railway

Since Warren Buffett bougth Burlington, railway stocks have been hot. There are long term bullish arguments for railways:
1. No more new entry. There won't be any more new rails to be built.
2. There will be more trades with China. So there are more demand for railway to transport from ports in west to east.
3. There will be more efficient to transport through rail than trucks, especially there is a global warming accord.
4. There will be more agriculture and resources shipments (crops, coal, fertilizer and etc)

However, there are some negatives as well:
1. Panama canal is expanding and by 2013, there will be more big ships can go direct to east coast from Asia.
2. Most railways are unionized. The labour cost will be difficult to contain.
3. Most efficiency measures have been implemented. It is more difficult to improve productivity.
4. Most rails are old and need capital investments to improve.
5. Although barriers of entry are very high but trucks are alternatives which put a lid on how much rail can charge.
My conclusion is the sector is slightly overvalued. I will be interested after 10 correction. I will buy CNR in Canada around 51.