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  Overview of U.S. Freight Railroads

downProfile of Freight Railroads Operating in the United States
downU.S. Freight Railroad Traffic
downThe Public Benefits of Freight Railroads
downThe Relationship of Passenger Rail to Freight Rail in the United States

  Profile of Freight Railroads Operating in the United States
  Freight railroads are critical to the economic well-being and global competitiveness of the United States. They move 42 percent of our nation's freight (measured in ton-miles) - everything from lumber to vegetables, coal to orange juice, grain to automobiles, and chemicals to scrap iron - and connect businesses with each other across the country and with markets overseas. They also contribute billions of dollars each year to the economy through investments, wages, purchases, and taxes.

There were 554 common carrier freight railroads operating in the United States in 2002, classified into five groups.

Class I Railroads
  • The Burlington Northern and Santa Fe (BNSD.
  • CSX Transportation (CSX).
  • Grand Trunk Corporation, which consists of the U.S. operations of Canadian National (CN), including the former Grand Trunk Western (GTW), Illinois Central (IC), and Wisconsin Central.
  • Kansas City Southern (KCS).
  • Norfolk Southern (NS).
  • The former Soo Line (800), owned by Canadian Pacific (CP).
  • Union Pacific (UP).

Class I railroads are those with operating revenue of at least $272 million in 2002. Class I carriers comprise only 1 percent of the number of U.S. freight railroads, but they account for 70 percent of the industry's mileage operated, 89 percent of its employees, and 92 percent of its freight revenue. Class I carriers typically operate in many different states and concentrate largely (though not exclusively) on long-haul, high-density intercity traffic lanes. There are seven Class I railroads <note 1 see below> ranging in size from just over 3,000 to more than 33,000 miles operated and from 2,600 to more than 46,000 employees.

Regional railroads are linehaul railroads with at least 350 route miles and/or revenue of between $40 million and the Class I threshold. There were 31 regional railroads in 2002. Regional railroads typically operate 400 to 650 miles of road serving a region located in two to four states. Most regional railroads employ between 75 and 500 workers, although four have more than 600 employees.

  Chart showing 2002 values for  U.S. freight railroad industry. Includes type of railroad, miles operated, employees and revenue.

Source: Association of American Railroads

Local linehaul carriers operate less than 350 miles and earn less than $40 million per year. In 2002, there were 309 local linehaul carriers. They generally perform point-to-point service over short distances. Most operate less than 50 miles of road (more than 20 percent operate 15 or fewer miles) and serve a single state.

Switching and terminal (S&T) carriers are railroads, regardless of revenue, that primarily provide switching and/or terminal services. Rather than point-to-point transportation, they perform pick up and delivery services within a specified area for one or more connecting linehaul carriers, often in exchange for a flat per-car fee. In some cases, S&T carriers funnel traffic between linehaul railroads. In 2002, there were 205 S&T carriers. The largest S&T carriers handle hundreds of thousands of carloads per year and earn tens of millions of dollars in revenue.

In addition, the two major Canadian freight railroads Canadian National Railway and Canadian Pacific Railway - each have extensive U.S. operations.

U.S. freight railroads employ approximately 177,000 people, the vast majority of whom are unionized. With average total compensation in 2002 of more than $80,000, freight railroad employees are among the nation's most-highly compensated workers.

By any measure of capital intensity, freight railroads are at or near the top among all major U.S. industries. From 1980 through 2003, Class I railroads spent more than $320 billion approximately 44 percent of their operating revenue - on capital expenditures and maintenance expenses related to infrastructure and equipment. Non-Class I carriers spent billions of dollars more. These massive expenditures help ensure that railroads have the capability to offer high quality, safe, and cost-effective service to meet the freight transportation needs of our nation.

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  U.S. Freight Railroad Traffic

Two pie charts showing freight market share by mode.  One shows 42% of ton-miles total taken up by railroads and the other 10% of revenue total due to railroads.
Data are for 2001
Source: Eno Transportation Foundation
Measured in ton-miles (the movement of one ton of freight one mile), railroads move 42 percent of intercity freight, more than any other mode of transportation. The rail share of intercity ton-miles has been trending slightly upward over the past 10 to 15 years, after falling steadily for decades. In part because railroads' rates are so low compared to their competitors, their 42 percent of ton-mile traffic generates less than 10 percent of intercity freight revenues. Railroads' share of intercity freight revenue has been trending down for decades, a reflection of the intensity of the competition for intercity freight transportation in the United States and of the significant rate reductions railroads have passed through to their customers.

Coal is the most important single commodity carried by rail. In 2002, it accounted for 44 percent of tonnage and 21 percent of revenue for Class I railroads. The vast majority of coal in the United States is used to generate electricity at coal-fired power plants. Coal accounts for half of all U.S. electricity generation, far more than any other fuel source, and railroads handle approximately two-thirds of all U.S. coal shipments.

