The Association of American Railroads (AAR) would like to report growth in the sector. However, the picture is not quite as clear cut. Strong consumer demand continues to drive strong rail intermodal movements, which suggests that Americans are bullish about their future. At the same time, however, industrial shipments (which includes autos, steel and aggregates) have remained weak, suggesting there is uneven growth across the economy.
Railroads may have some confidence about their short-term prospects – particularly if it’s boxes they carry. According to AAR analysis, US manufacturing is showing signs of expansion for the first time in two years. Should these trends continue, says the AAR, demand for rail-hauled goods such as motor vehicles, steel and crushed stone could rise in the months ahead.
Foodstuffs and Feedstocks
The perennially optimistic Association of American Railroads has found reason to talk up the freight sector in their latest monthly review. “Freight rail started 2025 with a mix of stability and sector-specific volatility,” said the Association. “US railroads originated 1.03 million carloads in January, up 0.2% year-over-year, marking the first overall increase in five months. While modest, this uptick suggests steady underlying demand, particularly in non-coal shipments.
” Figures show that raw products improved overall, both from agricultural harvests and for industrial feedstocks. Grain carloads surged 6.1%, marking a twelfth consecutive monthly increase. Chemical shipments are also on prolonged growth. They rose by 4.8% – their 17th consecutive monthly gain. Coal, however, is in continued decline. Shipments fell 2.3% year-over-year. “This was the smallest percentage decline in 13 months, signalling a potential stabilisation after prolonged declines,” said an upbeat AAR. “Coal remains the largest single carload commodity by volume, accounting for 27.3% of total non-intermodal U.S. rail shipments in January.”
Stability with pockets of strength
The AAR has expressed concerns over the tariff-driven economic policy, as promoted by new US president Donald Trump. “As economic policy continues to be debated in Washington, tariffs are at the forefront,” notes the AAR. “Proponents argue tariffs protect domestic industries and jobs, while critics warn that tariffs can drive up costs for manufacturers relying on imported materials and raise prices on these items for consumers.”
Although too early to be directly impacted by the new administration’s economic policy, the AAR figures show that January of this year saw the first carload increase in five months, with intermodal surging 10.3%, driven by strong consumer demand. However, industrial shipments remain weak, with coal and metals declining while chemicals and grain continue to grow.
The feature image on this story was taken by Norfolk Southern’s Brad Brenneman, a quality assurance supervisor at the Juniata Locomotive Shop in Altoona, PA. The image won the corporate-wide 2020 Photo Contest.