Railroads, Line-Haul Operating

SIC 4011

Companies in this industry

Industry report:

This category covers establishments engaged primarily in line-haul railroad passenger and freight operations. Railways primarily engaged in furnishing passenger transportation confined principally to a single municipality, contiguous municipalities, or a municipality and its suburban areas are classified in SIC 4111: Local and Suburban Transit and SIC 4119: Local Passenger Transportation, Not Elsewhere Classified.

Industry Snapshot

Line-haul railroads are those that transport passengers or freight long distances on a network of tracks that disperse goods and passengers across the United States; "line-haul" is simply the movement of freight between terminals. According to the Association of American Railroads (AAR), in 2009, railroads held approximately 43 percent of the nation's intercity freight market based on ton-miles. Seven Class I railroads and hundreds of smaller railroads generated $265 billion in economic activity in 2009, according to the AAR, while freight revenue totaled $46.1 billion.

Railroads moved record tonnage of freight in the 2000s. According to the AAR, in 2009 U.S. railroads carloads totaled 26.01 million, down slightly from the 31.46 million in 2007. Total ton-miles were 1.53 trillion in 2009. Railroads did face ongoing overhead problems because of high infrastructure maintenance costs and a highly unionized workforce.

The economic recession of the late 2000s caused consumers as well as federal and local governments to reconsider railroads as a viable option for moving people and freight. In 2010, President Obama initiated $8 billion in railway system grants. According to The Journal of Commerce, $1.25 billion of the federal grant money went to a high-speed railway linking Tampa and Orlando, Florida, and $2.25 billion was awarded to develop a 220-mph electrified train service between Los Angeles and San Francisco. In the Midwest, a railroad project that was to run from Chicago to St. Louis and then to Kansas City received $1.13 billion. While some of the money was to be distributed among freight lines, the government also planned to fund such projects as signal and track upgrades, new sidings for trains to pass each other, flyovers (bridges) to eliminate road crossings, and implementation of the newly mandated Positive Train Control (PTC) systems.

Organization and Structure

According to the AAR, there were seven Class I railroads in 2008 with revenues in excess of $401.4 million. The seven U.S. Class I railroads were BNSF Railway, CSX Transportation, Grand Trunk Corporation, Kansas City Southern Railway, Norfolk Southern Combined Railroad Subsidiaries, Soo Line Railroad, and Union Pacific Railroad. Although Class I accounted for only one percent of U.S. freight railroads, these railroads accounted for 67 percent of track mileage, 90 percent of employees, and 93 percent of the industry's revenues in 2009.

Regional railroads are line-haul companies with at least 350 miles of route miles or at least $40 million in revenues. In 2008, there were 33 U.S. regional railroads. They tend to serve areas of two to four states and employ between 75 and 500 workers. Local line-haul railroads have less than 350 route miles and earn less than $40 million in revenues. Most perform point-to-point deliveries within a single state and run less than 50 miles of track. In 2008, there were 326 local line-haul operators. Switching and terminal companies perform pick up and delivery services within a particular area to connect different line-haul operations, usually for a flat fee per car transported. In 2005, 199 switching and terminal companies were doing business in the United States. Finally, two major Canadian rail freight companies operated in the United States: Canadian National Railway and Canadian Pacific Railway.

In the late 2000s, a majority of railroads were privately owned, including all Class I railroads and all but one regional railroad. Unlike U.S. passenger railroads and railroad companies in many other countries, U.S. freight railroads received no significant government funding, and the companies spent millions annually in capital investments. Between 1980 and 2009, Class I railroads laid out some $460 billion on infrastructure and equipment maintenance and upgrades.

Coal is the most important commodity for rail freight, representing 47.2 percent of Class I tonnage in 2009. Other important commodities included chemicals, agricultural products, and automobiles and auto parts. Intermodal freight was a growing sector of the industry during the 2000s. Intermodal freight uses containers or trailers that travel by at least one other means, usually truck or ship.

Background and Development

Railroads, defined as vehicles that move along a track on flanged wheels, have been in use since the sixteenth century, when human- or horse-pulled carts on tracks were used in Europe to haul ore out of mines. The first mechanically self-propelled railroad system was created in 1681 by Ferdinand Verbeist, a French Jesuit missionary in Peking, China. It was not until 1804, however, when the steam locomotive was invented in Wales, that the railroad's potential as a system of mass transportation was realized. In the westward expansion of the United States, the railroad industry became significant both as a key factor in national growth and as a formidable economic force in its own right.

