SIC 4011
RAILROADS, LINE-HAUL OPERATING



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.

NAICS Code(s)

482111 (Line-Haul Railroads)

Industry Snapshot

Line-haul is defined as "the movement of freight between terminals." More generally, 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. According to the Association of American Railroads, there were 571 common carrier freight railroads operating in the United States in 2001. Of those, eight were Class 1: The Burlington Northern and Santa Fe Railway, CSX Transportation, Grand Trunk Western Railroad, Illinois Central Railroad, Kansas City Southern Railway, Norfolk Southern Combined Railroad Subsidiaries, Soo Line Railroad, and Union Pacific Railroad. Although Class 1 accounted for only 1 percent of U.S. freight railroads, they generate 92 percent of the industry's revenues. Regional, local line-haul, and switching-and-terminal operations rounded out the industry.

American railroads are experiencing a revival of sorts. Once the lifeblood of the U.S. transportation system, the rail system fell out of favor as trucks took over the roads and the shipping industry. However, as highway congestion continues to pose environmental, safety, and energy conservation concerns in the twenty-first century, railroads are being revisited as a viable means of transporting goods across the nation.

Organization and Structure

In the years from 1987 to 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 7 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 1 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 8 percent of the industry's volume and revenues.

Nearly 70 percent of all rail freight was transported under contract relationships between railroads and shippers. Meanwhile, railroads would operate almost exclusively on privately owned rights-of-way, and would spend large sums of money on restoration of these rights-of-way, maintenance, and equipment investment.

One of the most notable investments in new equipment 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.

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.

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 in the following years (its tracks reached West Virginia by 1834), railway companies sprang up in other areas of the country during the 1830s, many of which were to become the Class 1 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 distance, 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; 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.

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.

Big Business. From the end of the 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 next 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.

Deregulation. 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 1 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.

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 7 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.

Current Conditions

In 2002 Class 1 railroads operated on over 121,000 miles of tracks and had nearly 500,000 freight cars in service. These eight 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 is being based on the rapid growth of the fast-freight, or intermodal, sector. Unlike the traditional loose cars that are dominated by coal transportation, as well as other low-value per-weight goods, fast-freight uses containers that carry highervalued goods with a much keener need for quick and timely service. During the first years of the twenty-first century, railroads have worked hard to prove their old reputation for unreliable service is unfounded. To that end, trains carrying fast-freight, which may include time-sensitive goods, are 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 a very respectable 43 percent, but intermodal ton-miles jumped up 98 percent.

The largest problem facing the railroads' revival is 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 remains unclear how the industry will underwrite the cost to increase capacity, as well as maintain existing structures to once again become a dominant player in the freight-hauling industry.

Industry Leaders

The top Class 1 freight railroads of 2002, generally considered to be the industry giants, included Union Pacific, with $12.5 billion in revenues; Burlington Northern Santa Fe, $9 billion; CSX, $8.2 billion; and Norfolk Southern, $6.3 billion.

Illinois Central was acquired by Canadian National Railway Co. for $2.4 billion in a deal that was approved by the Surface Transportation Board in March 1999. The acquisition added 2,600 miles of U.S. track, ranging from Chicago to the Gulf of Mexico, to Canadian National's 13,750-mile system in Canada and six northern U.S. states. Following the acquisition, Canadian National reported $3.9 billion in revenues for 2002.

Through a series of acquisitions, RailAmerica, Inc. emerged as the largest regional and short-line operator. Toward the end of 1999 the company acquired RailTex of San Antonio for $325 million. The deal gave RailAmerica ownership or an interest in 51 railroads with 12,500 miles of track in the United States, Canada, Mexico, Chile, and Australia. In 2002 RailAmerica reported revenues of $428 million.

National Railroad Passenger Corporation, better known as Amtrak, was established by Congress in 1971. Operating with the benefit of government subsidies and federal grants for equipment, Amtrak reported 2002 revenues of $2.1 billion. In 1997 Congress passed the Amtrak Reauthorization Act, which among other things created the Amtrak Reform Council (ARC). The ARC was responsible for monitoring how Amtrak would use the $2.2 billion it received as a result of the Taxpayer Relief Act of 1997. With Wisconsin Governor Tommy G. Thompson appointed the new board chairman in 1998, Amtrak attempted to become self-sufficient by 2002, when Congress would end its operating subsidies. For 1999 Amtrak projected an operating loss of $930 million, followed by a loss of $908 million for 2000. Congress set aside $609 million for Amtrak's use in fiscal 1999 and $571 million for fiscal 2000.

In the 1990s Amtrak's challenge was to become profitable while improving travel time by incorporating high-speed passenger trains that would create competition with commuter air flights, especially in the congested Northeast. This goal is helped by rail travel's role in reducing traffic congestion and pollution when used as an alternative to automobile travel—trains emit 10 to 30 percent less pollution than do autos and trucks. Amtrak's first high-speed train, called Acela, was scheduled to debut in spring 2000. The 150-mile-an-hour train was expected to add $180 million in annual profits and help Amtrak compete against airline shuttles in the northeast corridor.

Workforce

According to the Association of American Railroads' Policy and Economics Department, in 2001 the railroad industry employed 184,368 people, with 162,155 being employed by Class 1 railroads. Average annual wages were approximately $58,000. Rail workers have long been unionized, and the unions have made rail employees as a group one of the highest-paid segments of the working population. But the increasing automation of trains, centralized dispatching, and company mergers, combined with companies' desire to cut operating costs as much as possible, have endangered several key employment positions. In addition, faster trains mean that crews, who are paid bonuses for miles traveled over a set limit, often earn bonuses of up to 70 percent of a day's wages for an 8- or 10-hour day. Companies are eager to cut these bonuses, but the power of the unions is strong.

