5.3 – Rail Transportation and Pipelines

Authors: Dr. Jean-Paul Rodrigue and Dr. Brian Slack

Rail transportation refers to the movement of vehicles on guideways. The most common guideways are rails, but recent technological developments have also made available monorails and magnetic levitation trains.

1. Rail Transportation and Rail Lines

Although primitive rail systems existed by the 17th century to move materials in quarries and mines, it was not until the early 19th century that the first extensive rail transportation systems were set. Rail transportation has been the product of the industrial era, playing a major role in the economic development of Western Europe, North America, and Japan, where such systems were first massively implemented. It represented a significant improvement in land transport technology and has introduced significant changes in the mobility of freight and passengers. This was not necessarily because of its capacity to carry heavy loads but because of its higher ubiquity level and speed. Rail transport systems dramatically improved travel time as well as the possibility of offering reliable and consistent schedules that could be included in the planning of economic activities such as production and distribution. The coherence of economic activities and social interactions was thus substantially improved. Rail transportation was the first mode that brought scheduling and reliability to transportation systems, as its assets and services needed to be planned and geographically allocated.

With the introduction of the steam locomotive in 1829, a mechanized land transport system became available for the first time. However, geography played an important role in the nature and function of the first rail systems. According to the geographical settings, rail lines were established differently because of the various strategies to be achieved. These included access to resources (penetration lines), servicing regional economies (regional networks), and achieving territorial control (settlements along transcontinental lines). The first rail lines were portage segments within canal systems or routes to complement existing canals and fill their service gaps. Because of its cost and time advantages, rail could supplant canal services in inland transportation to become the main driver of spatial change in industrializing regions of the world. The structure of rail network development reflects and influences the structure of the national urban system. For instance, initial rail network development in the United States in the second half of the 19th century reflected differential levels of industrialization to the advantage of the Northeast, leading to rail corridors that prevailed well into the 21st century. For France during the same period, rail development spurred from Paris and created a highly centralized network. For China, rail development came later in the early 20th century and focused on connecting its largest cities.

The capital intensiveness of building and operating rail services required the setting of corporations that grew in size as rail expanded. The first railway companies were mainly point-to-point ventures, with the company often taking the name of the serviced destinations. Several mergers occurred as the rail system expanded, leading to peculiar semantic results. For instance, BNSF Railway (Burlington Northern Santa Fe; the company uses the acronym to avoid confusion), a major rail operator in the western part of the United States, is the outcome of some 390 different railroad lines that merged or were acquired over a period of more than 150 years. Railways were nationalized in other parts of the world, such as Europe, creating a single operator and network manager.

There are substantial differences worldwide regarding the organization, the market focus, and the ownership of rail transport systems. Rail systems are characterized by a high level of economic and territorial control since most rail companies operate in a situation of monopoly, as in Europe, or oligopoly, as in North America, where seven large rail freight carriers control and operate large networks. Operating a rail system involves using regular (scheduled) but rigid services since a limited number of slots on a rail track are available within a time period.

Rail transportation, like roads, has an important relationship with space since it is the transport mode the most constrained by physiography. These constraints are mainly technical and operational:

