Since 1965 the Paraguayan railroad has played a declining role in domestic transportation. One of South America's oldest rail systems, the President Carlos Antonio López Rail Line, was started in 1854. Swapped back and forth by the state and private companies several times, the railroad was nationalized in 1961. Offering twice-weekly service between Asunción and Encarnación, the 367- kilometer rail system was outdated, wood-powered, slow, and generally costly even with government subsidies. The amount of cargo carried on the railroad declined swiftly in the 1970s and 1980s as alternative roads and waterways became more efficient, but some agricultural goods did move by train. In Encarnación, the Paraguayan railroad system connected via ferry with the Argentine city of Posadas, which was connected by rail to Buenos Aires and the Uruguayan railroad. There also was a small "soybean railroad" near the Brazilian border. In the 1980s considerable debate revolved around the possibility of an electric urban transport system in Asunción or the electrification of the national railroad, drawing on the country's large installed electrical capacity.

Data as of December 1988