Rail lines can be found at factory cities (munitions, fuel, radar, troops) and HQs. With the strat change in 1.09 from 1.08 the rail lines and roads no longer crisscross the landscape and now only make a straight run into their city/base for about 5 miles.
A train shot up my Mossie last time I was on. I was attacking the Bish radar factory when its train showed up. Hit me 5-6 times and put a hole in my port inboard fuel tank.