When headlines are dominated by inflation, rate hikes and recession fears, where can we find objective indicators of real economic activity? Rail freight volumes – often considered a leading economic barometer – may provide clearer answers.
Overall Decline in Rail Traffic
May's U.S. rail freight data from the Association of American Railroads (AAR) paints a concerning picture:
- Carload freight: 928,742 units, down 3.7% (35,821 units) year-over-year
- Intermodal freight: 1,102,558 containers/trailers, down 4.3% (49,258 units)
This dual decline suggests persistent economic headwinds, though underlying sectoral variations reveal a more nuanced story.
Sectoral Divergence: Growth Amid Decline
Not all commodities followed the downward trend:
Growth sectors:
- Crushed stone/sand/gravel: +5.8% (4,659 units), suggesting infrastructure spending impact
- Motor vehicles/parts: +9% (4,534 units), indicating consumer confidence recovery
- Food products: +7.1% (1,652 units), reflecting stable essential demand
Declining sectors:
- Grain: -13.5% (13,738 units), affected by weather and trade factors
- Primary metal products: -15.3% (5,878 units), signaling manufacturing weakness
- Petroleum products: -13.5% (5,857 units), potentially due to high prices and energy transition
Underlying Trends: Excluding Volatile Commodities
AAR's adjusted data excluding coal and grain shows:
- Carloads excluding coal: -4.3% (30,281 units)
- Carloads excluding coal and grain: -2.8% (16,453 units)
These figures confirm broad-based softness beyond sector-specific challenges.
Expert Analysis: A Complex Economic Picture
AAR Senior Vice President John T. Gray noted the data reflects "both good and not-so-good" elements. While automotive and construction-related shipments show resilience, chemical shipments declined for the first time in over a year, and grain volumes remain disappointing compared to 2020-21 levels.
Year-to-Date Perspective
January-May 2022 cumulative data shows:
- Carloads: 4,835,705 units (+0.2% year-over-year)
- Intermodal: 5,555,607 units (-6.6%)
The intermodal decline likely reflects ongoing supply chain constraints including port congestion and trucker shortages.
Weekly Data: Continued Pressure
The week ending May 28 saw:
- Carloads: 233,633 units (-4%)
- Intermodal: 280,644 units (-2.2%)
This confirms persistent short-term weakness as economic uncertainty continues.
The rail freight data underscores the challenges facing the U.S. economy amid global supply chain disruptions, inflationary pressures and shifting demand patterns. While certain sectors demonstrate resilience, the overall picture suggests a bumpy recovery path ahead.