  • Footprint. Rail transportation has a low footprint along lines, but its terminals can occupy large portions of real estate, especially in urban areas. This increases operating costs substantially. Still, rail terminals tend to be centrally located and accessible. A major issue concerns the rights of way that represent significant sunk costs for rail, which has fixed the network structure and impeded future developments because of the difficulty of securing rights of way along high-density corridors. This leads to a paradox as passenger rail is well suited to service high-density areas, which also impose high costs for securing rights of way.
  • Gradient and turns. Rail transport is particularly susceptible to the heterogeneity of geography, which imposes constraints such as a gradient and track alignment. Rail transportation can support a gradient of up to 4% (about 40 meters per kilometer), but freight trains rarely tolerate more than 1%. This implies that an operational freight rail line requires 50 kilometers to climb 500 meters. The gradient is also important as it impacts energy consumption, particularly for freight trains traveling long distances. For turns, the minimal curvature radius is 100 meters, but a radius of 1 km for 150 km/hr and 4 km for a speed of 300 km/hr is needed.
  • Vehicles. For traction, locomotion technology ranges from steam (abandoned) to diesel (mainly for freight) and electric (primarily for passengers). Rail transportation is very flexible regarding vehicles, and a wide variety of them fulfill different purposes. Among the most common vehicle assets are open wagons (hopper cars) used for bulk cargo (e.g. minerals), boxcars to carry general and refrigerated goods, and tank cars to carry liquids. Intermodal transportation has also permitted the development of a new class of flat railcars that can carry containers and trailers (less common). The trend has thus been towards a specialization of freight wagons, such as hopper wagons (grain, potash, and fertilizers), triple hopper wagons (sand, gravel, sulfur, and coal), flat wagons (wood, agricultural equipment, manufactured goods, containers), tanker wagons (petrochemical products), box wagons (livestock, paper, manufactured goods, refrigerated goods), car wagons and passengers wagons (first class, second class, third class cabins, sleeper cars, restaurant cars).
  • Gauge. They are heterogeneous across jurisdictions since, because of historical and political reasons, different nations and regions have adopted different gauges. The standard gauge of 1.435 meters has been adopted in many parts of the world, across North America and most of Western Europe. It accounts for about 60% of the tack mileage. But other gauges have been adopted in other areas, such as the broad gauge (1.520 meters) in Russia and Eastern Europe, accounting for about 17% of the mileage. This makes the integration of rail services complex since both freight and passengers are required to change from one railway system to the other. As attempts are being made to extend rail services across continents and regions, this is a significant obstacle, for example, between France and Spain, Eastern and Western Europe, and Russia and China. The potential of the Eurasian land bridge is impaired in part by these gauge differences.
  • Vertical integration. Relates to the ownership of tracks and rolling stock, maximum train length, signaling equipment, maintenance schedule, and traffic mix. A vertically integrated railway involves track ownership and operation by the same operator. These factors will influence the capacity of the rail system, particularly if the infrastructure is shared. When tracks are privately owned, the operator is free to allocate its services without much competitive hindrance. However, if the tracks are publicly owned, they are often reserved for a national rail carrier, and service slots can be leased to private operators through a bidding process. Most of the North American rail network is vertically integrated. In contrast, for most of Europe, there is a vertical separation between the owner of the infrastructure (a public entity) and the operator (a private company).

Other factors that inhibit the movement of trains between different countries include signaling and electrification standards. These are particular problems for the European Union, where the lack of interoperability of the rail systems between the member states is a factor limiting the broader use of the rail mode. There is also a trend where the passengers and freight markets are being separated. First, it occurs at the management level. The liberalization of the railway system by the European Commission is resulting in the separation of passenger and freight operations. This had already occurred in the UK when British Rail was privatized in the 1980s. Second, the move toward high-speed passenger rail services necessitated the construction of separate rights of way. This has tended to move passenger train services from existing tracks, thereby opening up more daytime slots for freight trains.

2. The Spatial Economy of Rail Transportation

Rail transportation has a strong economic rationale, making it a competitive modal option for the mobility of passengers and freight. Still, rail development is capital intensive as rail networks tend to be more a function of economic density than population density. The ability of trains to haul large quantities of freight and significant numbers of passengers over long distances is its primary asset. Overall, rail transportation is more efficient than road transportation. However, its main drawback is flexibility, as traffic must follow fixed routes, trains must be assembled, and transshipment must take place at terminals. Once the cars have been assembled, or the passengers have boarded, trains can offer a high-capacity service at a reasonable speed, which is significant when high-speed systems are involved. This feature led to the role of rail in opening the interior of the continents in the 19th century and remained its primary asset. The majority of rail activities have a strong regional focus, particularly for the mobility of passengers. Freight flows are over much longer distances, making rail corridors a distinct spatial function for rail.

With containerized unit trains, economies of scale can readily be achieved, while roads have limited ability to benefit from this advantage. Each additional container being carried by road involves the same marginal cost increase. At the same time, for rail, there is a declining marginal cost per additional container until the unit train size is reached. The same applies to passengers as for road transportation, an additional movement usually involves an additional vehicle, while for rail, there are declining marginal costs as a passenger train gets filled. Passenger services are thus effective where population densities are high. Bulk cargo shipments, particularly agricultural and industrial raw materials, dominate freight traffic. Rail transport has lower energy consumption per unit load per km than road and has comparative advantages in carrying heavy bulk traffic on specific itineraries over long distances. For instance, a 10-car freight train can carry as much cargo as 600 trucks. Besides emphasizing safety and reliability, rail transport favors the fast commuting of suburbanites during peak hours and has become an important mode for passenger movements in large cities.