In 1825, John Stephens of Hoboken, New Jersey, built the first American steam locomotive, ushering in an era of development that would make the railroad industry an integral part of the expansion of America. Only two years later, the Baltimore and Ohio Railroad Company (B&O) was created to carry passengers and goods from Baltimore to Ellicott City, Maryland, 13 miles away. As B&O expanded (its tracks reached West Virginia by 1834), railway companies sprang up in other areas of the country during the 1830s, many of which were destined to become the Class I railways of the present.

Railroad building continued at an amazing pace between 1830 and 1860. With their ability to connect places previously separated by prohibitive distances, the railroads made possible the settlement of the western half of the continent. Railroads also liberated the country from its reliance on water transportation and made it possible for cities to grow away from rivers and canals, as the new lines could deliver goods and building materials to new homesteaders and carry raw materials to other cities. It became physically and economically possible to tap the continent's huge reserves of raw materials such as lumber. New cities and towns were formed due to their proximity to railroad lines.

By the beginning of the Civil War, 30,000 miles of track had been laid across the country. Railroads played an important strategic role in that conflict, as they were a means of delivering crucial supplies and troops. The Union Army's control of railroads--the owners of which were located mainly in the industry-rich North--was a significant factor in its eventual victory.

In some ways, the industry determined the political and social geography of westward expansion. In 1869, the first transcontinental railroad was created when the tracks of the Union Pacific from the East met those of the Central Pacific from the West at Promontory, Utah. America had entered the Railway Age.

Big Business.
From the end of the Civil War in 1865 until the turn of the twentieth century, the industry grew at a fantastic rate, becoming America's first "big business." Although the railroad expanded the possibilities for agricultural sales, it did so at a price. Future conflicts between industry and agriculture were foreshadowed when, during the economic depression of the 1870s, a farmers' group called the Grange protested the high rates charged by railroad "middlemen" to ship their goods. The case went to the Supreme Court. Its decision of 1877, Munn v Illinois, gave states the power to regulate business with a strong public aspect like that of the railroads. National (long haul) rates remained unregulated, however, leaving the industry open for control by businesses of national stature.

The development of the railroads was inextricably linked to that of other industries. Andrew Carnegie's innovations in steel allowed the creation of rails that were much more durable than the previous ones made of more malleable iron. The increase in anthracite coal mining in the late nineteenth century reduced the price of coal and made coal-fueled steam engines cheaper and more feasible. The railroads, in turn, made it possible to transport and distribute coal and steel to new towns and cities, many of which were centered around mills and factories needing these goods. The railroad thus became an essential link in the cycle of industrialization of the 1870s and 1880s that made mass production and mass marketing a way of life for a growing nation.

It took a new organization of business on a greater scale to support all this growth; in the last quarter of the century, the rise of big business was seen nowhere more clearly than in the railroads. Initially the competing companies fought rate wars to lure customers, but bankruptcy followed for many. In the late 1870s, railroad executives set up "pools," informal rate-setting agreements that fixed rates in a market. They also cut wages, which eventually led to the formation of unions to protect worker rights.

The railroads' profit margins, coupled with their workers' unstable and often dangerous working conditions, created an increasingly explosive atmosphere in the industry. In 1877, railroad workers staged what was to become the first nationwide strike, a conflict that required military and police intervention. In the years between 1881 and 1905, the country witnessed 36,757 strikes, a situation that resulted in the creation of unions such as the Knights of Labor and the American Federation of Labor. These unions forced the railroads, among other businesses, to improve working conditions, reduce hours, and pay wages negotiated by the unions and company management.

The growth of the rail industry continued unchecked through the beginning of the twentieth century. Despite the Sherman Antitrust Act of 1890, industry saw the formation of several huge trusts, made up of formerly competing companies that controlled certain industries almost exclusively and made competition by smaller rivals nearly impossible. In 1902, President Theodore Roosevelt directed that a suit be filed against the railroad monopoly established by James J. Hill and J. P. Morgan. When that succeeded, he gave the Interstate Commerce Commission (ICC), which had been established in 1887, the authority to regulate monopolies and enforce rates. Although it did not end the tendency in the industry toward establishing trusts, the ICC did serve as a regulatory eye until it was abolished in 1995 and replaced with the Surface Transportation Board.

