Transportation Deployment Casebook/U.S. Railway Freight

U.S. Railway Freight Introduction

Being one of the main ways to transport goods, railway freight has grown a lot in the past two centuries. The United States has the longest railroad network in the world. As a major exporter of agricultural products and energy, it relies on railroads to transport bulk goods like grain, coal, and oil. The steady operation of railway freight affects the U.S. economy and its international competitiveness.

US railway map

Core Technical Characteristics

In the early years, railways used steam locomotives. This helped western expansion and made long-distance bulk transportation possible. As the network grew, standard gauge unification and steel rails improved capacity and safety. From the 20th century, diesel-electric locomotives totally replaced steam ones, successfully increased fuel efficiency and lowered costs. Special alloy rails made tracks more durable, and hybrid sleepers with concrete and plastic improved stability and reduced maintenance. Automatic signals, electronic dispatching, and refrigerated cars made freight more reliable and diverse. By the mid-20th century, containerization and multimodal transport allowed railways to connect better with roads and sea transport. This strengthened their role in long-distance, large-scale freight. In the new century, digitalization and automation became key trends, also the topic of all fields. Technologies like PTC (Positive Train Control), remote monitoring, and AI-based scheduling improved safety and efficiency.

Main Market

The main market for railway freight comes from the transportation of traditional bulk goods, such as coal, ore, steel, crops, etc., which have large freight volumes and are not easily damaged.

As society changes, railways have also adapted. They now transport parts for renewable energy, such as mechanical components, battery panels, and chip boards. This shift supports a new industrial structure. Containers have become the main unit of shipping in recent years, they are used as carriers to carry out loading and unloading, handling operations and complete transportation tasks.

Freight train carrying containers

The result is intermodal transport. In 2022, U.S. rail intermodal transportation volume was 13.5 million vehicles, and intermodal transportation accounted for approximately 27% of major U.S. railroad revenue, higher than any other single rail transportation segment. Nearly half of intermodal shipments were imports or exports. Undoubtedly, this shows its significant role in international trade.

Advantages

Railway freight performs well in long-distance, large-volume transportation: it has significant cost advantages, with the unit transportation cost per ton of goods much lower than other modes of transportation; it has a large transportation volume and is suitable for transporting bulk goods; it is less affected by weather and traffic conditions than other modes of transportation and has a higher punctuality. In addition, railways are safer in transporting dangerous goods, such as chemicals and oil, with a low accident rate. Compared to roads, railways are more suitable for long distances. They are more fuel-efficient and cost-effective than trucks. Company with the discussion of environment protection, railway freight also produces less carbon dioxide. Its emissions per ton are only one-third to one-fifth of truck emissions. With low-emission locomotives, electrification, and clean fuels, its environmental benefits will grow further.

The Birth of Railway Freight

Freight Methods Before Railways

Before the advent of railway freight, in the early 19th century, the main modes of freight transportation in the United States were horse-drawn carriages and water transportation.Horse-drawn carriages are usually used for short-distance freight and the circulation of goods between towns. They were flexible and could reach inland areas beyond rivers and canals. But they were so slow, moving at only 2-4 miles per hour, which were also costly and limited by livestock endurance and road conditions.

Conestoga Wagon, about 1840-1850 - National Museum of American History - DSC06103

Water transport had always been the main mode of transporting bulk goods before railways. The invention of the steamship revolutionized inland waterway shipping greatly increased its carrying capacity and speed. Artificial waterways such as the Erie Canal further reduced freight costs between the east and west, that has made New York the trade center of the United States.

Historical Background

In the early 19th century, the Industrial Revolution began in Europe and the United States. It boosted manufacturing and agriculture. As economic activity grew, the U.S. needed faster and more efficient transport.Horse-drawn carriages and water routes had many limits: they were slow, costly, and had limited coverage, could not catch the growing economy. The Louisiana Purchase in 1803 greatly expanded the territory of the United States, and the subsequent Westward Expansion accelerated the development of border areas. A large number of immigrants poured into the Midwest and the West. They needed efficient means of transportation to transport agricultural products, raw materials, and industrial products to connect to the eastern market. Railways became the key to expanding new territories and promoting commercial exchanges.

Earliest Railroad

The earliest freight railway in the United States is the Baltimore & Ohio Railroad (B&O Railroad)

Baltimore and Ohio Railroad's system map.

