Recent observations of less congested freight trains have been confirmed by the latest data from the Association of American Railroads (AAR). For the week ending May 14, both US rail freight volume and intermodal traffic showed year-over-year declines. Is this merely temporary volatility or indicative of deeper industry transformation?
Overall Rail Freight Decline: Divergent Sector Performance
The weekly rail freight volume reached 230,128 carloads, marking a 5.2% decrease compared to the same period last year. This downward trend isn't isolated—previous weeks showed similar patterns, with 231,737 carloads for the week ending May 7 and 232,972 carloads for April 30.
However, not all commodity categories performed poorly. Among the 10 categories tracked by AAR, three showed year-over-year growth:
- Nonmetallic minerals: Increased by 1,570 carloads to 33,344, demonstrating resilience in construction and infrastructure demand.
- Agricultural products (excluding grain) and food: Rose by 993 carloads to 16,257, reflecting stable demand in food supply chains.
- Motor vehicles and parts: Grew by 625 carloads to 13,097, signaling recovery in the automotive sector.
Conversely, several key categories experienced concerning declines:
- Coal: Dropped by 4,317 carloads to 64,015, potentially linked to energy transition trends and growing renewable energy adoption.
- Grain: Fell by 3,561 carloads to 21,910, possibly affected by global market volatility, weather conditions, and export demand fluctuations.
- Metallic ores and metals: Decreased by 2,289 carloads to 21,426, indicating weakness in manufacturing and industrial production.
Intermodal Pressures: Competition and Demand Shifts
Intermodal traffic, which combines rail with truck or water transport, also faced challenges. Weekly intermodal containers and trailers totaled 274,992 units, down 5.5% year-over-year. While slightly higher than the 273,190 units recorded for May 7 and 273,727 units for April 30, the overall decline remains evident.
Potential contributing factors include:
- Increased trucking capacity and fuel price volatility enhancing road transport competitiveness
- Port congestion potentially reducing intermodal efficiency
- Changing consumer demand patterns affecting specific commodity flows
Year-to-Date Performance: Mixed Results
Cumulative data for 2022 presents a nuanced picture. Total rail carloads reached 4,368,828 through May 14, up 0.6% year-over-year. However, intermodal volume declined 6.9% to 5,001,231 units during the same period.
This suggests rail freight maintains growth momentum in certain sectors, though intermodal weakness partially offsets these gains.
North American Trends: Cross-Border Impact
The broader North American picture shows similar challenges. Data from 12 railroads across the US, Canada, and Mexico recorded:
- Weekly rail carloads of 325,431 (down 4.2%)
- Intermodal units of 367,153 (down 4.2%)
Year-to-date North American rail transportation totaled 12,770,815 carloads and intermodal units, a 3.9% decrease, suggesting potential impacts on regional trade and economic activity.
Industry Outlook: Navigating Challenges
The rail sector faces multiple headwinds:
- Potential economic slowdown reducing freight demand
- Ongoing supply chain disruptions
- Labor shortages affecting operational efficiency
- Regulatory changes increasing compliance costs
However, opportunities exist in:
- Sustainability advantages over trucking
- Technological innovations in automation and digitization
- Infrastructure investment programs
The industry's path forward may involve operational efficiency improvements, enhanced customer service, stronger multimodal collaboration, and sustainability-focused positioning to maintain competitiveness amid evolving market conditions.