Profits Level Off.
Railroads continued to expand their business and their track miles until well into the 1920s, at which point the industry reached a level of maturity that was reflected in a leveling off of profits and growth that continued for the next few decades. As passenger air travel, and later air shipping, became more common and less expensive in the 1950s and 1960s, the railroads entered a period of decline that would not change until the 1980s. As it was still used to ship raw materials such as coal, grain, and lumber, the industry did little to reflect the nation's shift from a service and industrial economy to an information economy in the 1970s and 1980s.

The railroad industry suffered in the 1980s as increased reliance on trucking and other modes of transportation and the perception of railroads as antiquated contributed to slow growth. The advent of innovations, however, such as double-stack containers, intermodal shipping, and computer-controlled dispatching, changed both perceptions and profits.

Another boon to the freight rail industry was industry deregulation. The Staggers Rail Act of 1980 reduced the ICC's regulation of rates and service, and in the following year, the ICC exempted all intermodal traffic from rate controls. In addition, the ICC exempted boxcar and trailer-on-flatcar traffic and the transport of some agricultural products, lumber, and transportation equipment. Industry analysts credited this loosening of regulations with rail companies' increased investment in equipment, especially intermodal containers.

Deregulation also spurred Class I railroads' sales of branch lines to smaller companies. In contrast to the mergers of the 1980s, which analysts said left the largest railroads weighted down by debt and property, the sales of the early 1990s helped the industry as a whole. Smaller lines were able to offer improved local service, while still maintaining connection to the larger lines' nationwide network of tracks. In addition, smaller railroads often hired nonunion employees, who generally were unable to bargain for higher wages. Without union regulations, lines were also able to staff trains more lightly; they could rely on improved computer tracking and monitoring that could be handled by a two-person crew. Shorter lines also had the advantage of being able to offer more personal service to smaller customers.

One of the most notable investments in new equipment in the industry came in 1984 with the advent of double-stack containers--boxcar containers that fit on a lowered platform and could be stacked one on top of the other, doubling the amount a single train could carry. These immediately improved the feasibility and profitability of rail transport.

Another important innovation was the increase in intermodal transport, a system in which freight containers are attached to truck beds for shipments to rail yards, then transported by rail to a distribution "hub," where they were again picked up by trucks for the final leg of their journey. These containers could also be transported by ship to port locations where they were transferred to rail for the journey inland. Intermodal transport allowed for both speed and low cost when transporting goods; due to decreased wind resistance of the lower-stacked cars, it cut fuel consumption by 20 percent. More importantly, the system changed the relationship between rail and trucking companies--once intense rivals for the same business--by encouraging cooperation and new business collaboration for the benefit of both industries. Between 1980 and 1997, intermodal traffic grew from 3 million containers to 8.7 million. By 1997, intermodal transport accounted for more than 17 percent of rail revenues, second only to coal, which accounted for 22 percent of Class I tonnage.

A side effect of intermodal shipping was the adoption of a hub-and-spoke network for shipping, in which fewer cities (hubs) served as drop-off points for goods initially shipped by truck. This system reduced the number of stops that had to be made by a single train, speeding up travel time for many routes and reducing overall customer costs.

Between 1987 and 1992, the railroad industry began to pull out of the slump it had seen in the 1970s and 1980s. In 1995, railroads realized significant productivity gains with freight revenue ton-miles per employee rising to seven million, up 11.1 percent over 1994 figures, and a dramatic 233 percent increase over the 1980 totals. In 1995, the industry's fleet expanded for the third year in a row to 69.4 million, up seven percent from 1994 and twice the comparable 1980 level. Meanwhile, rail freight rates fell sharply and steadily, lagging behind the overall inflation rate every year since 1983, with the exception of 1998, when rates rose more than one percent. Costs, however, also declined since the early 1980s, resulting in widening margins for the railroads.

