Rail Freight Project Finance

Abstract

Since the early 1990s, privatization has swept the global railway market. The experience of Railroad Development Corporation, a U.S.-based railway investment and management company focused on developing countries, suggests that marketing has a greater impact than cost control on the success of a railway project. A case study on the restoration of an abandoned railroad in Guatemala illustrates how Railroad Development Corporation found local partners, identified freight customers, leased the right of way for non-railroad businesses, arranged financing, and reconstructed the railroad. Lessons learned on assessing the transportation market and valuing the business would be helpful for other emerging-market railroad projects.