As freight volumes decline across modes during the economic slowdown, rail carriers have been able to maintain prices and profits ?C creating increased calls in some quarters for re-regulating the railroads.

Since the 1950s, the rail industry was notorious for its challenging economics and low returns on invested capital. The build out of the US interstate highway system and the corresponding diversion of substantial shipper freight from rail to truck made the railroads a tough business to be in for several decades.

But starting in about 2004, a variety of factors ?C especially the surge in imports into the US and rising fuel prices ?C suddenly led to flush times for the rail carriers. Profits soared. Billionaire Warren Buffet made investments in several carriers; he is known as an investor who prefers companies with strong pricing power.

Now, as the rail carriers continue to increase rates, calls for re-regulation, which have been around for some time but have not received a whole lot of attention, appear to be increasing.

Rick Paterson, a transportation sector analyst at UBS, told the Wall Street Journal this week that the Tier 1 US rail carriers raised rates an average of 6% through the first three quarters of 2008, not including fuel surcharges ?C even as the cost of shipping by truck or boat shrunk, in some cases dramatically.

In his most recent quarterly earnings conference call, Union Pacific Corp. CEO James Young estimated that his company would enjoy “low double-digit” earnings growth for 2009, even with the sagging economy.

That may prove optimistic, as volumes and revenue may deteriorate more than expected last October when Young gave the estimate, but the stock prices of the rail carriers as a group were down just 24% in 2008, versus about 40% for the broader market. (Rail volumes declined 10% in November.)

Similarly, Clarence Gooden, chief sales and marketing officer at CSX, said during CSX’s recent conference call with industry analysts that “We intend to maintain our pricing discipline. We’re not going to give up the discipline that we’ve established over the last four years on an economic whim.”

Recently, several large coal shippers have made complaints to the STB alleging some of the rail carriers have doubled the costs to their organizations for moving coal.