Other major commodities carried by rail include chemicals, including massive amounts of industrial chemicals, plastic resins, and fertilizers; grain and other agricultural products; non- metallic minerals such as phosphate rock, sand, and crushed stone and gravel; food and food products; steel and other primary metal products; forest products, including lumber, paper, and pulp; motor vehicles and motor vehicle parts; and waste and scrap materials, including scrap iron and scrap paper.

  Pie chart of Class 1 gross freight revenue by commodity: 2003.  Of the $34.8 billion total the largest % include coal 21%, Chemicals 12% and  intermodal shipments 14%.

Source: Association of American Railroads
  Over the past ten years, intermodal traffic - the movement of truck trailers or containers by rail and at least one other mode of transportation, usually trucks has been the fastest growing rail traffic segment. Intermodal combines the door-to- door convenience of trucks with the long-haul economy of railroads.

Rail intermodal traffic has more than tripled in just over 20 years, rising from 3.1 million trailers and containers in 1980 to nearly 10 million units in 2003. Intermodal today accounts for about 22 percent of rail revenue. In 2003, for the first time ever, intermodal surpassed coal in terms of revenue for U.S. Class I railroads.

Bar chart showing the increase in intermodal transport from 3 million units in 1980 to over 9 million in 2002.
Source: Association of American Railroads, "Railroad Facts".
Rail intermodal transports a huge range of goods - everything from bicycles to automotive parts, lawn mowers to glassware, greeting cards to bottled water, and toys to computers. As manufacturing has become more global and as supply chains have become longer and more complex, intermodal has come to play a critical role in making supply chains far more efficient for retailers and others. The efficiency of intermodal - and of freight railroading in general - provides our nation with a huge competitive advantage in the global economy.

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  The Public Benefits of Freight Railroads
  In addition to cost competitiveness and efficiency, freight railroads offer huge public benefits.

First, they have major advantages in energy efficiency over other modes. On average, railroads are three times more fuel efficient than trucks, and railroad fuel efficiency is improving all the time. In 1980, U.S. railroads moved a ton of freight an average of 235 miles per gallon of fuel. In 2002, the comparable figure was 404 miles, a 72 percent increase.

Second, railroads are environmentally friendly. The U.S. Environmental Protection Agency (EPA) estimates that for every ton-mile, a typical truck emits roughly three times more nitrogen oxides and particulates than a locomotive. Other studies suggest trucks emit six to 12 times more pollutants per ton-mile than do railroads, depending on the pollutant measured. Railroads also have a clear advantage in terms of greenhouse gas emissions. According to the EPA, railroads account for just 9 percent of total transportation-related NOx emissions and 4 percent of transportation-related particulate emissions, even though they account for 42 percent of the nation's intercity freight ton-miles.

Bar chart showing the increase in fuel efficiency by the railroad from 240 ton-miles per gallon in 1980 to over 400 ton-miles per gallon in 2003.
Source: Association of American Railroads
Third, freight railroads significantly alleviate highway congestion. A single intermodal train takes up to 280 trucks (equivalent to more than 1,100 cars) off our highways; a train carrying other types of freight takes up to 500 trucks off our highways. Overcrowded highways act as an "inefficiency tax" on our economy, seriously constraining economic growth. Freight railroads help relieve this restriction by reducing gridlock, enhancing mobility, and reducing the pressure to build costly new highways.

Fourth, railroads have major safety advantages over other modes. For example, railroads are the safest way to transport hazardous materials. Railroads and trucks carry roughly equal hazmat ton-mileage, but trucks have nearly 16 times more hazmat releases than railroads.

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  The Relationship of Passenger Rail to Freight Rail in the United States
  Prior to Amtrak's creation by the Rail Passenger Service Act of 1970, intercity passenger rail service in the United States was provided by the same companies that provided freight service. When Amtrak was formed, in return for government permission to exit the passenger rail business (and avoid the hundreds of millions of dollars in annual losses from passenger operations they were forced to incur), freight railroads donated passenger equipment to Amtrak and helped it get started with a capital infusion of some $200 million (approximately $760 million in today's dollars). Today, Amtrak is the sole intercity U.S. passenger rail carrier in the continental United States.

The vast majority of the 22,000 or so miles over which Amtrak operates are actually owned by freight railroads. (Amtrak owns approximately 750 miles of railroad, primarily from Boston to Washington, D.C.) By law, freight railroads must grant Amtrak access to their track upon request and give priority status to Amtrak trains over other customers. Amtrak pays fees to freight railroads to cover the incremental costs of Amtrak's use of freight railroad tracks.

Commuter and light rail passenger service is offered in a couple of dozen cities throughout the United States. Many commuter rail operators own all or part of the railroad right-of-way (sometimes purchased from freight railroads) on which they operate. Other commuter and light rail systems operate primarily or exclusively over tracks owned by freight railroads. Moreover, to avoid the time and expense of new rights-of-way acquisition, the vast majority of proposed new commuter operations and existing commuter passenger operators that want to extend their operations typically advocate using freight railroad rights-of-way.




For more information please see Freight Railroad Background from the Federal Railroad Administration.

Association of American Railroads

Adapted from Association of American Railroads, July 2004, Overview of U.S. Freight Railroads.

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