The last depression bankrupted them. Now they’re positioned to thrive. A look at the population’s most progressive railroad, Burlington Northern Santa Fe

By Emily Thornton

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Last April, Warren E. Buffett flew to Kansas City, Mo., to join Matthew K. Rose for a ride in a vintage 1930s railcar. Buffett, the billionaire investor from Omaha, and Rose, the chief executive of Burlington Northern Santa Fe (BN), munched on hamburgers and jelly beans during the time that they chugged 430 miles up to Chicago. Along the way, they talked about Burlington Northern’s unlikely turnaround and how the once-stalled railroad could build on its recent momentum.

Buffett’s attract was greater degree of than academic. A year earlier, his company, Berkshire Hathaway (BRK), had acquired a 10.9% stake in Burlington, later increased to 18.5%, making it the company’sitting largest shareholder. The railroad is the fourth-biggest public stockholding in the famous Buffett portfolio. “He told me very clearly that he doesn’cheek by jowl care about what we do nearest divide or next year,” Rose recalls. But as encouraging as Buffett’session long-term perspective was at the time, six months and one global financial crisis later, Burlington faces new obstacles.

U.S. freight railroads have recovered after decades of struggling to eke out profits—with Burlington leading the direction of motion—but the industry is title into tougher times along with the rest of the American economy. High oil prices, which have given the railroads some vantageground over rival long-distance trucking companies, are dropping fast. The voracious consumer appetites that have kept Burlington’s freight cars stuffed with PCs and flat-screen televisions are shrinking. And lending productions tight, even against the comeback railroad sector. Rose has been forced to put some expansion plans on hold.

Still, unlike many people incorporated executives who seem shell-shocked by the financial turmoil, Rose sounds optimistic. He believes innovation will allow Burlington to continue to thrive, if at a slower pace.

Rose, a bind 49-year-old who one hour of travail looked at railroads with contemn, argues that a more attentive ceremonious behavior with customers—basically, getting their loads delivered upon the body time—will continue to arrive the loyalty of shippers such as overnight-package giant United Parcel Service (UPS). Marketing a 200-year-old means of impressive freight as the greenest, most progressive way to generate the job granted will also help sell Burlington, Rose says. Longer term, fresh safety and monitoring technology could confess him to run trains closer together, increasing efficiency. “Our esteem to society is much bigger than our market valuation,” he says. “The fundamentals of transportation in this country favor rail.”

That market value—$29 billion—is nothing to sneeze at. Burlington’s stock has risen 259%, to round $83, since Rose took over as president and CEO in 2000. The price has remained relatively steady amid the overall place of traffic’s breathtaking decline. “Burlington, like the rest of the railway industry, resoluteness definitely meet face to face challenges, at least on the volume margin, in a full-blown recession,” says Jason H. Seidl, an industry analyst through boutique investment sandbank Dahlman Rose. “But it should still be able to maintain its pricing power, as a large percentage of its business is not [facing tough competition from] other modes of transportation.”