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 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 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.
Class 1 (large interregional) freight railroads are experiencing significant growth in demand after decades of responding to a relatively stagnant market by reducing trackage by about 50 percent between 1960 and 2000. 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. 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.
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 accounts for over 20 percent of rail revenue. In 2003, for the first time ever, intermodal surpassed coal in terms of revenue for US Class I railroads.
Trailer-on-flatcar and container-on-flatcar service, once a small market, is now a major source of traffic and revenue, with high speed intermodal trains vying for space on the network with slower trains carrying bulk commodities. Seasonal surges in freight demand and disruptions from incidents and maintenance activities add to congestion as volumes reach capacity on the reduced mainline railroad network. Class 1 railroads are responding with operational improvements and capital expenditures. In 2006, railroads invested $8.5 billion on renewal of existing roadway, structures, and equipment, and on expansion to serve additional traffic. The results are relative stability in average speeds and terminal dwell times for each of the major railroads in 2007.
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.
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