Railroads

The 615 railroads in the US transport cargo within a rail network, and include line haul railroads and short line railroads. Major types of rail freight include energy products (18% of industry freight revenue), motor vehicles and equipment (17%), food and beverage products (15%), chemicals (10%) and plastics and rubber (10%). Non-freight related revenue includes fees for rail car switching, rail car hire and rental services, and demurrage (when shippers or receivers hold railcars beyond the contracted period of time).

High Capital Requirements

Rail transport is a highly capital-intensive industry, with most companies having significant investments in tracks, terminals, underlying property, locomotives, and rail cars.

Competition From Alternative Carriers

Railroads compete with alternative modes of transportation, such as trucks, barges, ships, and pipeline operators.

Sep 2, 2026 - Intermodal Surge Strengthens Railroad Demand

• Intermodal shipping is giving railroad operators a bigger piece of the freight market as shippers look for cheaper alternatives to long-haul trucking. Domestic intermodal container volumes are up 10% from a year ago, according to FreightWaves SONAR, while accepted truckload volumes have fallen 3.3%. Cost is driving much of the shift, with rail running about 34% cheaper than trucking, making intermodal particularly attractive when shippers have enough time to trade speed for savings. Higher fuel costs can widen that advantage because trucking fuel surcharges tend to rise faster than intermodal surcharges. For railroads, stronger intermodal demand means more container traffic and an opportunity to win freight traditionally handled entirely by trucks. The challenge will be maintaining reliable service as volumes grow, particularly around busy terminals where congestion, equipment availability, and connections with local drayage carriers can determine whether those cost savings hold up.
• Rising trucking rates, higher diesel prices, and tighter truck capacity are driving more US retailers and manufacturers to shift freight from highways back to rail. According to the Association of American Railroads, North American intermodal traffic rose 6% year over year in May, the strongest increase since March 2025, as shippers sought lower transportation costs. While rail shipments take longer and require truck transfers for final delivery, intermodal service can reduce shipping costs by 10% to 20%, according to Redwood Logistics, and remains far cheaper than long-haul trucking. Investments by railroads and logistics providers have also improved reliability and transit times, making intermodal a more attractive long-term option rather than just a temporary cost-saving measure. The shift is especially pronounced on US-Mexico freight lanes, where immigration enforcement has tightened truck capacity and further increased demand for rail alternatives.
• Employment in the US railroad industry is continuing a steady, long-term slide, with payrolls down 3.9% year over year in March and off 1.5% over the past three years, according to Bureau of Labor Statistics. The longer view is even more striking: rail jobs have shrunk 17.8% over the past decade, even as overall private employment climbed 11.5%. This isn’t just a soft patch - it’s a reset. Railroads have slashed headcounts through relentless efficiency drives and changing operating models like precision scheduled railroading. Core freight like coal has also dried up and trucks have muscled in on key routes. Pandemic-era cuts only deepened the shift, with hiring never fully catching up. The upshot: an industry that’s still moving the nation’s goods, but doing it with a leaner workforce, leaving rail employment increasingly out of sync with the broader labor market.
• The value of freight moved by rail across US borders with Canada and Mexico dropped 9.2% to $184.5 billion in 2025, according to the Bureau of Transportation Statistics. While surface transportation (truck, rail, and pipeline) accounts for more than 80% of all transborder freight by value, rail plays a secondary role to trucking in both directions. On the northern border, rail holds a 12.6% share of US-Canada freight value, narrowly trailing pipeline shipments at 13.4%. On the southern border, rail accounts for 10.9% of US-Mexico freight value, with trucking dominating at 73.6%. The top US rail ports for Canadian trade are Detroit, Port Huron, and International Falls, while Laredo, Eagle Pass, and El Paso lead for Mexican trade. Despite the overall decline in rail freight value, BTS characterized rail as remaining vital across both borders.

Industry size & Structure

The US freight rail transportation industry consists of 615 railroads, which employ 153,000 workers and generate $64.5 billion annually in freight revenue.

• The Association of American Railroads (AAR) classifies rail operators into one of three categories: Class I, regional, and local. Six Class I railroads generate revenue about 96% of industry revenue each year. Regional and local railroads account for the rest.
• Collectively, railroads operate nearly 140,000 miles of track.
• The industry is concentrated at the top; the top seven Class I railroads account for 94% of industry revenue.
• The seven Class I railroads are Union Pacific, CSX Transportation, BNSF Railway, Canadian National Railway, Kansas City Southern Railway, Norfolk Southern Railway, and Canadian Pacific Railway.
• Domestic firms, including non-Class I carriers, may have operations in foreign countries.
• Canadian and Mexican-owned railroads have a significant presence in the US. Both countries operate railroads in the US with enough revenue to qualify for Class I classification.
• The industry includes Amtrak, a federally-chartered company that provides national passenger rail services. Amtrak receives financial support from the federal government and fifteen state governments.