Rail volumes down 3%: what it means for 2025

As of late October 2025 (Week 43), U.S. Class I railroads are navigating a landscape of tepid growth tempered by recent declines. According to the latest data from the Association of American Railroads (AAR), U.S. rail volumes for the week ending October 25 (Week 43) dipped 3% year-over-year, with 498,462 combined carloads and intermodal units moved. This marks a slight deterioration from the flat four-week and quarter-to-date (QTD) trends, though year-to-date (YTD) volumes remain up 2%. The figures, drawn from a comprehensive industry report by Susquehanna Financial Group, highlight resilience in key commodities like grain while exposing vulnerabilities in automotive and coal shipments.

Overall, North American rail volumes—including U.S. giants like Union Pacific (UNP), BNSF, CSX, and Norfolk Southern (NSC)—totaled around 700,000 carloads on a trailing four-week average, aligning with seasonal patterns but showing a Y/Y dip in recent weeks. Intermodal traffic, which accounts for 53% of total volume, posted a 4% YTD gain but fell 4% in Week 43 and remained flat QTD. This stability stems from steady consumer demand for imported goods, though analysts note softening due to tariff uncertainties under the Trump administration. Merchandise volumes, comprising 33% of traffic, were down 2% weekly and flat QTD, with YTD at -1%, dragged by declines in metals & ores (-16% weekly) and forest products (-9% weekly).

Bulk commodities present a brighter spot. Grain volumes surged 7% YTD and 5% QTD, buoyed by robust U.S. exports amid global supply disruptions from conflicts in Ukraine and weather issues in Brazil. The U.S. Department of Agriculture reported record soybean harvests in 2025, pushing rail demand higher in the Midwest. Coal, however, showed mixed results: flat weekly but down 3% QTD and up 4% YTD. This reflects a rebound in domestic power plant usage earlier in the year—April 2025 saw a 17% jump in coal deliveries to utilities—but recent declines signal cooling as natural gas prices stabilize and renewable energy gains ground. September marked coal’s first monthly drop in seven months, per AAR, averaging 60,318 carloads weekly.

Automotive volumes, a key merchandise subset, illustrate stark geographic and industry variations. North American auto carloads fell 10% in Week 43, though QTD held at +2%. This downturn ties directly to a mid-September fire at Novelis’ aluminum plant in Oswego, New York, which supplies 40% of U.S. auto-grade aluminum sheets. The blaze halted production through early 2026, costing Ford an estimated 90,000-100,000 vehicles in Q4 and a $1.5-2 billion profit hit. Ford, heavily reliant on aluminum for F-150 trucks, is ramping up shifts at other plants to mitigate losses, while GM faces lesser impacts. Eastern rails like CSX and NSC, serving more auto plants, anticipate Q4 pressure, with NSC forecasting disruptions despite no direct ties to Novelis. In contrast, Western rails like UNP and BNSF, focused on parts from Mexico, have seen relative stability amid trade policy shifts.

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Among Class I rails, outliers emerge clearly. UNP stands out positively, with revenue ton-miles (RTMs) up 4% weekly, 2% QTD, and 6% YTD, driven by strong bulk and intermodal in the West. This outperforms the North American average, aided by investments in supply chain efficiency amid lower interest rates. BNSF, however, lagged with a 7% weekly decline and 5% QTD drop, attributed to softer coal and intermodal in the Pacific Northwest. Eastern peers show divergence: CSX volumes rose 2% weekly and 8% QTD, boosted by merchandise strength, while NSC fell 6% weekly, though it beat Q3 profit expectations on higher merchandise despite intermodal and coal weakness. Canadian rails CNI and CPKC, with U.S. exposure, posted RTM declines of 1% and 6% weekly, respectively, amid cross-border auto choppiness.

These trends are falling out of alignment with broader U.S. macroeconomic indicators, reflecting the goods economy’s limited share of overall economic activity in the U.S. The Bureau of Economic Analysis reported Q2 2025 real GDP growth at 3.8% annually, fueled by consumer spending and business investment. The Atlanta Fed’s GDPNow model estimates Q3 (ending September) at 3.9%, signaling continued expansion despite inflation concerns. Industrial production ticked up modestly in August, per the Federal Reserve, with manufacturing expanding overall as per the Philadelphia Fed’s September survey. However, the New York Fed’s Empire State index showed a modest decline in September manufacturing activity, hinting at regional softness in the Northeast—mirroring Eastern rail challenges.

Rail volumes face headwinds from trade tariffs and supply disruptions but could benefit from lower rates and healthy consumer demand. Deloitte forecasts GDP slowing to 1.8% for full-year 2025 before rebounding. As AAR’s chief economist noted, “Rail traffic continues to adjust to evolving market conditions,” underscoring the sector’s role as an economic bellwether. With YTD gains intact, Class I railroads demonstrate adaptability, but any sustained recovery will hinge on resolving auto bottlenecks and stabilizing energy markets.

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