As winter winds swept across the nation in early February, the US rail freight market showed signs of contraction. New data from the Association of American Railroads (AAR) reveals both carload and intermodal volumes declined year-over-year during the week ending February 4, casting shadows over economic prospects for the new year.
Mixed Performance Across Commodities
US railroads originated 216,700 carloads during the reported week, marking a 0.9% decrease compared to the same period last year. This continues a downward trend from previous weeks, with volumes falling below the 236,018 carloads recorded on January 28 and the 230,545 carloads from January 21.
Despite the overall decline, six out of ten major commodity categories posted gains. Automotive parts and vehicles led the growth with 13,155 carloads (up 2,725), followed by petroleum products at 10,727 carloads (up 1,578) and nonmetallic minerals reaching 25,578 carloads (up 1,445). These bright spots demonstrate resilience in specific industrial sectors.
However, traditional bulk commodities faced significant declines. Coal shipments plummeted by 6,723 carloads to 58,224, grain volumes dropped 1,236 carloads to 22,244, and chemical shipments decreased by 1,182 carloads to 32,743. These reductions reflect shifting energy demands, agricultural market fluctuations, and slowing industrial activity.
Intermodal Weakness Signals Consumer Concerns
The intermodal sector, often viewed as a consumer demand indicator, recorded 232,886 containers and trailers—a 2.9% year-over-year decline. This extends a concerning pattern from prior weeks (237,632 units on January 28 and 236,940 on January 21), suggesting potential headwinds for economic growth.
Year-to-Date Figures Paint Complex Picture
Cumulative data for 2023's first six weeks reveals diverging trends. US railroads moved 1,140,396 carloads (up 1.6% year-over-year) but only 1,152,814 intermodal units (down 7.1%). This disparity highlights stable demand for industrial commodities alongside weakening consumer-facing shipments.
North American Outlook: Mexico Outperforms
Expanding the view to North America, 12 major railroads across the US, Canada, and Mexico moved 314,555 carloads (up 1.5%) but only 305,639 intermodal units (down 4.0%) during the same week. Year-to-date totals reached 3,171,238 carloads and intermodal units combined (down 0.9%), with Mexico's robust rail performance partially offsetting declines elsewhere.
Analysts Cite Multiple Pressure Points
Industry experts attribute the freight slowdown to converging factors: macroeconomic uncertainty from persistent inflation and rising interest rates, shifting logistics patterns as supply chains normalize, and operational challenges including weather disruptions. The market's trajectory remains uncertain, hinging on whether the economy achieves a soft landing or confronts deeper contraction.
Rail freight volumes serve as both an economic barometer and policy indicator, reflecting industrial health while responding to infrastructure investments, environmental regulations, and trade agreements. As stakeholders monitor these metrics, rail operators face mounting pressure to enhance efficiency and adapt to evolving market conditions.