In addition to optimization and innovation, U.S. railroads have shown a remarkable ability to adapt to changing market conditions.
Parallel to deregulation, two important developments occurred in the nation’s freight market in the 1980s that largely predetermined the development of freight transportation.
The first was the shift in international trade from Europe to Asia. Imports from Japan, Taiwan, and South Korea were coming into the U.S. at West Coast (Pacific) ports and then shifting to densely populated cities to the east.
U.S. railroads have responded to this challenge by introducing a breakthrough technology: double-stack container trains.
They cut the cost of intermodal transportation by nearly half and successfully competed with automobile transportation.
Moreover, the trains were able to handle longer containers (over 40 feet), after allowing them to be transported by road in the 2000s.
New intermodal terminals were created, and a number of major railroad stations were redesigned for them.
As a result, containers are now the fastest growing and most profitable segment of the U.S. railroad business.
In 2013, intermodal revenue (about $15 billion) exceeded coal revenue ($14.3 billion), which has long been a major freight. Intermodal transportation in the U.S. breaks records almost every year.
If we take the time interval from 1980 to 2018, they increased from 3 to 14 million TEU (twenty-foot equivalent unit), that is almost 5 times.
In addition to containers, semi-trailers and automobiles are transported, but their share is small. According to the Intermodal Association of North America (IATA), international cargo accounts for 54% of the total.
A second major development that contributed to the development of U.S. railroads was the rapid expansion of coal mining in the Powder River Basin, Montana.
This was due to clean air measures and the need for low-sulfur coal supplies. Nearly half of U.S. coal is mined here.
Coal has always been and remains the largest cargo for U.S. railroads, accounting for about 40% of tonnage. Another massive cargo is grain.
At the same time, shipments of chemicals increased significantly – by 68% from 1980 to 2007. Including due to new types of transportation in special containers.
At the same time, shipments of a major rail freight such as iron ore in the U.S. collapsed by 62% over a third of a century due to depletion of local resources.
Shipments of general cargo (metal products, foodstuffs, timber, construction cargoes, and pulp) have also declined.