The initial capital costs of rail are high because the construction of rail tracks and the provision of rolling stock are expensive. Historically, investments were made by the same source (either governments or the private sector) before any revenues were realized. Rail thus has high entry barriers that tend to limit the number of operators. High capital costs also delay innovation, compared with road transport, since rail rolling stock has a service life of at least twenty years. This can also be advantageous since the rolling stock is more durable and offers better amortization opportunities. Generally, rail companies must invest about 45% of their operating revenues each year in capital and maintenance expenses for their infrastructure and equipment. Capital expenditures alone account for about 15 to 20% of revenue, while this share is around 3 to 4% for manufacturing. One strategy to deal with high capital expenditures has been the setting of equipment pools such as TTX, which account for about 70% of the intermodal railcar assets used by North American rail companies.

Since the end of the 1950s, railway systems in advanced economies have faced increasing competition from road transport. The breakeven distance, a threshold above which rail becomes most cost-effective than road transportation, was changed to the advantage of road transport. The more efficient road transport became, the higher its breakeven distance. Currently, the breakeven distance between intermodal rail and truck is between 600 and 800 miles (950 and 1,300 km). Under 500 miles (800 km), drayage costs from the terminal usually account for 70% of total costs.

In countries such as China, India, and Japan, rail transportation accounts for the majority of interurban passenger transportation. Rail transportation is still significant, mainly for passenger transportation, but has declined over the last decades. There are acute geographical differences in the economic preference for rail transportation among developed economies. High-speed passenger rail networks have been set up, but the competition was mainly on air transportation services rather than road transport. For North America, rail transportation is strictly related to freight, with passengers playing a marginal role only along a few major urban corridors. Passenger trains are even getting delayed because the priority is given to freight, impairing the reliability of the service. Only in the northeastern United States are passenger services running on time since Amtrak (the federally owned passenger rail operator) owns the tracks.

Even if rail transportation services were primarily developed for national economies, globalization significantly impacts rail freight systems. These impacts are scale specific:

  • At the micro scale, extended metropolitan regions reveal a specialization of rail traffic as well as a transfer of certain types of commodities from the rail network to the fluvial and road network systems. Railways servicing ports increasingly tend to focus on container movements. This strategy followed by rail transport operators allows, on the one hand, an increase in the delivery of goods and, on the other hand, the establishment of door-to-door services through a better distribution of goods among different transport modes.
  • At the meso scale, the railway transportation network is influenced by the growing integration between rail and maritime transport systems, with a concentration of investments in shaping rail corridors. Rail transportation has thus become the extension of maritime supply chains.
  • At the macro scale, new long-distance alternatives are emerging in the form of land bridges in North America and between Europe and Asia. In North America, rail has successfully serviced long-distance intermodal markets, underlining the efficiency of rail over long distances and high-volume flows. In Asia, China has deployed since 2014 a large transnational investment strategy focusing on the development of rail corridors between China and Europe, which has been labeled the Belt and Road Initiative.

Rail freight services are also facing the challenge of improving their reliability, leading to a fragmentation of the types of services offered. For conventional rail freight markets such as coal, grain, forest products, or chemicals, the priority has consistently been providing high-capacity and low-cost forms of transportation. However, these services were unreliable but could be easily accommodated by stockpiling, a strategy common in the resource sector (e.g. power plants, grain elevators). An emerging freight market for rail mostly concerns intermodal services that require a much higher level of reliability, similar to what is expected in trucking. Commercial changes such as large volumes of retail import containerized cargo, and just-in-time manufacturing require high-reliability levels to support the related supply chains.

3. Rail Transportation in the 21st Century

Although railways are a product of the industrial revolution, they have been affected by continuous innovations, and technical, regulatory, and commercial changes, improving their capacity and efficiency. Rail transportation is thus as important in the 21st century as it was in the late 19th century. One innovation relates to the quality of the rail infrastructure, particularly rail tracks (e.g. better steel, concrete ties), which determines the operational characteristics of their use, such as speed, permitted weight, maintenance, and resilience to the environment.