, which was established in 1827 and officially put into use in 1830. The original purpose of the construction was to help establish a faster transportation channel between the Port of Baltimore and the inland areas of the United States. Aiming to coping with Pennsylvania's trade advantages over New York through the Erie Canal and the Hudson River-Erie Canal route.

Growth

Early Market and Expansion

In the first half of the 19th century, railroads mainly transported coal and agricultural products, which moved from the Midwest to the East. For example, the Mohawk and Hudson Railroad carried coal from mines to rivers, canals, or ports. From there, it was shipped to eastern cities. The Erie Railroad, fully opened in 1851, linked New York to the Great Lakes, provided a fast route for agricultural products. During the Civil War of 1861-1865, railroads became the core tool for transporting strategic materials and troops. The war promoted railroad construction and accelerated the unification of standardized track gauges (the Northern Railway adopted a 4-foot 8.5-inch standard track gauge from 1863). After the war, the railroad system expanded rapidly and became an important pillar of the country's economic recovery.

In 1869, the first transcontinental railroad was completed, connecting Sacramento, California with the eastern railroad network. Highly reduced freight time from months to within a week and stepped into the railway era in the United States.By the beginning of the 20th century, railway freight accounted for 85% of total freight volume.

The ceremony for the driving of the golden spike

Technology Development

Rail materials improved from wooden rails to forged rails. In the meantime, the standard gauge of 4 feet 8.5 inches was gradually adopted. All these changes increased speed and stability. In the 1860s, railway bridges, tunnels, and telegraph dispatching helped overcome terrain obstacles, which improved cross-regional connections and made rail transport more efficient. From 1870 to 1900, steel rails, stronger steam locomotives, automatic couplers, and air brakes increased capacity and safety. Special freight cars, like refrigerated and tank cars, made railway transport more diverse.

Policy Impact

Pacific Railroad Act of 1862 Original Manuscript

In 1862, then-US President Lincoln signed the Pacific Railway Act. It became the first transcontinental railway was officially completed at Promontory Summit in Utah, connecting the east and west coasts, greatly shortening the time of cross-continental travel. The government allocated funds to support railway construction. It promoted the flow of resources to the western region and provided immigrants with opportunities to move westward, which helped the development of the United States after the Civil War.

ATF policy

In the late 19th century, Antitrust Laws broke the railway monopoly. They lowered freight rates and protected small and medium-sized businesses, also stopped railway companies from controlling the market through mergers. These laws reduced the chance of large companies manipulating transport costs and helped ensure the growth of railway freight.

Maturity

During this time, railways has greatly improved in technology and management. They used stronger steam locomotives and enhanced carriage design to boost capacity. A standardized dispatching system was introduced to make train operations more efficient. The railway industry also started using large freight marshaling yards to improve logistics. After the antitrust laws, railway companies merged to create a more efficient transport network. This allowed railway freight to reach its peak during the golden age. In the 1960s and 1970s, the U.S. railroad industry faced serious crises, including the Northeast Railroad Crisis caused by the bankruptcy of Penn Central (1970), which led to government intervention. Under government intervention and supervision, railway freight efficiency has continued to rise. Net rail operating income increasing threefold between 1980 and 2010, as the return on investment also doubling. Despite the overall drop in railway freight rates, companies have kept profits through productivity improvements. This ensures the industry's long-term sustainable development. Overall, the U.S. rail freight industry has entered a mature stage marked by efficiency and strong profitability.

Technology Maturity And Policy Adjustment

Before the 1970s, the US railway freight market was strictly regulated by the government. The operating efficiency of rail companies was low, and the service quality could not meet the market demand. Leading to the continuous erosion of the rail freight market share by other modes of transportation. In order to change this situation, the United States government enacted the Staggers Rail Act in 1980

Signing of the Staggers Rail Act of 1980

to relax the regulation of the rail industry. As a positive result, rail companies were allowed to set prices independently according to market demand and simplify the approval process for rail mergers and reorganizations.

