The crisis of the railroads of the 1970s, in addition to government control of fares, was the difficulty in rationalizing the nineteenth-century system for twentieth-century conditions.
The network was too large, for it was built on the assumption that steam locomotives had to be refueled every 100 miles.
It also served a huge number of customers and cities, which made for complex operations. Many lines faced problems of obsolescence and competition and congestion.
Much of the public debate about railroads in the 1970s was about low-volume lines.
The railroads wanted to abandon them as unprofitable. They didn’t want to wait for all the traffic to disappear.
At the same time, customers and local officials opposed it, on the grounds that jobs would be lost and regional economies would suffer.
The bankruptcy of the railroads, however, led to the passage of deregulatory laws. Under them, the U.S. Congress allowed companies to abandon unprofitable lines unless subsidies were provided by the state, local governments, or customers.
To make the process acceptable to the public, the government allocated temporary funding to the states to keep low-volume lines open.
In spite of this, many were abandoned and others were converted to short lines or regional railroads.
Nowadays, they play a crucial role in serving existing customers and in attracting new freight owners.
In all, more than 40,000 miles of track have been closed or mothballed, helping to reduce infrastructure maintenance costs.
The annual savings from abandonment of low-operating lines, as estimated by American experts, amounted to about $0.5 billion a year.
The market share of Class II railroads, as well as the volume of abandoned lines, has grown significantly.
The U.S. rail network shrank from 183,000 miles to 140,000 miles between 1980 and 2010.
Instead, major carriers moved to more profitable and efficient lines. The railroads focused on long-distance, low-cost transportation of long trains.
In other words, they came to what is called “route transportation”. As an example, the average trucking distance increased from 503 miles in 1965 to 919 miles in 2008.
Subsequently, a series of mergers reduced the number of Class I railroads and eventually produced several large established systems.
While there were 40 registered Class I railroads (18 of them large) in the early 1980s, there are now only 7 left.
This provided more opportunities for capacity consolidation and opened up opportunities for comprehensive planning of operations and investment.