NATION - Warren Buffett's bold move to snap up Burlington Northern Santa Fe Corp. , a railway with tracks running through his hometown of Omaha, shines a new light on an industry that he believes is poised to ride an economic rebound.

Placing a huge bet that the U.S. slump is over, Mr. Buffett said that "an efficient and well-maintained rail system" will play a starring role in future prosperity. Through holding company Berkshire Hathaway Inc. , the billionaire plans to acquire full control of BNSF in a blockbuster deal that values the railway at $34-billion (U.S.).

"America must grow and prosper for railroads to do well," Mr. Buffett said in a statement announcing that Berkshire, which owns 22.6 per cent of BNSF, is offering to buy the rest of the railway for $26.3-billion. "Most important of all, it's an all-in wager on the economic future of the United States."

North America's largest railways have been hurt by overcapacity during the downturn. Their carloads fell more than 18 per cent in the first nine months of this year compared with the same period in 2008, amid one of the worst economic downturns of the postwar era. Shipments of autos slid 37 per cent, lumber decreased 32 per cent, and container traffic slumped 12 per cent.

Despite those numbers, Mr. Buffett and other well-known investors have placed big money on railways in the belief that they will be major beneficiaries of Asian demand for coal and other key commodities from North America. BNSF has invested heavily in hauling coal from Wyoming's Powder River basin, where production is forecast to double over the next 25 years, Edward Jones analyst Daniel Ortwerth said in a report.

The rail sector has another potential ally: higher fuel prices, which hurt the profits of all transportation companies but are more detrimental to truckers than railways.