The implementation of the Staggers Rail Act has strongly improved the marketization of the US rail industry, promoted competition and integration among rail companies. Successfully acted as one of the most far-reaching bills in the history of US rail freight. The widespread use of containers and double-stack trains has greatly increased the transport capacity of each train, allowing each train to carry more and reduce unit transportation costs. Improved fuel efficiency has significantly reduced train fuel consumption: from 188 tons-miles per gallon in 1966 to 484 tons-miles per gallon in 2010. In railway infrastructure, stronger railways and better track structures have increased the service life of tracks and sleepers. This became a useful method to lower maintenance costs. Advances in information technology have also played a very important role. Computerized dispatching systems and real-time monitoring have optimized train operation plans and improved efficiency.

Future Outlook

In the future, U.S. railway freight will face new road where opportunities and challenges both exist. These will come from technological innovation and market changes. Self-driving freight trains, like BNSF's unmanned pilot, are expected to improve efficiency and lower labor costs. Hydrogen-powered locomotives and rail electrification will help cut carbon emissions. They will also help railways meet stricter environmental regulations. Faced with declining demand for bulk goods such as coal, railway companies need to accelerate the transition to container transportation and multimodal transport, and strengthen connections with ports and road transportation to improve market competitiveness. Otherwise, railway freight will still face competitive pressure from road freight and sea transportation, especially as falling shipping costs and advances in truck autonomous driving technology may further weaken railway's market share.

Quantitative Analysis

Formula

The life cycle can be modelled by an S-curve which is used to display data over some time. S-curves (status vs. time) allow us to determine the periods of birthing, growth, and maturity. Here, it is assumed that the data used for modelling takes on a logistic shape to seek a curve that best fits the data.

Three-parameter S-curve logistic function was used :

S(t) = S_max/[1+exp(-b(t-t_i)]

S(t) = State Measurement (in ton-miles of railway freight)，

  t = time (in years)，

  t ₀ = inflection point time (the year in which half of S max is obtained)，

  S _max = saturation level (maximum annual volume of U.S. railway freight)，

  b = the coefficient to be estimated.

Results

S-curve for U.S. railway freight volume from 1980 to 2022

S _max ≈ 1,762,973 (ton-miles)

t ₀ ≈ 1984

b ≈ 0.0976

R² ≈ 0.8845

The growth inflection point was in 1984, which coincided with the time point of rapid growth of rail freight after the 1980 Staggers Rail Act reform, indicating the role of policy in promoting rail freight. The reason why the S-curve cannot fit the data completely is mainly because the data used is incomplete. The complete life cycle of US rail freight should start from the first half of the 19th century, but the data is too old for the author to obtain these data. If the railway mileage is used as an indicator, the total mileage of US railways began to decline after 1930, which the author believes is not suitable for this analysis. The fluctuation of the line in the second half caused the predicted value to deviate greatly from the actual value. This may be due to the impact of the global financial crisis during that period, or it may be due to the impact of sea and air transport on railway transport after entering the new century.

Annual Data

Year	Volume(Ton-Miles)	Predicted Volume(Ton-Miles)
1980	932000	708087.4191
1981	924000	749799.924
1982	810000	792124.5005
1983	841000	834869.53
1984	900090.9684	877835.5494
1985	876209.1896	920818.926
1986	891234.5318	963615.6979
1987	951940.1473	1006025.429
1988	1025683.347	1047854.92
1989	1045628.228	1088921.643
1990	1033969	1129056.751
1991	1038875	1168107.596
1992	1066781	1205939.659
1993	1109309	1242437.876
1994	1200701	1277507.35
1995	1305688	1311073.488
1996	1355975	1343081.608
1997	1348926	1373496.084
1998	1376802	1402299.127
1999	1433461	1429489.28
2000	1465960	1455079.707
2001	1495472	1479096.383
2002	1507011	1501576.226
2003	1551438	1522565.262
2004	1662598	1542116.857
2005	1696425	1560290.056
2006	1771897	1577148.068
2007	1770545	1592756.895
2008	1777236	1607184.135
2009	1532214	1620497.934
2010	1691004	1632766.114
2011	1729256	1644055.437
2012	1712567	1654431.016
2013	1740687	1663955.851
2014	1851229	1672690.475
2015	1738283	1680692.694
2016	1585440	1688017.424
2017	1674784	1694716.581
2018	1729638	1700839.045
2019	1614498	1706430.664
2020	1439814	1711534.3
2021	1533869	1716189.906
2022	1533416	1720434.622