Collective bargaining occurred throughout 1991 between the freight railroads, Amtrak, and the railroad employees' unions (most notably the International Association of Machinists, or IAM), with most disputes being settled that year. Yet by June 1992, IAM and the freight rail companies had still not reached an agreement. This situation, combined with Amtrak's stalled negotiations with two of its unions, led to a strike and a national rail shutdown on June 24, 1992. After Congressional intervention forced binding arbitration, all disputes were resolved by August 2, 1992. It is likely that labor disputes will continue to mark the rail industry, as technical advances shift emphasis from physical labor such as brake operation to more technical and managerial jobs such as engineering.

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. In 1993 starting engineers earned an average of $35,000 to $45,000 per year, reflecting the job's status as the highest-paid railroad worker.

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, etc., and the engineer. In 1993 the average annual starting salary for a conductor was $32,000 to $35,000.

Some trains employ an assistant engineer ("fireman" or "firer"), who aids the engineer in running and monitoring the trains. This position is being phased out due to the increasing computerization and mechanization of trains, terminals, and freight yards. Firers perform engine maintenance and repair and serve as emergency replacements for engineers. Brake operators (previously called "brakemen") maintain braking equipment and lights and add and remove cars at station stops. Brake operators also are disappearing from trains due to railroad-union negotiations; they are being eliminated mainly through attrition and early-retirement incentives. In 1993 firers earned an average yearly starting salary of $16,000 to $25,000, and brake operators had a starting salary of $30,000.

America and the World

Regional trade agreements, railroad cooperation, railroad mergers, and transportation innovations have 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 1 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.

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. Likewise, 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 10 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 the Association of American Railroads 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.

Once industry standards became hammered out, some industry observers felt that ATCS would provide near-instantaneous data on car location, switching records, car scheduling, and other factors that affected the smooth synchronization of a vast network of trains. Of course, the up-front costs were great, but ATCS was one step toward further computerizing a large and complex industry.

Other innovations included ISS (Interline Settlement System) and REN (Rate EDI Network), industry-wide standards of computerized data management that would manage 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 of this automation, based on smaller networked computer systems rather than large central mainframe machines, could lead to a continuing decentralization of control and information that would allow 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 125 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.

High-speed rail systems fell into two categories, steel-wheel-on-steel-rail and magnetic levitation systems. Among the more traditional wheel-on-rail trains, the fastest of which could reach 187 miles per hour, France's TGV train was the most successful. As of 1993, a privately financed TGV system was planned by the Texas High-Speed Rail Authority to link Dallas/Fort Worth, Houston, San Antonio, and Austin by 1999. Privately financed for $7 billion, the system would be the first of its kind 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. The trains, which were separated from the tracks by a magnetic field, were not yet in commercial use. A planned maglev system, however, that would connect the Orlando, Florida, airport and the Disney World complex, was planned, with backing from American, German, and Japanese investors.

Among other developments in the industry were new fuels for locomotives. In 1991 Burlington Northern, in conjunction with Air Products & Chemicals, Inc., developed a locomotive that could be run on refrigerated liquid methane, a natural gas derivative. The use of such fuels could reduce fuel costs for rail companies, as well as cut down on polluting emissions.

Railroads invest heavily in technologies that would improve safety and efficiency. By July 1997 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.

Further Reading

Association of American Railroads. Policy and Economics Department, 2003. Available from http://www.aar.org .

"CN-IC Gets STB Final Approval." Chemical Week, 9 June 1999.

"Conrail Breakup Creates Congestion." Chemical Week, 7 July 1999.

"Fast Train to Nowhere?" Business Week, 27 September 1999.

"Freight Delays Follow Conrail Carve Up." Pulp & Paper, August 1999.

Gallagher, John. "Finally, Focus: Rail Shipper Groups to Back Single Bill to Level Playing Field with the Railroads." Traffic World, 14 April 2003, 29-30.

"Grows to 12,000 Miles." Railway Age, September 1999.

Hassler, Darrell. "Canadian National, Illinois Central Railways Merge." American Metal Markets, 16 July 1999.

Hatch, Anthony M. "On Track for Improvement." The Journal of Commerce, 13 January 2003, S92-S93.

"Industry Indicators." Railway Age, December 2002, 1.

"Market Report." Traffic World, 26 August 2002, 35.

Messina, Ignazio. "Railroads Target Cool Cargo." JoC Week, 26 August 2002, 21-22.

Murray, Tom. "Wrong Train Running?" Trains Magazine, July 2002, 30.

Phillips, Don. "Future Fast Freight's." Trains Magazine, November 2001, 58.

Plant, Jeremy F. "Railroad Policy and Intermodalism: Policy Choices after Deregulation." The Review of Policy Research, Summer 2002, 13-32.

"RailAmerica to Fold in RailTex." Railway Age, November 1999.

Rasmussen, Jim. "Conrail Split Avoids Depths of Union Pacific's Woes." Knight-Ridder/Tribune Business News, 14 September 1999.

Reinke, Jeff. "A New Direction for Amtrak?" Mass Transit, July/August 1999.

"Shippers Wary of Conrail Breakup." Purchasing, 15 July 1999.

"Shortline Consolidation." Chemical Week, 27 October 1999.

"Tracking Mergers." American Shipper, January 1999.

"UP Doubles Stake in Mexico." Railway Age, March 1999.

"Weekly Traffic of Major U.S. Railroads." Traffic World, 14 April 2003, 35.



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