Rail Transportation
SIC 4000
NAICS 4821
Entities in this industry sector are involved with the line-haul transportation of passengers and freight via rail systems (except passenger transportation by rail within or around specific urban centers—see SIC 4100). Industry firms also conduct support activities related to the operation of rail terminals for line-haul passengers and freight, yards, sidings, and switching. Not included in this heading are railway constructions (SIC 1629), and the manufacture of rail equipment (SIC 374).
Almost every country in the world has a rail system, although the degree to which it is put to use for passenger versus freight use can vary dramatically. How the industry is regulated, even the size of the track used, can often appear as individual as the country. The industry is most often subdivided between freight and passenger operations, and within passenger operations it is subdivided further into local and long distance (high-speed) services. This industry discussion focuses on freight and long-distance passenger services and their complimentary services, including terminals and switching.
By 2003, some 746,000 miles of rail lines were being used to transport freight and people between cities, across countries, and increasingly, across nations. Between 2002 and 2050, the world population was expected to grow to 9.3 billion people. As a result, the need for efficient, economical and environmentally friendly means of transport for this growing population and the products they consume was resulting in technological advancements in the speed of trains, the weight of cargo that could be carried, the efficiency of train fueling systems, and the computerization of the logistics behind moving mass numbers of people and products.
By the mid-2000s, the railway industry was looking up, thanks to the substantial increase in "intermodalism," the seamless combination of various modes of transport—such as trains, boats, and trucks—to ship freight. In intermodal transport, the freight is shipped in trailers or containers that can be directly interchanged between different modes of transportation. In the U.S. alone, intermodal traffic went from a mere 3 million containers in 1980 to nearly 10 million in 2003, and, according to the Association of American Railroads (AAR), intermodal traffic set records in 21 of those 23 years.
According to Worldwide Rail Market, published for the German rail equipment manufacturing firm Vossloh AG, there were almost 746,000 miles (1.2 million kilometers) of rail lines around the world by 2003. According to SCI Verkehr GmbH, a German rail consulting company, the longest network could be found in Asia (with approximately 284,000 miles), followed by North America (approximately 194,000 miles of track), Europe (162,000 miles), Latin America (67,000 miles), Africa (56,000 miles), and Australia/Pacific (39,500 miles). However, how these rail lines are used varies significantly by region. For example, the primary use of rail lines in North America is for freight, and as a result, most lines are single-track, with relatively few rail crossings. In Europe, lines are used for both passenger and freight, and travel through large urban centers, requiring more complicated organizational and safety structures for their functioning.
Most countries regulate their rail industries through government-run organizations. For example, in the United States, the Federal Railroad Administration, under the Department of Transportation, is responsibile for safety legislation. The International Union of Railways (known as the UIC), located in Paris, had 162 members in 2005, including all rail transport and infrastructure managers in Europe, and most major railways in the remainder of the world. The organization was working to develop international transport by rail, and prepared standards, regulations and recommendations to this aim.
Trends in the growth of the world's population and the increasing global mobility of that population, as well as increases in the amount of trade between countries, have led to increased cooperation with other transportation industries, regional trade agreements, privatization, railroad mergers, and transportation innovations. In North America, 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 territories. Both the United States and Canada expanded into Mexico in the early 1990s. For example, in 1991 a joint venture between Burlington Northern (BN) and the Mexican corporation Grupo Protexa S.A. produced Protexa Burlington International (PBI), an innovative rail-barge link between Galveston, Texas, and Mexican Gulf ports. Two years later, Canadian National Railway began connecting with PBI via BN to deliver Canadian grain to Mexico. Territorial expansion was further increased both by a wave of rail mergers in the United States in the mid-1990s and by the North American Free Trade Agreement (NAFTA), which diminished most trade barriers between the United States, Canada, and Mexico.
With trade between the United States and Canada creating a north-south orientation, railroads shifted their east-west systems accordingly. The two nations began sharing track, railbeds, and operations on both sides of the border. U.S. railroads, for example, gained entry to Canada through interline agreements with Canadian railroads, as when the Atchison, Topeka, and Santa Fe Railway Company (Santa Fe) entered into an interline connection with the Canadian National Railway Company's Grand Trunk line at Chicago. In essence, railroads could finally provide complete service from Mexico to Canada.
Under an agreement with Mexico's government, NAFTA allowed Canadian and U.S. railroads to market their services in Mexico, to operate unit trains with their own locomotives, to construct and own terminals, and to finance rail infrastructure. The agreement did not, however, allow full foreign ownership of a Mexican transportation firm. While pre-cleared containers and boxcars could cross the border into Mexico, neither Canada nor the United States was permitted to handle their own shipments into Mexico. Mexican law required foreign railroad operators to turn shipments over to Ferrocarriles Nacionales de Mexico (FNM), Mexico's national railway. Neither Mexico nor the United States allowed locomotives from the other nation to cross the border. Power units, therefore, had to be switched at border terminals such as Laredo or Brownsville, Texas, a policy that helped trucking firms capture about 75 percent of all U.S. southbound trade with Mexico.
Southern Pacific (SP), which would later be acquired by Union Pacific (UP), invested directly in Mexico's infrastructure with Mexican partners Ferropuertos (rail ports). SP developed a network of distribution centers at Mexican rail ports that enabled timely unloading. In 1993, it completed construction on an intermodal facility at Monterey that was operated by Mexican firms.
In Europe, a spirit of cooperation, spurred by the establishment of the European Union in 1993, led to the creation of a pan-European rail network. Prior to the EU, national and state-run railways had traditionally refused to collaborate. Cooperative efforts were initiated in 1991 when European transport ministers, in an effort to improve intermodal links, adopted standard measurements for containers and other units used by rail transport industries. Previously, non-standardized shipping lots and container sizes used throughout Europe had been a major problem for the transport and distribution industries.
Four different rail gauges and seven different types of loading gauges on European railroads had hampered any previous possibility for an interconnecting system. Rail systems had been especially outdated in Spain, Portugal, Greece, and Ireland where truck and loading gauges were not standardized, signaling systems were mismatched, bridge and tunnel dimensions varied, power lines used uneven voltage, and track slope and curve gradients differed.
EU directives called for increased rail use to reduce truck traffic on Europe's overly congested and polluted roadways. In the early 1990s, trucks accounted for 70 percent of all freight movements in the EU. A goal was set to affect an 8 percent increase in cross-border intermodal traffic hauled by a combination of trucks, railways, and barges, no later than 1997. The EU plan called for a pan-European combined transport network involving an investment of US$2.5 billion in new rail, terminals, boxcars, and locomotives to boost multimodal transport across the borders of member nations. A planned 30,000 kilometers of high-speed track, to be built in two phases, was scheduled for completion by 2005. Some US$590 million was earmarked for high-speed rail links that would connect the northern route (Paris-London-Brussels-Amsterdam-Cologne) with the southern route (Seville-Barcelona-Lyon-Turin-Milan-Venice). Further connections would be made with Tarvisio and Trieste, Italy; Madrid, Spain; and Lisbon and Oporto, Portugal.
EU directives also called for approximately US$120 billion to be spent on developing and implementing high-speed passenger rail systems. Eurotunnel, the Anglo-French channel-tunnel consortium, developed "Le Shuttle" service, connecting London with Paris and Brussels through the Channel Tunnel. Often dubbed the "Chunnel." Service, it began in November 1994 and made it...
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