Rail traffic increased steadily in the 1990s, growing by 30 percent between 1990 and 1997. In 1998, rail traffic increased 2.1 percent to 1.38 trillion ton-miles, due in part to a 3.7 percent increase in U.S. industrial output. Demand for rail service was influenced by several factors, including retail sales, general manufacturing levels, export and import trade, and housing and commercial construction. Coal was the industry's largest source of traffic, accounting for 44 percent of volume and 22 percent of revenues in 1997. Grain, another major source of traffic, accounted for eight percent of the industry's volume and revenues.

In 1994, the ICC approved the merger of Burlington Northern (BN) with the Atchison, Topeka and Santa Fe Railway Company. This created the country's biggest railroad, with $7 billion in combined revenues and 33,000 miles of track. BN already operated the longest rail system in North America, with 24,500 miles of track spanning 25 states and two Canadian provinces.

In late 1996, CSX Corp. attempted to take over Conrail with an $8.4 billion offer. Norfolk Southern immediately countered with a $9.1 billion hostile takeover bid. After several months of wrangling and opposition from several sources over the proposed takeover, the two railroad giants agreed to divide Conrail's assets between themselves. After two years of planning, CSX and Norfolk Southern finally divided Conrail in 1999. CSX acquired 4,000 miles of track for $4.2 billion, while Norfolk Southern took 7,200 miles of track for $5.8 billion. The deal left most of the railroad traffic in the eastern half of the United States under the control of the two companies.

Another major consolidation in the railroad industry took place late in 1996, when Union Pacific acquired Southern Pacific. Following the acquisition, Union Pacific experienced two years of service interruptions as it tried to integrate the two rail systems. It was estimated that the interruptions cost shippers $2 billion and Union Pacific $1 billion.

While the merger of Union Pacific and Southern Pacific resulted in two years of service interruptions, it was hoped that the acquisition of Conrail by CSX and Norfolk Southern would go more smoothly. Service delays and misdirected freight cars, however, were reported in the months following the Conrail breakup in mid-1999. Because of these delays, United Parcel Service of America Inc.--one of the nation's largest rail shippers--diverted part of its Conrail business to trucks.

By 1999, Union Pacific appeared to have successfully integrated the Southern Pacific system into its operations. Through mid-1999, the company reported a seven percent gain in rail traffic, the most of any major rail line.

The railroad industry enjoyed growing margins, as costs fell faster than rail rates during the 1990s. In addition, favorable economic conditions and a robust economy have contributed to steady increases in rail traffic. Following a 0.5 percent decline in rail traffic in 1997--due to factors such as the Asian financial crisis, traffic problems at Union Pacific, and soft demand from the coal and grain industries--rail traffic rebounded in 1998, rising 2.7 percent as the overall economy increased industrial output by 3.7 percent.

The future of the rail industry is affected heavily by industries that produce the goods being shipped. Those industries relying most heavily on rail transportation for shipping their products included steel, coal, chemicals, pulp and paper, automobiles, construction, and agriculture. Coal alone made up approximately 40 percent of rail shipments, so the coal industry's economic status had a strong effect on the fortunes of the railroads.

In 2002, Class I railroads operated on more than 121,000 miles of tracks and had nearly 500,000 freight cars in service. The seven major railroads reported total revenues of $33.5 billion in 2001. Coal accounted for 47 percent of commodities shipped via rail and generated 23 percent of revenues. Total revenue for all railroad classes in 2001 was $36.7 billion. That year, railroads shipped 1.5 trillion ton-miles and carried 9.5 percent of all intercity goods (trucks carried the vast majority, at 80.4 percent).

Railroads' renewed life was based on the rapid growth of the fast-freight, or intermodal, sector. Unlike the traditional loose cars that were dominated by coal transportation, as well as other low-value per-weight goods, fast-freight used containers that carried higher-valued goods with a much keener need for quick and timely service. During the first years of the twenty-first century, railroads worked hard to prove that their old reputation for unreliable service was unfounded. To that end, trains carrying fast-freight, which might include time-sensitive goods, were given the right-of-way on the tracks, with trains pulling loose cars pulling over to make way for the intermodal freight carriers. Between 1980 and 1999, coal ton-miles grew 43 percent while intermodal ton-miles jumped up 98 percent.

The largest problem facing the railroads' revival was service capacity. At the beginning of the twenty-first century, railroads were putting approximately 20 percent of revenues into capital expenditures. Railroads are very expensive to build, and construction must be coordinated within existing, and often already congested, transportation infrastructure. Therefore, it remained unclear how the industry would underwrite the cost to increase capacity, as well as maintain existing structures to once again become a dominant player in the freight-hauling industry.

