The 1960s and 1970s were decades of such intense decline for the American railroad industry that many people wondered if it might become obsolete altogether. As freight revenues fell and passenger traffic dropped, the railroad became perceived as a dinosaur—useful only as a relic of the past. However, the railroads that were stagnating decades ago are once again thriving and are expected to endure. There are several reasons for the railroads' turnaround.
The passing of the 1980 Staggers Act allowed railroads to negotiate shipment rates with customers, offering volume discounts. Prior to 1980, this had been prohibited by government regulations. A second reason for the improvement in the industry is the development of better containers for carrying freight. The beginning of this trend was piggybacking. In piggybacking, truck trailers and containers are carried on railroad flat cars. An improvement to piggybacking came with the development of standard cargo boxes that can be carried easily by train, truck, or ship. This type of shipping, called intermodal shipping, allows railroads to engage in partnerships with other forms of transport, and therefore boost productivity and usefulness.
A final reason for the recovery of the railroads, paradoxically, is the decrease in rail employment. As technology has been incorporated into the railroads, the need for human labor has been reduced. Computers are used to keep track of freight cars, match empty cars with the closest loads, and dispatch trains. Computer-assisted devices alert engineers to train malfunctions and new work rules have become widespread allowing trains to operate with two- or three-person crews instead of the traditional five-person crews.
According to IBISWorld, the U.S. rail transportation market generated revenues of $99.6 billion in 2024. This reflected compound annual growth of 1.3 percent since 2019. The researcher forecast continued growth for the industry through 2029, noting that companies would benefit from an uptick in consumer spending due to monetary easing, which would have the effect of bolstering trade values overall. “A declining trade-weighted index will benefit rail transporters, as a declining dollar value is expected to propel export activity,” the firm explained. “Rising exports coincide with higher freight volumes in distribution, allowing Class I railroads to generate more transportation fees.”
There are about 83,000 railroad workers employed in the United States, and the Department of Labor (DOL) predicts a 2 percent employment increase for most workers in the railroad transportation field through 2033. The DOL indicates that approximately 7,300 job openings will occur each year. Most of these will be attributable to retirement or workers changing jobs. While an uptick in intermodal freight activity will benefit the industry, the continued use of automated systems, and a decline in the use of coal, are two factors that have the potential to limit job growth.
The continued growth of high-speed rail transportation is a potential bright spot for the industry. In December 2023, the Biden Administration announced funding for the first world-class high-speed rail projects in U.S. history. According to a White House press release, these included "building a new high-speed rail system between California and Nevada, which will serve more than 11 million passengers annually" and "creating a high-speed rail line through California’s Central Valley to ultimately link Los Angeles and San Francisco, supporting travel with speeds up to 220 mph."