Increasing electrification and automation also improve the efficiency of rail transportation, passenger and freight alike. While the construction of rail lines has abated in developed economies, new developments are mainly occurring in developing economies. Railway speed records have improved continuously with the introduction of high-speed rail systems. For instance, portions of the French high-speed rail system (also known as TGV: Tres Grande Vitesse) can reach commercial speeds up to 320 km/hr. Variable wheel-base axles permit rail transport between different gauges. However, freight trains run at considerably lower speeds, in the range of 30-35 km/hr, and as the rail system gets more used, operational speed may decline because of congestion.

Longer and heavier rail, coupled with major engineering achievements such as bridges and tunnels, allow for the suppression of natural obstacles, which enhances network continuity. Salient examples include the Seikan tunnel between the islands of Honshu and Hokkaido in Japan, which has a length of 53.8 kilometers, while the Channel Tunnel between France and England reaches 50.5 kilometers. The Gotthard Base Tunnel, which opened in 2016, was built mostly to carry rail freight through the Alps, totaling 57.1 kilometers. One of the most technically challenging rail segments ever built was completed in 2006 in China. The 1,142-kilometer line links Golmud in Qinghai province to Lhasa in Tibet. Some parts go through permafrost and altitudes of 16,000 feet, conferring its status as the world’s highest rail line.

The global trend involves the closure of unprofitable lines and the elimination of several stops. With the downsizing of rail transportation, while traffic was moving to other modes, rail companies abandoned lines (or sold them to local rail companies), removed excess terminals and warehousing capacity, and sold off some property. The rationalization (deregulation) of the rail network is now completed in several countries, such as the United States. This has implied significant labor savings with the reduction of train crews (from 3-4 to 2), more flexible working hours, and the usage of subcontractors for construction and maintenance. In addition to energy efficiency and lighter equipment, double-stack cars have revolutionized rail transportation with additional fuel efficiency and cost reductions of about 40%. Depending on the service and type of commodity carried, rail can be 1.9 to 5.5 more energy-efficient than trucking. Unit trains carrying one commodity type allow scale economies and efficiencies in bulk shipments, and double stacking has greatly promoted the advantages of rail for container shipments.

Trends concerning cargo transport using trailers on flat cars (TOFC) and containers on flatcars (COFC) illustrate the increasing adoption of intermodal transport. Still, TOFC services are being phased down, and COFC now dominates intermodal rail. A market for niche services such as Roadrailers mounting truck trailers as train convoys remains. Due to its versatility, the container is highly favored for cargo transport. Loading trailers into rail cars is prone to inefficiencies, particularly because of a much lower load factor than containers. Double-stack rail technology is a major challenge for the rail transport system as it is effective for long distances where additional terminal costs are compensated by lower transport costs. North America has a notable advantage over Europe on this issue. A full double-stacked unit train can carry between 400 and 600 TEU (200 to 300 containers) and have a length exceeding 10,000 feet (about 3,000 meters). The average intermodal train length in the United States is around 6,500 feet (about 2,000 meters). European trains are generally limited to 750 meters and can carry 80 TEU of single stacked containers, while some rail segments can accommodate 850 meters.

Further, most railroads were constructed early in the 20th century and had an overhead clearance inadequate for double-stack trains. This is notably the case for tunnels and bridges. Even if improving clearance is a significant investment, several rail companies, notably in North America, have invested massively in double-stacking projects. The economies and improved capacity of double-stacking have justified investments in raising the clearance from 5.33 meters (17’6″) to 8.1 meters (20’6″) along major long-distance rail corridors. Europe is less advanced in this process because most of its rail facilities were built in the middle of the 19th century. Clearance thus forbids the usage of double-stacking on most European rail corridors. In China, doubles-staking corridors are under development, particularly between major container ports and inland cities, but their use remains limited. Another salient example of a 75-km double-stacked corridor is across the isthmus of Panama, allowing it to support canal operations as a portage option.

The emergence of high-speed rail networks and increasing rail speed significantly impacted passenger transportation, especially in China, Europe, and Japan (high-speed freight trains are not currently being considered). For instance, the French TGV has an operational speed of about 320 km/h. High-speed passenger trains require special lines but can also use the existing lines at a lower speed. It often permitted a separation between rail passenger traffic rolling at high speed and freight traffic using the conventional rail network. The efficiency of both the passengers and freight rail network was thus improved significantly. Since high-speed trains require some time to accelerate and decelerate, the average distance between stations has increased substantially, bypassing several centers of less importance. Over average distances, they have proved to compete effectively with air transportation, can reduce intercity travel times by half, and impact modal share. Other strategies include improving the speed of existing passenger services without building a high-speed corridor. This involves upgrading the equipment and improving the infrastructure at specific locations along the corridor. The benefits of offering a passenger rail service above 120 km/h can substantially improve the quality and efficiency of inter-city services in high-density urban regions.