In 2002, Class I railroads originated 27.9 million carloads and 9.15 million intermodal units and recorded revenues of $34.1 billion. Total carloads for all freight rail carriers was 32.43 million, and total industry revenues equaled $36.9 billion. In 2003, Class I increased to 28.87 million carloads and 9.78 million intermodal units, and reported revenues of $35.4 billion. Overall, the industry originated 33.28 million carloads and reported revenues of $38.3 million. During the early 2000s, coal continued to dominate the industry, totaling 44 percent of tons originated and 21 percent of gross revenues in 2003. Chemicals and chemical products accounted for nine percent of tonnage and 13 percent of revenues. Motor vehicles and equipment accounted for just two percent of tonnage but generated over nine percent of revenues.

The improvements in the industry's market environment during the early 2000s led to a record year of freight railroads in 2004. According to the AAR, in 2004, U.S. carloads (excluding Canadian-owned freight railroads) totaled 17.42 million, up nearly three percent from 2003. Intermodal loadings topped the previous record set in 2003 by more than 10 percent--up more than one million containers to 10.99 million units in 2004. Trailers increased by 11.5 percent and containers by 10 percent. Total ton-miles of an estimated 1.61 trillion also set a record. Of the major commodities, during 2004, coal carloads increased three percent, chemicals 4.3 percent, and grain 2.6 percent. Only motor vehicles and equipment was down by three percent on the year.

Growth continued into 2005 as U.S. carloads were up 2.5 percent and intermodal traffic was up 7.6 percent in the first quarter of that year, but activity took a downturn by 2007. Carloads of grain hit record highs in October 2007, one of only six of the 19 major commodity categories tracked by the AAR that had increased over the previous year. Overall, total U.S. rail carloads were down 2.9 percent through the first 10 months of 2007 compared to 2006, and intermodal traffic dropped 2.2 percent over the same period.

Despite the downward trend in 2007, the industry saw the need for major expansion over the next three decades. The National Rail Freight Infrastructure Capacity and Investment Study, conducted by transportation consulting firm Cambridge Systematics in 2007, estimated that $148 billion must be invested to expand the nation's freight rail infrastructure in order to meet future demand. Of that total, $135 billion was needed for the rail networks operated by the Class I railroads.

While freight-hauling railroads were facing a bright future with continued growth expected, National Railroad Passenger Corporation, better known as Amtrak, was continuing its ongoing struggle to find solid footing as the nation's passenger rail system. As of 2009, Amtrak had not posted a profit since its inception in 1971 despite billions of dollars in federal subsidies. In 2005, the Bush administration proposed eliminating Amtrak's $1.2 billion federal subsidy, breaking up and privatizing Amtrak, introducing competition, and shifting responsibility for rail services to the states, and in 2008, only $300 million was budgeted for operating costs, a significant drop from the $490 million in operating subsidies in 2006 and reflective of the federal government's willingness to phase out the operating subsidies altogether.

Current Conditions

Despite the economic downturn in the United States in the late 2000s, things were looking up for Amtrak as well as the entire railroad industry in 2010. Although still not turning a profit, in 2009, Amtrak recorded revenues of $2.4 billion and employed 18,000 people. The government continued to fund the entity, providing approximately $1.3 billion in 2009 subsidies. Amtrak sales and ridership were on the rise, and, as reported by Railway Gazette International, at least 13 of Amtrak's services benefitted from the American Recovery & Reinvestment Act of 2009, which awarded $8 billion in grants to further develop the U.S. railway system.

Industry Leaders

The top Class I freight railroads of the early 2010s were the giants of the industry. Union Pacific, of Omaha, Nebraska, with $14.1 billion in 2009 revenues, was the nation's largest freight railroad. With 43,531 employees, Union Pacific owned more than 26,000 route miles and leased another 6,000 route miles of track over 23 states in the western two-thirds of the United States. With 35,000 employees, Burlington Northern Santa Fe (BNSF), headquartered in Fort Worth, Texas, covered 28 states over a total of 32,000 owned and leased route miles. BNSF had revenues of $14.1 billion in 2009. In 2010, Warren Buffett's Berkshire Hathaway, which already owned 23 percent of BNSF, purchased the remaining 77 percent stake. With 21,000 route miles in 22 states, Norfolk Southern Railway Co. of Omaha, Nebraska, employed 28,173 workers and reported revenues of $7.9 billion in 2009. CSX Corp. of Jacksonville, Florida, had $9.0 billion in 2009 revenue with 30,088 employees. CSX had about 21,000 route miles in 23 states.

