U.S. Freight Rail: Mixed Signals, Intermodal Dip, June 2025

Mixed Signals for U.S. Freight Rail in June: Growth in Carloads Masks Intermodal Dip

U.S. freight rail experienced a month of mixed fortunes in June, with overall carload volumes showing a modest increase, yet intermodal traffic, a key performance indicator (KPI), faltered. The Association of American Railroads (AAR) recently released its “Rail Industry Overview” newsletter, offering a snapshot of the sector’s performance. This analysis reveals that while overall carload volumes were up, intermodal volume took a downturn, marking the first year-over-year decline in nearly two years. The data, compiled for June 2025, indicates a slight overall positive trend, but with crucial segments undergoing notable shifts. The core question becomes, how sustainable is this current trajectory, and what are the underlying forces shaping these divergent trends? Furthermore, the article will investigate the shifts in carload volumes across commodities and offer a peek into the implications of market changes.

Freight Carload Growth: A Glimmer of Industrial Activity

Freight carloads in June 2025 saw a 2.1% increase compared to June 2024, suggesting a marginal expansion in industrial output and product movement across the nation’s vast rail network. This indicates that the fundamental demand for shipping physical goods via rail remained steady. This positive trend is a welcome sign for railroads, which heavily rely on the transportation of various commodities, from raw materials to finished products, to sustain operations and maintain profitability. This rise is particularly important in the context of broader economic indicators, with rail often acting as a bellwether for manufacturing and industrial activity. It shows the railroads are managing their business with economic fluctuations.

Intermodal Volume Decline: A Concerning Trend

Intermodal traffic, a critical component of freight rail, experienced a significant setback. The data shows a 2.9% decline in June 2025, marking the first year-over-year drop in nearly two years. Intermodal transport, the practice of using multiple modes of transportation, typically involves shipping goods in standardized containers that can be efficiently transferred between trains, ships, and trucks. The decline of intermodal transport is worrying, since it shows a reduced ability of the railways to compete with road transport. The intermodal decline also contributed to the freight-rail index dipping 0.5% from May to June, bringing it to its lowest point since May 2024. AAR officials attributed much of the overall index dip to the drop in intermodal volume.

Commodity-Specific Performance: Coal, Chemicals, and Grain

Several key commodity sectors witnessed notable shifts in their rail traffic during June. Coal carloads continued their upward trajectory, rising by 2.4% in June, marking the fourth consecutive year-over-year gain after a 14-month decline. This resurgence is influenced by factors such as energy demand and pricing dynamics, but it is also impacted by broader environmental concerns. Chemical carloads saw a 0.6% decrease, marking the first decline in nearly two years. This dip is attributed to higher natural gas prices in 2025. On the other hand, grain carloads showed robust growth, increasing by 11.3% over the previous year, marking the fourth consecutive gain. The U.S. Department of Agriculture (USDA) reported that grain exports are up 3.9% in 2025, with significant corn exports helping to offset declines in soybean and sorghum exports.

Conclusion

The June 2025 performance of the U.S. freight rail sector offers a complex picture. While overall carload volumes show signs of resilience, the decline in intermodal traffic raises concerns regarding the ability of rail to compete with other shipping models, as well as a potential economic slowdown. The varying performances across different commodities reflect shifts in the energy market, agricultural exports, and broader economic conditions. The growth in coal carloads hints at a potential rebound in energy production. The dip in chemicals, associated with fluctuating natural gas prices, emphasizes the importance of understanding the impact of energy costs on the transport sector. The continued growth in grain carloads signals solid export demand. Looking ahead, railroads will need to adapt to these changing dynamics by improving operational efficiencies, exploring new technologies, and strengthening their relationships with customers. The ability to capitalize on the growth in grain and other commodities could define the industry’s trajectory. The railway industry is expected to continue monitoring these trends to respond and maintain its essential position in the nation’s economy and supply chain.