United States January rail carload and intermodal volumes started 2025 with growth, to varying levels, 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 January FRI posted a 6.4% annual gain, while coming in 4.7% below December’s near-record reading. AAR explained 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: January U.S. rail carloads, at 1.03 million, marked a 0.2% annual increase, for the first gain in the last five months, signaling steady underlying demand, particularly in non-coal shipments.
Looking at certain commodities, AAR found that coal loadings were off 2.3% annually, marking the smallest percentage decline in 13 months, with AAR saying it portends a “potential stabilization after prolonged declines,” with coal representing the highest-volume carload commodity, at 27.3% of non-intermodal shipments in January. Grain rose 6.1%, growing for the 12th straight month, and chemical shipments headed up 4.8%, growing for the 17th consecutive month.
Intermodal: AAR reported that January intermodal volume was up 10.3% annually, growing for the 17th consecutive month, which AAR said reflects robust consumer spending and continued demand for containerized freight through U.S. supply chains, with average weekly intermodal originations at 265,943 units, representing its highest level, save for January 2021.
The RIO report highlighted various macroeconomic factors tied to railroad volumes and future growth, including: manufacturing’s ability to engineer a turnaround, following growth in January, with it being a key driver of rail freight demand; and trade and tariffs, with U.S.-Mexico-Canada rail trade from December 2023 to December 2024, at $204 billion, and AAR noting that as tariff policies evolve, rail-dependent sectors like automotive, agriculture, and energy expected to initially feel the effects.
“Rail freight trends in early 2025 reflect broader economic crosscurrents,” the report observed. “Strength in consumer-driven sectors like intermodal and chemicals is helping offset weaknesses in manufacturing and energy-related shipments. While rail volumes have not fully rebounded, a potential turnaround in manufacturing, combined with stable trade flows, suggests cautious optimism. With tariff policy, inflation and global trade conditions in flux, railroads must stay adaptable to shifting demand patterns. The industry enters 2025 with stability but lingering uncertainties, making strategic planning and flexibility key priorities moving forward.”
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.”
