiana GP50 #5003 and Indiana Southern GP40 #4038 are at Beehunter, Indiana on June 19, 2009. The attractive ISRR color scheme was applied to units during the Railtex era. Doug Kroll photo.

Safety and Customer Service

RailAmerica prided itself on a strong commitment to safety and customer service. The company implemented comprehensive safety programs and training initiatives to ensure the well-being of its employees and the communities it served. This focus on safety helped RailAmerica maintain a solid safety record and build trust with its stakeholders.

Customer service was another key pillar of RailAmerica’s business model. The company focused on providing reliable and flexible services tailored to the specific needs of its diverse customer base. By offering personalized service and maintaining strong customer relationships, RailAmerica was able to secure long-term contracts and stable revenue streams.

Acquisition by Genesee & Wyoming Inc.

In 2012, RailAmerica reached a significant milestone when it was acquired by Genesee & Wyoming Inc. (G&W) for approximately $1.39 billion. This merger marked a major consolidation within the short line railroad industry, combining two of the largest and most successful operators.

The acquisition was driven by several strategic factors. First, it allowed G&W to significantly expand its footprint in North America, adding RailAmerica’s extensive network of over 40 short line railroads to its portfolio. This expansion enhanced G&W's connectivity and service capabilities, positioning the combined entity as a dominant player in the short line and regional rail market.

Second, the acquisition provided opportunities for operational synergies and efficiencies. By integrating RailAmerica’s operations into its own, G&W aimed to streamline management structures, reduce costs, and enhance service offerings across the combined network. The merger also facilitated knowledge sharing and best practices between the two companies, further strengthening their operational capabilities.

Post-Acquisition Integration

Following the acquisition, G&W undertook a comprehensive integration process to consolidate RailAmerica’s operations with its own. This integration involved aligning management structures, standardizing operational procedures, and integrating information systems. The focus was on creating a unified network that could offer seamless and efficient services to customers across a vast geographic area.

The integration process was executed meticulously, with a focus on maintaining high levels of service quality and customer satisfaction. G&W leveraged its extensive experience and expertise in the short line railroad industry to ensure a smooth transition and maximize the benefits of the acquisition.

