United States February railroad and intermodal volumes were mixed, according to the new edition of the “Rail Industry Overview (RIO),” which was recently published by the Washington, D.C.-based Association of American Railroads (AAR).
This free publication is issued monthly by the AAR and provides insights from AAR’s economists, regarding what rail traffic is saying about the current state of the economy, as well as where things may be headed. It also features a Freight Rail Index (FRI), which AAR said “tracks movement across the most economically sensitive rail traffic commodities,” including U.S. carload commodities and intermodal containers and trailers.
AAR Chief Economist Rand Ghayad told LM that the RIO essentially provides a summary of the key findings from the roughly 45 reports AAR produces for various industry stakeholders, with some of those reports geared towards those in the freight rail industry, as well as policy makers, and academics, with data and information coming from what he called a wide range of sources.
“Rail volume or rail traffic data in general is usually seen as a very important and solid indicator of what’s happening in the economy,” he said. “So, if you want to know how is the economy is going to be moving over the next couple of months, one way is actually to look at what’s happening in the rail industry. The whole idea of RIO is to summarize the findings from everything we’re putting out there and connect the dots with what’s happening in the economy. If the industry is doing well, it means the economy is on the right track. If the industry is not doing well, it means there are some concerns about how the economy is proceeding. It’s meant to be very easy to digest. It’s not meant to be very technical. It’s not meant to be only for, rail folks. It’s meant to be for everybody who’s interested to know about the economy, and mostly about how rail drives the economy.”
AAR reported that the February FRI was up 1.8% compared to January, amid weather-related constraints on volume, noting that this increase serves as a sign of continued rail resilience. This followed a 4.7% decline, from December to January. AAR said in the previous edition of the RIO that the sequential decline does not indicate signs of a downturn, coming off of a very strong December—instead, it signals what it called a return to seasonal trends.
Carloads: February U.S. rail carloads, at 843,618, fell 4.5% annually, following January’s 1.03 million tally, which marked the first annual gain in five months.
AAR said that severe February floods in the Northeast and frigid temperatures in the upper Midwest and in much of the rest of the country constrained rail operations and the ability of rail customers to load and unload freight.
“Without these weather issues, rail volumes likely would have been higher,” the report said.
Through the first two months of 2025, AAR said that total U.S. railroad volume is down 2.0%, or 37,584 carloads, annually, which it noted signals ongoing softness in key industrial sectors and the aforementioned weather-related disruptions.
It added that six of the 20 carload commodity groups it tracks saw annual gains in February, paced by nonmetallic minerals and paper products. Grain mill products were up for the eighth consecutive month and chemical carloads saw gains for the 18th consecutive month.
On the other end, coal, the highest-volume carload commodity, fell for the 14th consecutive month, and grain was off 5.8% annually, following a year of annual gains.
Intermodal: RIO reported that intermodal volumes were up 6.4%, or 66,340 units, to 1.11 million containers and trailers. And it added that weekly volumes came in at an average of 276,654 units per week, which set a new February high. Through the first two months of 2024, intermodal volume came in at 2.44 million untits.
“This strength reflects solid consumer spending, and, in part, efforts by some importers to expedite shipments in advance of tariffs,” the report said.
On a year-to-date basis through February, it said total intermodal volume was up 8.5% and container volume rose 9.5%, with the latter marking a new high for the first two months of the year. AAR observed that continued intermodal growth will depend on sustained consumer spending, which hinges on a robust labor market and could be shaped by changes on U.S. trade policy.”
Outlook: “As we move into the spring months, the outlook for railroads hinges largely on the resilience of key sectors, including intermodal and industrial goods, amid ongoing uncertainties,” the report stated. “While intermodal has shown strength, manufacturing remains under pressure, which could continue to impact carload volumes, particularly for industrial products. A cautious economic environment, with persistent inflation and potential trade disruptions, could further dampen demand in some rail segments. On the positive side, the labor market remains strong and the services sector is showing growth, offering some stability. However, much will depend on whether consumer spending rebounds and whether manufacturing can find its footing in the face of ongoing challenges. For railroads, the next few months will test whether intermodal resilience can offset manufacturing struggles. Staying agile in response to trade shifts, consumer demand, and industrial production will be key.”
In a recent interview with LM, AAR President & CEO Ian Jefferies said that early into 2025, the freight railroad industry is moving in a productive and positive direction, with volumes overall having remained reasonably steady on an annual basis, paced by strong intermodal volumes that was offset on the carload side by declines in coal loadings, and adding that several commodities did very well.
“Service has been a pretty solid spot for an extended period of time, something our members worked really hard on, coming out of some of the supply chain challenges in 2021 and 2022, so we’re going to look to continue to further improve that,” he said. “Investment remains very strong, with capex and maintenance combined at around $23 billion in private dollars annually, which is something we continue to be proud of every year. The safety numbers were very strong in 2024—with a further decrease in derailments over 20223 and a further reduction in employee injuries, so there is momentum on that front. And now we are coming into what we hope will be an opportunity to do some regulatory modernization with the new administration and hopefully the economy can hang in there and maybe get churning up a little more, and our [stakeholders] are locked and loaded ready to take on additional freight.”
