(FORTUNE Magazine) – When one of the nation's oldest trucking companies declares bankruptcy just as the biggest railroad announces record quarterly earnings, tabloid headlines like STALLED TRUCK CRUSHED BY SPEEDING LOCOMOTIVE spring to mind.

Well, it wasn't quite that dramatic. Consolidated Freightways' early-September demise didn't result from a head-on collision with the booming Union Pacific Railroad. But the starkly contrasting news points to big shifts in the $600-billion-a-year hauling business.

Consolidated had the bad luck to be in an increasingly difficult and competitive part of the trucking business. Unlike companies such as Schneider National or J.B. Hunt, which fill an entire truck with stuff going to one location, Consolidated specialized in packing loads for multiple customers into one truck and hauling them thousands of miles. But a slowdown in manufacturing and inroads made by United Parcel Service have squeezed Consolidated and its ilk. Though Consolidated had been ailing for the past three of its 73 years--it lost $104 million on revenues of $2.2 billion last year--its sudden cessation of service surprised many shippers. "They just stopped answering the phones one day," says Ed Emmet, president of the National Industrial Transportation League.

But if truckers think they have one fewer competitor, they'd better watch out for that famous light at the end of the tunnel. Union Pacific has finally emerged from a troubled merger with Southern Pacific that practically brought train service to a halt back in 1998. Shippers that were furious with UP a few years ago now say they are impressed with its speed and reliability.

With the merger, and through alliances with the two eastern railroads, CSX and Norfolk Southern, UP has begun reclaiming business the railroad lost to full-load truckers decades ago, says Dick Davidson, CEO of UP. The new alliances mean that fewer long freight trains get broken up and reassembled each time they pass from one railroad's tracks to another's. Many now run uninterrupted from coast to coast. "We're moving agricultural products from Southern California to New York and Boston, and we could barely compete a few years ago," says Davidson.

In spite of the dour stock market, shares of all four major railroads are flat or up over the past year, with UP's up 15%. (The Dow index for truckers is flat). Now that service has improved to the point where the railroads can raise prices, Wall Street has remembered that companies that move protons and neutrons--not just electrons--have value too.