Railroads are perhaps the cheapest way to haul freight overland. According to the Association of American Railroads (AAR), the U.S. freight train system leads the world in volume of traffic, amount of freight hauled, revenues, affordability, miles of track and other measures.
U.S. freight railroads include the following categories:
- Class I freight railroads report revenues greater than $346.8 million. There are seven U.S. freight railroads, and they haul more than 67 percent of the nation's freight. They operate 3,200 to 32,000 miles (5,150 to 51,499 kilometers) of track and typically engage in long hauls. Some companies in this class include CSX Transportation, Norfolk Southern and Union Pacific Railroad.
- Regional freight railroads check in with revenues between $40 million and $346.8 million. More than 33 regional railroads operate in the United States, each with 350 to 600 miles (563 to 966 kilometers) of track.
- Local linehaul freight railroads have revenues less than $40 million and operate fewer than 350 miles of track. Many local linehauls transport freight within a 75-mile (121-kilometer) radius, often within a single state. About 324 local linehauls function in the United States.
- Switching and terminal (S&T) railroads don't provide point-to-point transportation but rather provide switching services. They pick up and deliver cars within an area, usually for local linehaul railroads.
Freight railroads carry lots of stuff, but the most common item is coal for electrical power plants (44 percent tonnage and 21 percent revenue). Chemicals, farm products, nonmetallic minerals, mixed shipments and other commodities make up the major categories. In 2007, Class I railroads hauled more than 1.9 billion tons (1.7 billion metric tons) of freight and earned about $53 billion. Freight railroads make money based on the weight of freight and the distance traveled. The industry uses the ton-mile as the basic unit, and Class I railroads carried more than 1.7 trillion ton-miles in 2007 [source: AAR].
In the United States, the railroad companies themselves own the railroad tracks. Land grants by the federal government to the railroads in the 1800s allowed the railroads to own the tracks. Furthermore, U.S. freight railroad companies are privately owned and operated, with no government subsidies. While railroads own some of the thousands of freight cars used, car companies and other shippers actually own most of them.
The international leaders in freight railroads are the United States, Russia and China. In contrast to the United States, European railroads are mostly government-owned. They primarily transport passengers and, to a much lesser degree, freight. However, this setup is changing, and hauling freight is becoming increasingly important. European railways don't make as much money hauling freight as their U.S. counterparts do. Their situation seems to be similar to that of U.S. freight railroads before the Staggers Rail Act of 1980 was passed.
On the passenger front, however, European railroads are millions of meters ahead, as you'll read about next.