But railways must avoid being lulled into a false sense of security, because with competitors snapping at their heels, there are still a lot of things required to make rail more attractive to freight shippers and passengers.
As we report this month, SCI Verkehr's study of global rail traffic conducted in mid-2010 shows that the sharp drop in freight in 2009 has bottomed out and traffic is now growing again. Confirmation that the recession has ended in most countries comes from end-of-year results published recently by some of the world's major railways.

North American Class I railways generally reported strong growth last year and significantly improved financial performance. And while traffic has not yet returned to pre-recession levels, stored locomotives and wagons are gradually being returned to service, and the railways are once again recruiting staff.

One of North America's biggest railways, Union Pacific (UP), did particularly well last year reporting a 47% increase in net income to $US 2.8 billion and a 5.5 point improvement in its operating ratio to 70.2% thanks to the strengthening US economy.

Russian Railways (RZD) was hit very hard by the recession, recording a 15% drop in freight traffic in 2009. In contrast, traffic grew by 8.7% last year and RZD made a profit of Roubles 70 billion ($US 2.3 billion). But as RZD's president, Mr Vladimir Yakunin, points out, utilisation of the Russian rail network is now back at the level it was in 2004, so while the recovery is underway, there is still a long way to go.

There are also positive signs of recovery in Europe, with French National Railways (SNCF) recording a 4.1% increase in turnover for 2010, and increases in all sectors of its business. Overall, SNCF says business is back to the level it was in 2008, but freight is still below what it was pre-crisis. German Rail (DB), Europe's biggest railway, has yet to publish its annual results for 2010, but it did record a 13% increase in turnover for the first half. German railfreight as a whole recorded a 16.7% rise in traffic during the third quarter translating into orders for freight locomotives from optimistic leasing companies.

Indian Railways (IR) reports a 6.27% increase in freight revenue and a 3.4% rise in tonne-km between April and December 2010. However, IR's financial performance has been badly hit by a steep pay increase, a reduction in lucrative export iron-ore traffic, and pressure on passenger revenue. As a result, IR's operating ratio has plummeted from 75.9% in 2007-08 to 95.3% currently, limiting its ability to invest.

For the most part, global passenger traffic only suffered a halt to its steady growth, reflecting its resilience to an economic storm. Some of the drivers of passenger rail growth, such as traffic congestion and the rising cost of fuel, have not gone away.

SCI Verkehr is forecasting growth in tonne-km of around 45% and for passenger-km of about 58% between 2010 and 2020. This is certainly encouraging for the rail industry, although increases in traffic do not necessarily equate to similar increases in revenue, especially if competition gets tougher.

While the outlook is bright, there is still a lot railways can do to take advantage of the upswing in their fortunes and not to squander this window of opportunity. First railways must master the art of providing a service tailored to the needs of customers even though they remain a mass mode of transport.

Unfortunately, many railways believe this is too difficult and are even turning their back on some of their unique selling points such as the ability to offer high-quality catering on trains or good-quality overnight services which avoid costly hotel accommodation or a very early start. Most companies strive hard to find unique selling points, whereas many railways fail to appreciate what they already have.

Passenger expectations are increasing steadily as people become more affluent. Due to rising prosperity, China and India now have rapidly-growing numbers of well-educated people with disposable income which they are willing to spend on high-quality goods and services. China's investment in high speed rail will appeal to such people, but India has a long way to go to catch up.

Attention to detail is also vital to success. This means running trains on time, using the technology available to provide accurate and up-to-date information to customers, especially when things go wrong, and making sure trains connect with one another to maximise network benefits.

Freight customers are equally demanding. They expect to know where their freight is at all times, and for it to be delivered on time and without damage. Rail needs to work harder than its competing modes to overcome some of its inherent weaknesses, such as the huge challenge of crossing borders.

Truck drivers generally stay with their load and are on-hand to solve any problems, whereas train crews are changed frequently during a trip and as the train passes from one railway to another at the border, leading to long delays.

In theory rail is much faster than sea from the Far East to Europe, but sea dominates the market because it is cheaper and more reliable.

Unless rail really gets to grips with some of these challenges, it will never achieve its full potential.