The latest data from the Association of American Railroads (AAR) paints a complex picture of the U.S. freight rail market in early 2023, with strong intermodal performance contrasting with declines in traditional freight volumes. This divergence reflects both structural changes in the economic recovery and varying challenges across industries.
Mixed Performance in Overall Freight Volume
For the week ending January 16, U.S. railroads originated 232,550 carloads, representing a 2% decline compared to the same period last year. While this figure was below the 235,404 carloads recorded in the week ending January 9, it showed improvement over the 202,278 carloads reported in the first week of January, indicating ongoing volatility. Year-to-date figures through January 16 show total rail freight volume at 467,954 carloads, down 1.8% from 2022 levels.
Contrasting Sector Performance
The AAR's tracking of 10 major commodity categories revealed a split market, with five categories showing growth and five experiencing declines:
- Grain: Volumes surged by 8,246 carloads to 27,613, reflecting strong agricultural export demand and favorable global market conditions.
- Metallic ores and metals: Increased by 1,715 carloads to 23,325, likely tied to infrastructure projects and manufacturing recovery.
- Agricultural products (excluding grain) and foodstuffs: Grew by 1,621 carloads to 16,818, indicating stable consumer demand.
However, significant declines in other sectors weighed on overall performance:
- Coal: Plunged by 12,609 carloads to 57,665, continuing a long-term trend tied to energy transition.
- Nonmetallic minerals: Dropped by 4,411 carloads to 25,582, potentially due to seasonal construction patterns.
Intermodal Outperforms Traditional Freight
In stark contrast to conventional rail freight, intermodal traffic showed remarkable strength. The week ending January 16 saw 295,997 containers and trailers moved by rail, a 12.8% year-over-year increase. This performance exceeded both the previous week's 289,849 units and the 219,713 units recorded in the first week of January. Year-to-date intermodal volume stands at 585,846 units, up 11.6%.
Several factors drive intermodal's strong performance:
- Continued e-commerce growth fueling parcel and consumer goods shipments
- Supply chain optimization combining rail's cost efficiency with trucking flexibility
- Rail serving as an alternative to congested ports for inland distribution
Market Outlook and Strategic Implications
The rail freight market's structural divergence appears likely to persist, with traditional sectors facing headwinds from energy transition while intermodal benefits from evolving supply chains. Rail operators must adapt by:
- Increasing investment in intermodal infrastructure
- Exploring new freight opportunities beyond traditional commodities
- Strengthening partnerships with ports and trucking companies
Policy makers could support this transition through infrastructure investment, particularly in rail electrification to reduce emissions, and by streamlining cross-border rail procedures. The U.S. freight rail system stands at an inflection point, where adaptation to these market forces will determine future competitiveness.