Through a series of acquisitions, RailAmerica, Inc., of Jacksonville, Florida, emerged as the largest regional and short-line operator in the late 1990s. By the late 2000s, RailAmerica had ownership or an interest in 40 railroads with 7,500 miles of track in the United States, Canada, Mexico, Chile, and Australia. Annual revenues in the mid-2000s were more than $423 million. RailAmerica went public in 2009. Genesee & Wyoming, Inc., of Greenwich, Connecticut, was another large regional rail operator. The company owned stock in 60 short-line and regional railroads and operated on 10,700 miles of track.


According to the AAR, the railroad industry employed 224,400 people in 2009, with 151,900 of those employed by Class I railroads. The average annual salary for Class I railroad employees workers was $72,153. In addition, AAR statistics showed that "every railroad job related to day-to-day operations sustained another 4.5 jobs elsewhere in the economy."

Each train is run by an engineer who holds the highest rank on a train and is in charge of the train and its crew. The engineer checks the train for mechanical and safety problems before each run, starts and stops the train, and monitors its progress throughout a trip. Trained as "firers" (a term surviving from the days of steam locomotives) or assistant engineers, engineers must learn how to run and monitor all trains owned by their employer and must be familiar with tracks, signals, and hazards of each route.

All trains also employ a conductor who is responsible for the train crew and the passengers or freight. On freight trains, the conductor logs the contents of each freight car and ensures that the contents are deposited at their destinations along the route. On passenger trains, the conductor collects passenger fares, helps passengers with any needs or requests, and alerts the engineer when all passengers at a given stop have left the train. Conductors also act as an information conduit between the dispatchers, station managers, and the engineer.

Brake operators (previously called "brakemen") maintain braking equipment and lights and add and remove cars at station stops. Brake operators are disappearing from trains due to railroad-union negotiations and are being eliminated mainly through attrition and early-retirement incentives.

America and the World

Regional trade agreements, railroad cooperation, railroad mergers, and transportation innovations all had an impact on the growth and development of rail transportation. The U.S.-Canadian Free Trade Agreement, signed in 1988, resulted in Class I railroads on both sides of the border accelerating their connections into each other's territory. The North American Free Trade Agreement (NAFTA), which diminished most trade barriers, and a wave of rail mergers in the United States in 1994 and 1995 further hastened this trend.

With trade between the United States and Canada forcing a north-south orientation, railroads shifted their east-west systems accordingly. Both shared track, rail beds, and operations on both sides of the border. U.S. railroads gained entry to Canada through interline agreements with Canadian railroads. The Atchison, Topeka and Santa Fe Railway Company, for example, entered into an interline connection with the Canadian National Railway Company's Grand Trunk line at Chicago. This enabled the railroad to provide service between Mexico and Canada.

NAFTA resulted in U.S., Canadian, and Mexican rail carriers capitalizing on increased trans-border trade. Rail traffic to Mexico began growing when the country first began easing trade barriers in 1988 and reached new highs in 1993 with NAFTA. In 1994, cargo volumes for Canadian railroads accounted for about one-quarter of the southbound export tonnage moving across the U.S. border. The pact particularly benefited U.S. producers of grain, automobiles, lumber, and other goods suited for transport by rail.

American companies worked especially hard with the Mexican national rail system, FNM (Ferrocarriles Nacionales de Mexico), to simplify border regulations and increase rail traffic between the two countries. For example, FNM adopted Union Pacific's computerized monitoring and tracking system, while Concarril, a Mexican company, began building cars for the Atchison, Topeka and Santa Fe Railway. Shipments of goods between the two countries had already increased in the early 1990s, even before the implementation of NAFTA, with more American-made automobiles and Pacific Rim imports being shipped by train to Mexico.

