Rail transport is an energy-efficient and capital-intensive means of mechanized land transport. Rails provide very smooth and hard surfaces on which the wheels of the train may roll with a minimum of friction. As an example, a typical wagon can hold up to 125 tons of freight on two four-wheel bogies (termed "trucks" in North America). Fully loaded, the contact between each wheel and the rail is the area of about one U.S. ten-cent piece. This can save energy compared with other forms of transportation, such as road transport which depends on rubber tires on pavement.

Trains also have a small frontal area in relation to the load they are carrying, which cuts down on air resistance and thus energy usage. In all, under the right circumstances, a train needs 50-70% less energy to transport a given tonnage of freight (or given number of passengers), than does road transport. Furthermore, the rails and sleepers distribute the weight of the train evenly, allowing significantly greater loads per axle / wheel than in road transport, leading to less wear and tear on the permanent way.

Rail transport makes highly efficient use of space: a double-track rail line can carry more passengers or freight in a given amount of time than a four-lane road.

As a result, rail transport is a major form of public transport in many countries. In Asia, for example, many millions use trains as regular transport in India, South Korea, Japan, China, and in European countries. However, outside New York City, rail transport as a form of public transit in the United States is rare. Few major US cities other than New York, Chicago, Boston and Philadelphia can lay claim to any significant use of local rail-based passenger transport; Amtrak is the only nationwide passenger rail system in the country. In Canada, the government-owned VIA Rail system provides a limited level of intercity service at prices that are usually higher than air travel or bus service, however Toronto, Montreal and Vancouver operate rapid transit and/or light rail services that receive millions of riders a year.

Commercially, world rail transport has had a mixed record. Most rail systems, including urban rapid transit (metro/subway) systems, are highly subsidized and have never or rarely been profitable; however, their indirect benefits are often great. Passenger rail in nearly all countries is dependent on government subsidies. As a result levels of rail transport have in some times and places been reduced in order to save money.[citation needed]