4. Pipelines

Pipelines are an extremely important and extensive mode of land transport, although very rarely recognized by the general public, mainly because they are buried underground or under the sea, as in the case of gas pipelines from North Africa to Europe. For example, in the United States, 215,000 miles of pipelines carry 17% of all ton-miles of freight. Two main products dominate pipeline traffic: oil and gas. Although local pipelines are significant for the transport of water, and, in some rare cases, for the shipment of dry bulk commodities, such as coal in the form of slurry. Pipelines can even be used to carry small quantities of freight, such as in pneumatic tubes, but this use remains marginal and for short distances.

Pipelines are almost everywhere designed for a specific purpose only, to carry one commodity from one location to another. They are built mostly with private capital, and because the system must be in place before any revenues can be generated, they represent a significant capital commitment and sunk costs. They are useful in transporting large quantities of products where no other feasible means of transport (usually maritime) is available. Pipeline routes tend to link isolated production areas to major refining and manufacturing centers in the case of oil, or major populated areas, as in the case of natural gas. To fulfill their role, pipelines have four main functional properties:

  • Collecting pipelines. They aim to move oil and natural gas from extraction fields to processing and storage facilities. The growth in offshore oil and gas extraction facilities has favored the setting of underwater collective pipelines moving products to shore-based facilities.
  • Feeder pipelines. They move products from processing and storage facilities to transmission pipelines. Their purpose is to ensure that a sufficient volume of products is collected to justify the larger diameter of transmission pipelines.
  • Transmission pipelines. Major conduits, mostly transporting crude oil and natural gas over long distances and commonly across international jurisdictions.
  • Distribution pipelines. Small conduits that deliver natural gas to homes, businesses, and industries. This also applies to water distribution pipelines, but the supply systems are usually local in scale.

Pipeline construction costs vary according to the diameter and increase proportionally with the distance and viscosity of fluids, which requires more pumping stations, particularly in lower temperatures. However, operating costs are very low since pipelines represent a fundamental mode for transporting liquid and gaseous products over long distances. One major disadvantage of pipelines is the inherent inflexibility of the mode. Once built, which is usually at great expense, an expansion of the demand cannot be easily accommodated without adding a second adjacent pipe. There are specific limits to the carrying capacity of pipelines, which require careful consideration. Conversely, a lessening of the fuel supply, or alternatively a decline of the demand, will produce a lowering of revenues that may affect the viability of the system. A pipeline can be profitable only if it operates above a certain throughput threshold from which it derives revenue to cover its operating costs. Unlike modes such as maritime shipping, pipeline capacity cannot be incrementally removed (or added). A further limit arises from geographical shifts in production or consumption, in which a pipeline built from one location to another may not adjust quickly to changes.

The routing of pipelines is mostly indifferent to terrain, although environmental concerns frequently delay approval for construction. In arctic/sub-arctic areas, pipes cannot be buried because of permafrost. The impacts on migratory wildlife may be severe and sufficient to deny approval, as was the case of the proposed McKenzie Valley pipeline in Canada in the 1970s. The 1,300 km long Trans Alaskan pipeline was built under challenging conditions and is above the ground for most of its path. Geopolitical factors play a vital role in routing pipelines that cross international boundaries. Pipelines from the Middle East to the Mediterranean have been routed to avoid Israel. New pipelines linking Central Asia with the Mediterranean are being routed in response to the ethnic and religious mosaic of the republics in the Caucasus. Gas pipelines from Russia to Europe began to be laid in the late 1990s after the collapse of the Soviet Union using three main corridors. One through the Baltic Sea and reaching Germany, another through Belarus and reaching Poland, and a third through Ukraine and reaching Slovakia. By 2020, Russia supplied about 40% of European natural gas consumption. The War in Ukraine in 2022 led to the shutdown of pipelines going through Ukraine, which resulted in gas shortages and price surges in Europe.

Related Topics


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