In 1994, Union Pacific derived $348 million in revenues from Mexico traffic, up 20 percent from the previous year, and handled 55 percent of cross-border rail traffic. Southern Pacific, the largest double-stack carrier to Mexico, handled the second-largest amount of cargo. Southern Pacific invested directly in Mexico's infrastructure and developed a network of distribution centers at Mexican rail ports that enabled timely unloading. In 1993, it completed construction on an intermodal facility at Monterrey, operated by Mexican firms. Union Pacific expanded its presence in Mexico in 1997 by entering into a joint venture to operate the Pacific-North Railway. In 1999, it increased its ownership to 26 percent of Grupo Ferroviario Mexicana, parent company of Ferrocarril Mexicano, the operator of the privatized former Pacific-North region of the Mexican National Railway.

In the early 2000s, the U.S. freight railroad industry led or was near the top in the world in the categories of miles of track, freight revenue, productivity, and affordability. Other countries, including India, had much more extensive passenger rail systems.

Research and Technology

Among the newest innovations in the railroad industry was EDI, or electronic data interchange, which allowed the railways to track goods and trains more closely and quickly than in the past. The primary EDI system, ATCS (advanced train control systems), controlled trains using telecommunications technology and computer tracking. With ATCS, train crews could stay informed of all train operations, a development that could improve safety and reliability and reduce costs.

Norfolk Southern established an EDI system called Thoroughbred, which allowed the carrier to closely track cargo, gave customers up-to-the-minute status reports on their shipments, and provided delivery schedules. Similarly, the Atchison, Topeka and Santa Fe Railway launched Santa Fe Direct, a real-time EDI system to track shipments that went beyond its rail service. Union Pacific's computerized car locator system, on which all U.S. and Canadian locator systems were based, installed its system at ten rail yards in Mexico. In 1994, data was integrated into the U.S. and Canadian systems, making it possible for a Canadian shipper to send freight out on a Canadian National or Canadian Pacific car all the way to Mexico City without the car being opened, and know where the goods were anytime and anywhere.

Technology refinements in the use of intermodal containerized freight, the means by which containers could be interchanged between rail, seagoing, and trucking modes, resulted in railroads moving freight faster and more efficiently. Statistics from AAR indicated that the use of intermodal peaked in 1994 with 8.13 million trailers and containers in use, then slacked off in 1995 to 8.07 million, only to rebound to 8.7 million in 1997. The engineering of double-stack trains, a means by which one container is literally stacked on top of another, also made it possible for a train to carry the equivalent of 200 trucks, thereby saving fuel and labor costs while improving efficiencies. Platforms on which the containers were secured provided a smoother ride for materials and products. By August 2010, rail intermodal volume was reported at more than 236,000 units a week, up about 22 percent from 2009.

Other innovations included ISS (Interline Settlement System) and REN (Rate EDI Network), industry-wide standards of computerized data management that managed revenue sharing among railroads when goods were shipped on more than one line, as was often the case, and speed billing and dispute resolution within the industry. An information system called Railinc, used widely in the industry, already sped customer service and tracking. Finally, it was predicted that the rail industry would take advantage of handheld "slate" computers that would allow crews to forward information to central schedulers "on the fly," or as it was taken down. All this automation, based on smaller networked computer systems rather than large central mainframe machines, led to a continuing decentralization of control and information that allowed greater flexibility and improved response on the part of each company and the industry as a whole.

A major development affecting passenger rail service, and especially Amtrak, was high-speed rail passenger systems, which ran at 150 miles or more per hour and brought train travel to a speed where it could compete with air travel over shorter distances, both in regard to cost and convenience.

The early 2010s saw renewed interest in high-speed rail systems. The only high-speed rail system recognized by the U.S. Department of Transportation in 2010 was Amtrak's Acela Express service, which ran from Boston to Washington, D.C. Average speeds were 68 mph, although the train could reach speeds of 150 mph for brief periods of time. Part of the $8 billion federal grant approved by President Obama in 2009 was to to to developing 10 more high-speed lines in the United States.

Magnetic levitation (maglev) technology, which used magnetic forces to propel, brake, and control trains traveling up to 300 miles per hour, was tested in Germany and Japan. By the late 2000s, the trains, which were separated from the tracks by a magnetic field, were used in Japan, China, and Germany. The highest recorded speed occurred in Japan at 361 miles an hour.

