New data reveals an annual decline in US rail freight volumes during August, though not all sectors performed equally. The automotive industry's strong showing contrasted sharply with broader industrial economic weakness, signaling both challenges and opportunities ahead for rail freight development.
August Performance: Emerging Downward Trend
According to data from the Association of American Railroads (AAR), both rail carload and intermodal volumes declined year-over-year in August 2023:
- Rail Carloads: Totaled 1,133,375 units, down 2.0% (23,323 fewer units) compared to August 2022.
- Intermodal Units: Reached 1,239,290 containers and trailers, a 6.3% decrease (83,717 fewer units).
- Total Volume: Combined rail and intermodal traffic stood at 2,372,665 units, marking a 4.3% annual decline (107,040 fewer units).
This marks the third consecutive month of year-over-year declines, reflecting shifting economic conditions and varying sector demand for rail transport. However, a closer examination reveals notable bright spots.
Sector Breakdown: Mixed Performance
Among the 20 commodity categories tracked by AAR, nine showed annual growth, with particular strength in:
- Motor Vehicles & Parts: Increased by 9,374 units (13.6%), reflecting automotive manufacturing recovery.
- Petroleum Products: Grew by 5,567 units (12.9%), driven by stable energy demand.
- Primary Metal Products: Rose by 1,792 units (4.6%), supported by infrastructure needs.
Significant declines occurred in:
- Grain: Fell 22,064 units (22.9%), potentially due to harvest conditions and export demand.
- Coal: Dropped 9,754 units (2.8%), continuing its long-term structural decline.
- Pulp & Paper Products: Decreased 2,334 units (10.2%), affected by digitalization trends.
When excluding coal and grain, August carloads actually showed a 1.2% increase, highlighting these two commodities as primary drags on overall performance.
Intermodal Weakness Continues
The 6.3% intermodal decline reflects broader economic headwinds, including:
- Residual port congestion impacts
- Trucking competition for shorter hauls
- Potential inventory adjustments among retailers
Year-to-Date Perspective
Cumulative data through August presents a bifurcated picture:
- Rail Carloads: Essentially flat at 7,852,770 units (up just 3,625 units).
- Intermodal Units: Down 9.2% to 8,260,367 units (838,829 fewer than 2022).
Expert Analysis
AAR Senior Vice President John T. Gray attributed the three-month slide to industrial sector weakness outside automotive manufacturing. "Unless industrial activity—particularly manufacturing—recovers, rail volumes in many key markets may remain constrained," Gray noted.
Future Outlook
The rail freight sector faces both challenges and opportunities:
Challenges
- Economic uncertainty from inflation and geopolitical risks
- Intensified competition from trucking and pipelines
- Regulatory pressures across safety and environmental standards
Opportunities
- Federal infrastructure investment in rail networks
- Growing sustainability advantages versus trucking
- Technological innovations in automation and digitalization
Detailed Performance Data
| Metric | August 2023 | Y/Y Change | YTD 2023 | Y/Y Change |
|---|---|---|---|---|
| Rail Carloads | 1,133,375 | -2.0% | 7,852,770 | 0.0% |
| Intermodal Units | 1,239,290 | -6.3% | 8,260,367 | -9.2% |
| Total Volume | 2,372,665 | -4.3% | 16,113,137 | -5.0% |
| Motor Vehicles & Parts | 9,374 | 13.6% | N/A | N/A |
| Petroleum Products | 5,567 | 12.9% | N/A | N/A |
| Primary Metal Products | 1,792 | 4.6% | N/A | N/A |
| Grain | -22,064 | -22.9% | N/A | N/A |
| Coal | -9,754 | -2.8% | N/A | N/A |
| Pulp & Paper Products | -2,334 | -10.2% | N/A | N/A |
While August's results reflect economic headwinds, the automotive sector's resilience and upcoming infrastructure investments offer pathways for recovery. Rail operators will need to adapt strategically to maintain competitiveness in this evolving transportation landscape.