The U.S. rail freight market presented a mixed picture in March, with significant divergence across different commodity sectors, according to the latest data from the Association of American Railroads (AAR).
Strong Growth in Chemicals and Bulk Commodities
Overall rail freight volume increased by 1.2% year-over-year to 1,169,546 carloads, marking the 12th month of annual growth in the past 13 months. The chemical sector led the expansion with an impressive 11.7% increase, adding 18,291 carloads compared to March 2022.
Other bulk commodities also showed robust performance. Coal shipments grew by 5.4% (16,637 carloads), while crushed stone, sand, and gravel volumes increased by 8.5% (7,974 carloads), reflecting continued infrastructure investment across the country.
Declines in Agricultural and Energy Products
Contrasting with these positive trends, grain shipments declined by 10.8% (13,839 carloads) year-over-year, while petroleum and petroleum products fell by 16.5% (9,033 carloads). The "all other carloads" category decreased by 14.6% (4,459 carloads).
These declines may reflect changing agricultural conditions, shifts in energy demand patterns, and broader economic uncertainties affecting these sectors.
Intermodal Challenges Continue
The intermodal sector remained weak, with March volumes declining 6.4% year-over-year to 267,628 units per week. Total intermodal containers and trailers reached 1,338,138 units, representing a decrease of 92,170 units from March 2022.
This marks the seventh monthly decline in the past eight months for intermodal traffic, highlighting ongoing challenges in this transportation segment.
Economic Uncertainty Persists
John T. Gray, AAR Senior Vice President, noted the contradictory trends in his monthly statement: "March was another month of mixed results for U.S. rail traffic. Chemicals set a new record while crushed stone, sand, food products, lumber, and motor vehicles all showed strength. On the other hand, grain, petroleum products, and paper shipments declined."
Gray emphasized that these opposing trends reflect significant economic uncertainty that needs resolution before the sector can reach its full potential.
Recent Weekly Data
For the week ending April 2, U.S. railroads reported a modest 0.6% increase in carloads to 231,963, though this remains below the levels recorded in late March (233,555 carloads for the week ending March 26 and 232,770 for the week ending March 19).
Market Outlook
The rail freight sector faces both challenges and opportunities in the coming months. Key factors to watch include:
- Global economic conditions and trade patterns
- Energy market volatility and transition
- Infrastructure investment levels
- Supply chain efficiency improvements
- Intermodal service reliability
The divergent performance across commodity sectors suggests that rail operators and shippers will need to carefully monitor market developments and adjust their strategies accordingly.