Source: The World Bank

Percent of Rail Passenger Traffic to Total Rail Traffic, 2000

Important differences in the use of rail transportation are noted among countries. Rail freight dominates in the United States and Canada while passengers are a residual function. This is mainly related to the geographical scale of their respective rail systems along with a preference on road and air transportation for inter-urban passenger movements. This confer an advantage for the flow of rail freight as it is uninterrupted by passenger flows. Western Europe and Japan have a reverse situation where rail transportation tends to be dominated by passengers. As a result, rail freight flows are often marginalized and constrained to use the system during the night. This is reflected in the performance of rail freight operations in Europe where the average speed is about 18 km/hour and only half of international combined freight trains are running on time.

The economic rationale of rail transportation can be summarized with this list of factors:

• Market area and capacity. Rail transportation enables to transport raw materials over long distances (paper, wood, grain, chemicals, metallic products, etc.) as well as to move passengers and freight (cars, agricultural equipment, etc.). The average length of a domestic rail freight haul was 1,300 km in the United States, compared with 700 km for trucks. Intermodal integration has favored a segmentation and a specialization of rail transportation.
• Costs. Rail transportation has high construction and maintenance costs but shipping costs decrease with distance and load. Its increasing returns enable to absorb traffic peaks and growths. Transshipments (loading and unloading) and train assembly also increase costs. Rail operating costs are divided according to labor (up to 60%), locomotives (16%) and wagons, fuel, maintenance and equipment (24%).
• Benefits. It accelerated the industrialization process, as in several countries the emergence of rail transportation was concomitant to an industrial take-off. It also accelerated economic development and human settlements, especially in North America where rail transportation was a dominant factor of territorial expansion in the late 19th and early 20th century. Furthermore, rail transportation consumes about four times less energy per ton-km or per passenger-km than road transportation. Rail transportation is an important source of employment. Industrial activities range from the construction of the rolling material, the installation of rails, the maintenance of the material, the operations of the rolling material, and management. Rail transportation also has multiplier effects on industrial activities such as steel and transportation engineering. Safety is also a fundamental attribute of the rail transport system as it is, after air transportation, the safest mode.
• Regulation. Rail transportation is highly dependent from government subsidies in several countries. Governments financed most rail projects, mainly for the sake of national economic imperatives. This has created several rail monopolies with an integrated management of infrastructure, but with several imposed routes.