Railroads invest heavily in technologies that will improve safety and efficiency. By the late twentieth century, railroads had two-way end-of-train braking devices installed on all trains that routinely traveled at speeds greater than 30 miles per hour. Railroads replaced older wheels with heat-treated curved plate wheels, which were developed following research in the late 1980s. Positive train separation systems were being tested to reduce the chance of mainline collisions. The latest rail transport and safety improvements were tested at the Transportation Technology Center, a 52-square-mile facility operated by the Association of American Railroads.

In the early 2000s, U.S. railroads began considering the advantages of electronically controlled pneumatic (ECP) brakes. Unlike conventional brakes, which operate sequentially from one rail car to the next, ECP technology applies the brakes uniformly and instantaneously on every rail car, thus stopping at shorter distances and with a lower risk of derailment. The ECP technology also provides self-diagnostic system checks that inform crews when maintenance is required, so the need to stop for routine brake tests becomes unnecessary. In October 2007, Norfolk Southern became the first U.S. railroad to operate revenue service trains equipped with ECP brakes under a waiver approved by the Federal Railroad Administration. BNSF Railway also received waiver approval and began to operate with ECP brakes by 2007.

Another trend in the 2000s was the movement toward using global positioning satellites to track and control trains in place of traditional signaling as a way to increase performance and productivity. Despite concerns that the technology was unable to provide adequate accuracy and information, the declining cost of global satellite positioning systems, coupled with recent improvements in accuracy, held to the industry's ongoing interest in global positioning.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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COOKING WITH GAS: Florida East Coast Railway Is the First North American Railroad to Adopt LNG for Its Entire Line-Haul Locomotive Fleet
Railway Age; December 1, 2017; 700+ words
...also the first railroad to haul LNG as a commodity...North American railroad to operate its entire main line fleet on LNG...Chinnici, Chief Operating Officer...will help other railroads and industries...FECR has been operating with LNG since...
Short on miles but long on service: short-line railroads are carving out an expanded role with shippers.(Shortline)
Logistics Today; October 1, 2007; 700+ words
...The short line sector of the railroad industry...current Class 1 railroads (those with...many smaller lines acquired...and "Short Lines". The regionals...defined as line-haul railroads operating at least...threshold. Short lines are those...fact, these ...
Railroad-Related Work Injury Fatalities
Monthly Labor Review; July 1, 2007; 700+ words
...concrete. (2) Railroads also transport...commuters. (4) Railroads employ more...operations operating their own...rate, the railroad industry is...460 SIC 40, railroad transportation 293 Line-haul operating railroads 209 Railroad...
Creating intermodal capacity: the railroads speak out on current capacity, infrastructure investments and demurrage charges.
Logistics Today; November 1, 2006; 700+ words
...defines Class I's as line haul freight railroads with operating revenue in excess...huge pressures on railroads today are to move...Grenzeback says that railroads are, "becoming...Leaders at the Class I railroad's are aware of...
Freight trains still carrying a hefty load; Here to stay: Railroads can haul more tonnage more efficiently than semis, official says
Telegraph - Herald (Dubuque); October 4, 2001; 700+ words
...computerization, railroads can operate...cars, they can haul more tons of...Meanwhile, operating expenses and...Kreunen said. "A railroad can make a profit...Adams said. Railroads also have integrated...the 1990s, railroads experienced...founded Riverport Railroad, which ...
Maintenance plans offer best protection. (MRO Lubricants Product Focus).(planned lubrication maintenance schedules important for maintaining machine operation)(Brief Article)(Statistical Data Included)
Industrial Distribution; July 1, 2002; 700+ words
...Stampings 11.7 NORTHWEST CENTRAL Railroads (Line-Haul Operating) 8.7 Meat Packing Plants...9 Water Sewer & Utility Lines 6.2 Highway & Street Construction...Copper Ores 3.9 Railroads (Line-Haul Operating) 3.0 PACIFIC COAST Aircraft...
Georgia firm believes system will allow railroads to profitably haul containers.
The Florida Times Union; August 20, 2004; 700+ words
...model for short-haul intermodal rail...distances where railroads typically have...based shipping line serving Puerto...compete with trucking lines and railroads as it adds new...road. Although railroads are battling congestion...Ted Prince, a railroad consultant in ...

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