A sudden cold wave appears to have brought a chill to the U.S. rail freight market, with the latest data from the Association of American Railroads (AAR) showing year-over-year declines in both rail carloads and intermodal units for the week ending February 4. However, certain commodity segments bucked the downward trend, with automotive shipments showing particular strength while coal transport suffered significant losses.
Overall Freight Volume Declines, Intermodal Under Pressure
The AAR reported U.S. rail carloads totaling 216,700 for the week, representing a 0.9% decrease compared to the same period last year. This continues a downward trend from previous weeks, falling below the 236,018 carloads recorded on January 28 and 230,545 on January 21. The intermodal sector fared worse, with container and trailer volume dropping 2.9% year-over-year to 232,886 units, also below the previous two weeks' performance (237,632 on January 28 and 236,940 on January 21).
Divergent Sector Performance: Automotive Shines While Coal Struggles
Despite the overall decline, six of the ten commodity categories tracked by AAR showed year-over-year growth. The automotive sector led gains with 13,155 carloads, up 2,725 from last year, signaling continued recovery in automotive supply chains and demand. Petroleum products followed with 10,727 carloads (up 1,578), likely influenced by winter heating needs and energy price fluctuations. Nonmetallic minerals grew by 1,445 carloads to 25,578, potentially tied to infrastructure projects and construction activity.
Conversely, coal transport plummeted by 6,723 carloads to 58,224, reflecting ongoing energy transition trends toward renewable sources. Grain shipments fell 1,236 carloads to 22,244, possibly affected by weather conditions and agricultural market dynamics, while chemicals declined by 1,182 carloads to 32,743 amid softening manufacturing demand.
Year-to-Date Figures Show Mixed Results
For 2023 through February 4, U.S. railroads moved 1,140,396 carloads, marking a 1.6% increase over 2022. However, intermodal units totaled 1,152,814, down 7.1% year-over-year, underscoring persistent challenges in the intermodal market potentially related to easing port congestion, trucking competition, and shifting consumer spending patterns.
North American Overview
Combined data from 12 North American railroads (U.S., Canada, and Mexico) showed 314,555 carloads for the week, up 1.5% , while intermodal units fell 4.0% to 305,639. Total weekly rail traffic of 620,194 carloads and intermodal units represented a 1.3% decline. Year-to-date North American rail volume stands at 3,171,238 units, down 0.9%.
Market Analysis and Outlook
The rail freight market presents a complex picture in early 2023, with automotive sector resilience contrasting with coal's structural decline and intermodal's persistent weakness. Rail operators may need to adapt strategies to address competitive pressures and shifting demand patterns, potentially through enhanced intermodal coordination, operational efficiency improvements, and targeted technology investments.
Future performance will likely hinge on macroeconomic conditions, energy policy developments, international trade flows, and technological innovation. The industry's ability to navigate these variables while addressing sustainability concerns and service quality will determine its competitive position within the broader transportation landscape.