Or maybe we just need more rail and smaller trains that run frequently?
If you go with smaller trains you lose the benefit of moving large amounts of cargo with few people. Smaller trains and more rail still lacks the flexibility of trucks on roads. What are the benefits? Trains only make sense when you have very large amounts of cargo or people being transported on a specific route, and the volume of cargo or people one that route remains consistently high.
In the vast majority of cases if you have to load and unload cargo containers onto trucks you're better off sticking with trucks.
Now if you can use high speed trains that travel much faster than trucks to replace air transport, it might be possible to make a decent business case for rail transport if the fuel savings are big enough. After all you can buy a lot of jet fuel for the cost of building a high speed rail system.