Railroad Holdings

Railroad	Heritage	Acquisition Date	Notes
Alabama and Gulf Coast Railway	StatesRail	1/2002	-
Arizona and California Railroad	ParkSierra	1/2002	-
Bauxite and Northern Railway	Alcoa	September 2005	-
California Northern Railroad	ParkSierra	1/2002	-
Cape Breton and Central Nova Scotia Railway	RailTex	2/2000	-
Carolina Piedmont Railroad	RailTex	2/2000	-
Cascade and Columbia River Railroad	Purchased	9/1996	-
Central Michigan Railway	Purchased	1/2004	-
Central Oregon and Pacific Railroad	RailTex	1/2000	-
Central Railroad of Indiana	RailTex	2/2000	-
Central Railroad of Indianapolis	RailTex	2/2000	-
Chesapeake and Albemarle Railroad	RailTex	2/2000	-
Chicago, Fort Wayne and Eastern Railroad	Purchased	2/2004	-
Connecticut Southern Railroad	RailTex	2/2000	-
Dallas, Garland and Northeastern Railroad	RailTex	2/2000	-
Eastern Alabama Railway	StatesRail	2/2002	-
Goderich-Exeter Railway	RailTex	2/2000	-
Grand Rapids Eastern Railroad	RailTex	2/2000	-
Huron and Eastern Railway	Purchased	1986	-
Indiana and Ohio Railway	RailTex	2/2000	-
Indiana Southern Railroad	RailTex	2/2000	-
Kiamichi Railroad	Purchased	1/2002	-
Kyle Railroad	StatesRail	1/2002	-
Lahaina, Kaanapali & Pacific Railroad	StatesRail	1/2002	Closed in 2014.
Marquette Rail	Purchased	2/2012	-
Massena Terminal Railroad	Alcoa	9/2005	-
Michigan Shore Railroad	RailTex	2/2000	-
Mid-Michigan Railroad	RailTex	2/2000	-
Missouri and Northern Arkansas Railroad	RailTex	2/2000	-
New England Central Railroad	RailTex	2/2000	-
North Carolina and Virginia Railroad	RailTex	2/2000	-
Ottawa Valley Railway	RaiLink	7/1999	-
Otter Tail Valley Railroad	Purchased	10/1996	-
Point Comfort and Northern Railway	Alcoa	9/2005	-
Puget Sound and Pacific Railroad	ParkSierra	1/2002	-
Raillink Canada Limited	Purchased	1/2002	-
Rockdale, Sandow and Southern Railroad	Alcoa	9/2005	-
San Diego and Imperial Valley Railroad	RailTex	2/2000	-
San Joaquin Valley Railroad	StatesRail	1/2002	-
South Carolina Central Railroad	RailTex	2/2000	-
Southern Ontario Railway	RaiLink	7/1999	-
Texas Northeastern Railroad	RailTex	2/2000	-
Toledo, Peoria and Western Railway	Purchased	9/1999	-
Ventura County Railroad	Purchased	8/1998	-
Virginia Southern Railroad	RailTex	2/2000	-
A&R Line, Inc.	Cargill	9/1999	Leased by TP&W in 1997; service discontinued in 9/2002.
Arizona Eastern Railway	StatesRail	1/2002	Sold (12/2004) to Permian Basin Railways.
Central Western Railway	RaiLink	7/1999	Sold (1/2006)
Dakota Rail, Inc.	Purchased	9/1995	Sold (12/2001) to Hennepin County Regional Railroad Authority.
Delaware Valley Railway	Purchased	7/1994	Lease to the Brandywine Valley Railroad in 3/1999.
E&N Railway	Purchased	1/1999	Sold (6/2006) to Southern Railway of British Columbia.
Evansville Terminal Company	Purchased	6/1996	Sold (9/1997) to John H. Marino.
Ferronor	Purchased	2/1997	Leased Potrerillos Railway (1/2002). Sold in February 2004.
Freight Australia	Purchased	4/1999	Sold (8/2004) to Pacific National.
Georgia Southwestern Railroad	RailTex	2/2000	Sold in March 2002.
Gettysburg Railway	Purchased	12/1996	Sold (10/1997) to John H. Marino. Later sold to Pioneer RailCorp in 2001, which created the Gettysburg & Northern Railroad. Today it is owned by Patriot Rail.
Indiana and Ohio Central Railroad	RailTex	2/2000	Merged into Indiana and Ohio Railway (5/2005).
J.K. Line, Inc.	Cargill	9/1999	Leased by TP&W in 1998; service discontinued in 4/2002.
Lakeland and Waterways Railway	RaiLink	7/1999	Sold 1/2006
Mackenzie Northern Railway	RaiLink	7/1999	Sold 1/2006
Minnesota Northern Railroad	Purchased	12/1996	Sold (8/2000) to KBN, Inc.
Ontario L'Orignal Railway	RailTex	2/2000	Sold 12/2000
Pittsburgh Industrial Railroad	RailTex	2/2000	Sold 12/2000 to Summit View, Inc.
Plainview Terminal Company	Purchased	11/1995	-
St. Croix Valley Railroad	Purchased	9/1997	Sold (8/2000) to KBN, Inc.
Saginaw Valley Railway	Purchased	March 1992	Merged September 2004 into Huron and Eastern Railway
San Luis and Rio Grande Railroad	Purchased	6/2003	Sold (12/2005) to Permian Basin Railways.
San Pedro and Southwestern Railway	StatesRail	1/2002	Sold (12/2003) to Arizona Railroad Group.
South Central Tennessee Railroad	Purchased	2/1994	Sold (12/2000)
Texas-New Mexico Railroad	RailTex	2/2000	Sold (5/2002) to Permian Basin Railways.
West Texas and Lubbock Railroad	Purchased	11/1995	Leased to Permian Basin Railways in 5/2002; later sold to that railroad in 12/2004.

Toledo, Peoria & Western GP40 #4020 and an ex-Southern Pacific 'Tunnel Motor' are at Bartonville, Illinois on March 24, 2012. Doug Kroll photo.

Legacy and Impact

The acquisition of RailAmerica by Genesee & Wyoming Inc. marked the end of an era for RailAmerica as an independent entity, but its legacy lived on within the larger framework of G&W.

RailAmerica’s history of growth, innovation, and commitment to customer service continued to influence and shape the operations of the combined entity.

The integration of RailAmerica’s network and expertise significantly bolstered G&W’s capabilities, allowing it to offer an even more comprehensive and reliable rail service to its customers. The acquisition also underscored the ongoing trend of consolidation within the railroad industry, as companies sought to achieve economies of scale and enhance their competitive positioning.

In conclusion, RailAmerica’s journey from its inception in 1985 to its acquisition by G&W in 2012 was characterized by ambitious growth, strategic acquisitions, and a steadfast commitment to operational excellence.

The company’s ability to transform underperforming railroads into profitable enterprises and its emphasis on safety and customer service made it a leader in the short line railroad industry. The legacy of RailAmerica continues to influence the operations of Genesee & Wyoming Inc., contributing to its position as a dominant force in the global rail industry.