Rail Freight Trends: The Risks Hiding in Plain Sight

Rail market outlook with Bill Stephens of Trains Magazine: here’s what freight operators need to watch next.\n\nIn this FreightWaves Today interview, Stephens breaks down the state of freight rail, the signals that matter and what they could mean for the broader supply chain. Straight analysis for rail, trucking and logistics pros trying to read the market without the noise.\n\n#RailFreight #FreightMarket #SupplyChain

North American rail traffic turned negative in week 36 for the first time since the week ending Feb. 7, snapping a months-long streak of year-over-year gains. Carloads fell 3.3% and intermodal dropped 3.8%, producing a combined decline of 3.6% compared to the same week in 2024. In the U.S. alone, carloads were down 3.3%, intermodal fell 4.1%, and overall volume was off 3.7%.

The breadth of the decline is what stands out for carriers and shippers tracking economic momentum. Stripping out coal and grain — leaving only economically sensitive industrial products — carload volume was down 5.9%. Chemicals and petroleum, the second-largest carload commodity category after coal, fell 5.6%, with chemicals alone dropping 9.2%. Automobile carloads were down nearly 19%, while bright spots were limited to grain, forest products, and coke and primary metals.

“The streak is over. For the first time since the week ending February 7th, rail traffic was down compared to the same week a year ago.”

Class I railroad executives speaking at investor conferences this week acknowledged that rising fuel prices are driving some highway-to-rail conversion, but warned the same price spike could eventually erode consumer demand. Norfolk Southern separately noted it was seeing increased carload traffic converting from truck in lumber, steel, and metals. On the intermodal side, international volumes in the East have been challenged as shippers favor West Coast ports for cost reasons.

The Union Pacific–Norfolk Southern merger remains the dominant structural story in rail. Last week’s deadline required rival railroads to disclose what concessions they would seek from regulators. BNSF, CSX, and CPKC all requested trackage rights and customer access. BNSF’s requests were the most extensive: it is seeking trackage rights for intermodal trains over Norfolk Southern from Chicago to Harrisburg, Pennsylvania — a major consumer goods distribution hub — and on the carload side wants creation of a neutral switching railroad on the Gulf Coast, the country’s largest chemical-producing region.

Union Pacific CEO Jim Vena said he does not see how BNSF’s trackage rights request can work economically, given that trackage rights fees would be layered on top of operating costs. UP has also said it would walk away from the deal if regulators grant widespread trackage rights, and the merger agreement includes a $750 million concessions trigger that would allow UP to reconsider the acquisition. BNSF has argued that a combined UP-NS system would control 85% of intermodal traffic in the Harrisburg area, including access to an independent terminal in Bethlehem, Pennsylvania.

Historical precedent suggests an approved merger could set off a subsequent wave of consolidation. BNSF itself was created in 1995, and that deal prompted the Union Pacific–Southern Pacific merger a year later. On the passenger rail front, Amtrak is set to launch its new Siemens Mobility-built Airo trainsets in Pacific Northwest Cascades service on Sept. 30, adding capacity to a corridor that has been constrained by aging and out-of-service equipment. Meanwhile, Brightline continues to negotiate with creditors to refinance its debt load — with ridership hitting records but financial pressure raising bankruptcy concerns — as the Florida private passenger railroad runs from Miami to the Orlando airport.

• North American rail carloads fell 3.3% and intermodal dropped 3.8% in week 36, the first year-over-year decline since February, with chemicals down 9.2% and autos off nearly 19%.
• BNSF is seeking trackage rights from Chicago to Harrisburg and a neutral Gulf Coast switching railroad as part of its conditions on the proposed UP-NS merger, which carries a $750 million concessions trigger.
• Amtrak’s new Siemens Mobility Airo trainsets launch in Pacific Northwest service Sept. 30, while Brightline faces potential bankruptcy despite record ridership due to its heavy debt load.

This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above.