Rail's ability to ease congestion, by attracting freight and people to switch from road and air, coupled with its excellent environment credentials, has already been recognised by politicians and planners. But now this message has been picked up by private investors.
Buffett's decision has already sent ripples around the world, and had an instant impact on the share price of rail-related companies as far away as China. It will certainly encourage other investors to re-evaluate rail as a proposition worth considering, particularly in the current financial climate where the appetite to invest in spurious financial instruments hopefully is waning in favour of more traditional and tangible industries.
The BNSF deal could also make it easier to raise capital for railway investment projects. It will certainly make US investors see rail in a new light, and should give a boost to President Obama's plans to develop passenger rail services including high-speed. Will the message spread further afield, and get the mired Argentine high-speed project off the starting blocks for example?
Buffett's confidence in rail could also encourage investors and politicians to take another look at privatisation. Will the German government, for example, see the long-awaited privatisation of German Rail in a new light? Will the appetite for rail privatisation in Russia be rekindled?
Buffett is different from most multi-billionaires. He is not one to flaunt his wealth. He lives in a modest house in Omaha, Nebraska, where his company Berkshire Hathaway is headquartered. He buys hail-damaged cars to save money and even then he only changes his car when it is absolutely necessary. Berkshire Hathaway is run in a minimalist way with an extremely small staff. As a result, the company only occupies a small part of a building in Omaha.
This ethos is reflected in Buffett's business philosophy to invest in companies that are well run, solid, and make good profits. He believes in investing in people and real businesses with a long-term future, rather than financial instruments or get-rich-quick deals. He therefore tends to leave managers to run their business as they see fit.
This should be good news for the management team at BNSF. One of the problems of being a listed company is that shareholders and investment analysts often demand short-term decisions for immediate gain. This certainly does not sit well with a railway which is a very long-term business which requires long-term planning and investment if it is to succeed. Buffett has already said he is in this for the long term as the business is going to be around for next 100 to 200 years. It doesn't get much longer term than that!