You’re on Cajon Pass, in the mountains that separate the Los Angeles Basin from the high desert. On a hillside in the distance, big rigs are grinding up I-15. But you’re about to see a lot more trucks on the tracks in front of you. A train is approaching: 4 locomotives pulling 100 truck trailers, belonging to many of America’s biggest trucking firms, in between. And right behind it is another, this one with 250 shipping containers. The two rail lines in this pass combine to carry 100 trains a day. The majority of them are carrying trucks.

What you’re seeing here is the western end of one of the world’s greatest railroad lines, BNSF’s “Transcon.” It links San Francisco, Los Angeles, and Phoenix to Texas, the Midwest, and the East. Where all those traffic streams combine, across Arizona and New Mexico, the line carries 100,000 containers and truck trailers a day. That’s as many as travel by truck on I-40, which runs alongside. All that cargo started its trip by truck and will finish its trip by truck. In addition, the railroad carries another 50,000 trucks worth of freight in tanks cats, flat cars, hoppers, and boxcars. This is an interstate – with a difference. And it’s only one one of two major transcontinental rail lines across Arizona; the other, operated by Union Pacific, links the same places and is similarly busy.

Over the past decade, railroads have been steadily picking up market share from trucks: in 1996, they carried 33% of U.S. ton-miles; in 2005, they carried 38% (pdf). The Transcon saw a 50% increase in rail freight from 1994 to 2004. And this gain in market share has come despite that fact that the railroad was raising its prices.

Trains are benefiting from two major efficiencies: energy and manpower. Because steel wheels on steel rails have less friction that rubber tires on a concrete road, and because a 4,400 horsepower engine is more efficient than a 500 horsepower one, trains are much more fuel efficient than trucks. A train can move a ton of freight 400 miles on a gallon of fuel; a truck can do only 130. Every time the price of fuel goes up, railroads look better. And when the price of labor goes up, railroads look better, too. That train with 200 containers requires a 2-person crew in place of 200 truck drivers. And drivers have been harder to find lately – few people want the life of a long distance trucker.

Meanwhile, railroads have overcome some of their natural disadvantages. By moving traffic in trailers and containers, they don’t need to maintain a spur track to every industry; they can concentrate their traffic on a few main lines. U.S. railroads have 1/3 of the track they did in 1920 but carry 3 times as much freight (pdf). And every shipper in the United States is a potential rail customer; in fact, since most trucking firms use rail as an integral part of their networks, many shippers are using rail without knowing it. Likely, so are you: the biggest railroad customer in the United States is UPS.

But railroads have one huge disadvantage, courtesy of the government. Those trucks on the interstates are being heavily subsidized. One 18-wheeler does as much damage to the highway as 50,000 cars, but it pays only as much fuel tax as 5 cars. That does not even take into account the fact that building highways with clearances, lane widths, grades, and curves to accommodate trucks likely adds a third to the cost of a automobile-only highway. The mainline railroads, meanwhile, get no taxpayer support to maintain their tracks; in fact, they have to pay property tax on them.

The truck subsidy distorts the market in two significant ways. One is that it favors one mode over another. Rail is inherently more economically efficient – the fact that it’s taking traffic from trucks even with the deck stacked against it proves it. Were the playing field level, trains would carry more, and the overall cost of moving goods would decrease. The other distortion is that, by making transport artificially cheap, we’re encouraging firms to do more of it. The loss of industrial production in the United States can be blamed directly on cheap transport: a $1 widget can be shipped halfway around the globe so cheaply that we can make it in China for use in New Jersey. If shippers had to pay the actual price of transport, they would shift supply chains, production, and distribution to be more efficient, and, once again, the overall cost of moving goods would decrease.

Railroads have been investing in improving their infrastructure to increase capacity. Cajon just got a 16 mile long third track at a cost of $90 million. That added as much capacity as two freeway lanes at less cost (pdf). But while those freeways lanes would be funded by the taxpayer, the railroad had to pay for its additional track itself, and as long as we subsidize its competition, the amount of money available to do that will be insufficient to meet the need.

Libertarian think tanks like the Reason Foundation are calling (pdf) for the government to create a network of transcontinental tolls roads to carry truck traffic. But they’re missing something: those toll roads already exist, and they’re maintained and operated by private enterprise without taxpayer help. They just don’t have any pavement.

For more pictures from Cajon, see my gallery.