The Association of American Railroads has some economic concerns over a fall in bulk loads, notably coal traffic.
The Association of American Railroads, which produces a monthly industry-wide review of operational performance, is concerned about economic trends. However, their own statistics reveal an underlying metric that accounts for much of their worries. Specifically, a decline in coal traffic is skewing their figures.
The AAR takes a holistic view of the railroad industry in the US. It closely relates its health to the overall economy. In their latest monthly review, the Association noted that, excluding coal, US railroad bulk carloads increased 1.9% in December 2024. That is an eleventh consecutive year-on-year gain. It follows a 1.5% gain in the fourth quarter and 1.4% for 2024 overall. However, the AAR says that broader economic indicators are not as optimistic.
A three-decade low for industrial products
Notwithstanding record figures for intermodal traffic, as reported earlier this week by WorldCargo News, the US Federal Reserve data on US manufacturing output is giving the AAR cause for concern. Since its most recent peak in mid-2022, output has been slowly falling. The Association of American Railroads says that US rail carloads have likewise lagged. However, the Association notes that a significant fall in coal volume has significantly skewed their figures.
In 2024, carloads of industrial products – which the AAR defines as the combination of chemicals, steel, paper, motor vehicles, crushed stone and sand, metallic ores, and stone products – were down 0.9% from 2023. “Total originated carloads on US railroads in December 2024 fell 0.8% from December 2023; fell 2.0% (57,285 carloads) in Q4 2024 from Q4 2023; and were down 2.9% for the year,” said the AAR. “In our records that begin in 1988, only 2020 had fewer total rail carloads (10.88 million) than 2024 (11.34 million).”
Coal is still vital to railroad figures
In 2024, there were 343,156 fewer carloads transported than there were in 2023. However, the AAR quantified that with an outlier statistic covering the decline of coal. A loss of 460,420 carloads in 2024 more than accounted for the total decline. “Carloads of coal in 2024 were down 13.6% from 2023 and, at 2.94 million, were the lowest in our records,” said the AAR. Even with the big decline in 2024, coal still accounted for 25.9% of total carloads. That’s far more than any other carload commodity.
It isn’t clear if America is experiencing a mirror of the ‘coal collapse’ that British rail freight operators have been forced to confront. However, this may be a long-term decline. If the US economy follows the net-zero path pursued elsewhere, coal demand will remain in decline. Nevertheless, with the incoming administration of President Trump, economic and environmental policy may be many things, except predictable.
Grains and gas make progress
Of the 20 carload categories that the AAR tracks, 12 had higher volumes in 2024 than in 2023, notably grain and chemicals. Grain carloads totalled 1.07 million in 2024, up 8.5% over 2023 but otherwise the fewest since 2019. Grain carloads were up each month in 2024 except January. The AAR believes the 2024 increase was due primarily to higher grain exports, reflected by developments in domestic production.
US rail carloads of chemicals totalled 1.69 million in 2024, up 4.1% over 2023 and the most ever for a year. “Year-over-year carloads of chemicals have grown each month since September 2023,” explained the AAR. “[This is] due in part to low natural gas prices which are boosting US chemical producers that use gas as a feedstock or energy source.”
Road cars benefit railcar figures
Whatever may change after the inauguration of the new president, one thing will remain immutable. America remains wed to the car, and that has implications for the railroad industry. While pipeline delivery remains the preferred vehicle for raw production, carloads of petroleum products in 2024 were at their highest level since 2019. The AAR still maintains that was due, at least in part, due to higher crude oil shipments.
The manufacturing slowdown did negatively impact rail deliveries of steel products. In 2024, they were the lowest since 2020. Nevertheless, US rail carloads of motor vehicles rose 1.2% in 2024 over 2023. The year did finish on a negative note. Cars delivered by rail in 2024 declined in November and December, although there’s no suggestion that America has reached “peak car”.