The latest data from the Association of American Railroads (AAR) reveals a complex picture of the US rail freight market, with traditional carload traffic demonstrating resilience while intermodal container and trailer volumes face persistent declines. This divergence presents new challenges and considerations for the logistics industry.
Carload Traffic: Traditional Strength Endures
For the week ending July 23, US rail carload traffic reached 232,565 units, marking a 1.1% year-over-year increase. This performance surpassed the previous two weeks' volumes (229,809 units for July 16 and 207,450 units for July 9), indicating underlying growth momentum in conventional rail freight.
Among the 10 major commodity categories tracked by AAR, three sectors drove the growth:
- Automotive & Parts: The industry's recovery boosted transportation demand, with volumes increasing by 1,790 units to 12,559.
- Coal: Strong energy needs pushed coal shipments up by 1,772 units to 67,719, maintaining its position as a rail freight staple.
- Agricultural Products (excluding grain) & Food: Stable consumer demand supported a 950-unit increase to 15,627 shipments, highlighting rail's role in essential goods transportation.
However, several categories experienced declines:
- Metallic ores and metals fell by 1,516 units to 21,601, reflecting global economic pressures.
- Petroleum products decreased by 490 units to 10,038, influenced by energy transition trends.
- Miscellaneous carload freight dropped by 228 units to 9,468, affected by broader economic conditions.
Intermodal Challenges: Persistent Downturn
In contrast, intermodal container and trailer volumes declined to 266,366 units for the same period, representing a 2.5% year-over-year decrease. This continues a downward trend from the previous week's 269,090 units.
Several factors contribute to this decline:
- Improved port congestion has reduced the need for rail-based workarounds.
- Trucking regains competitive advantage for shorter hauls amid stable fuel prices.
- Cooling consumer demand due to inflation and economic uncertainty impacts overall freight volumes.
Year-to-Date Performance: Mixed Results
Cumulative data through the first 29 weeks of 2022 shows carload traffic nearly matching 2021 levels at 6,663,741 units (just 0.2% lower), while intermodal volumes fell significantly by 5.9% to 7,644,302 units, reinforcing the market's bifurcation.
North American Rail: Broad Softness
Expanding to the continental perspective, data from 12 major railroads across the US, Canada, and Mexico shows:
- Weekly carload traffic of 328,063 units (down 0.4%)
- Intermodal volume of 352,928 units (down 2.4%)
- Combined weekly total of 680,991 units (down 1.4%)
Year-to-date figures through week 29 show total North American rail freight at 19,533,345 units, representing a 3.3% overall decline.
Market Outlook: Navigating Challenges and Opportunities
The rail freight sector faces several headwinds:
- Escalating global recession risks
- Ongoing supply chain volatility
- Intensified competition from alternative transport modes
- Policy uncertainties regarding energy and environmental regulations
However, potential growth drivers include:
- Rail's environmental advantages in sustainability-focused markets
- Operational improvements through digital transformation
- Service diversification to meet evolving customer needs
As market conditions evolve, rail operators must balance adaptability with operational efficiency to maintain competitiveness, while the logistics industry reevaluates rail's role in building sustainable, efficient supply chains.