America’s rail freight sector is bearing the brunt of a tariff-fuelled trade war, with unpredictable policy changes from the White House triggering sharp swings in container volumes. The knock-on effects are rippling through intermodal operations across the continent.
The unpredictable trade war has put North American intermodal rail traffic in turmoil. For UK observers, the situation offers a revealing glimpse into the vulnerability of long-distance, port-to-door supply chains. British intermodal services have been more stable. However, when trade policy turns into a moving target, the warning signs are clear.
Advance buying and dynamic tariffs
North American railroads were caught in a wheel slip of import behaviour earlier this year. Shippers rushed to front-load Chinese goods ahead of an expected hike in tariffs. That spike in demand caused a surge in container traffic through West Coast ports (Seattle to San Diego, that is, not Barrow to Bristol) with carriers like BNSF and Union Pacific scrambling to handle the volume.
Then came the snap decision from the Oval Office. In April, the Trump administration slapped a 145% tariff on Chinese goods. Almost overnight, that surge turned into a slump. Intermodal terminals were left with glut conditions, and within five to six weeks, rail freight flows reflected the sharp decline. For railroads that had already invested in operating at capacity, the whiplash was costly in time, money and reliability.
Temporary tariff relief offers fleeting respite
In a rare moment of moderation, the tariffs on Chinese imports were eased to 30% in May and are set to stay at that level until mid-August. The trade has responded as expected. International shipping container bookings are climbing again, although an anticipated mid-June surge at US ports is, so far, muted. Railroads, braced for a surge, may see a slump.
Rail yards are an integral part of operations at the Port of Los Angeles. Image: © Port of Los Angeles
A mid-summer bounce for intermodal operations would be welcome, but American railroads remain wary. The prospect of another sudden reversal, or a reimposition of tariffs, keeps the sector on high alert. There’s little appetite for fresh investment or expansion when the rules of engagement shift week by week.
Diversified sourcing creates fresh strain
With tariffs on China in flux, US importers have been rebalancing supply chains, bringing in more goods from other parts of Asia and Latin America. That has pushed more traffic to East and Gulf Coast ports, challenging railroads to reconfigure their networks.
The very fluid tariff structure is, to say the least, bewildering. The already volatile situation could change at any time, and frequently has. From a rail operations point of view, the fragmentation of flows makes it harder to plan and deliver consistent, efficient services.
Intermodal still a cornerstone of rail freight
Despite the upheaval, intermodal remains the backbone of American rail freight. According to the Association of American Railroads, intermodal volumes are up 7% in the US and 5.8% across North America so far this year, with demand still outpacing pre-pandemic averages.
Union Pacific intermodal double-stack train. Container traffic could be susceptible to tariff issues Image: © Union Pacific
That mirrors the UK, where intermodal also represents around half of all rail freight activity. However, the dynamics are different. In Great Britain, distances are shorter, lead times are tighter, and the UK has not as yet been drawn into the kind of tariff turbulence affecting trans-Pacific trade.
US East Coast gains come with limitations
One visible shift has been a rebalancing of container traffic away from the American West Coast. Brief strikes last year (reported by sister service WorldCargo News) had already pushed shippers to route cargo through East and Gulf Coast ports. Ongoing security concerns in the Red Sea have added another layer of complexity, diverting some Asia–Europe flows into North America via the Pacific.
That’s bad news for western-focused US railroads like BNSF and UP, which rely heavily on West Coast port volumes. But it’s no simple win for eastern operators like CSX and Norfolk Southern either. The intermodal share of imports at East Coast ports is significantly lower, so while volumes may rise, rail’s share of the pie doesn’t necessarily grow with them.
UK perspective is a warning and a window
For the UK, the American experience shows just how quickly intermodal operations, even at a continental scale, can be thrown into disarray by policy unpredictability. British ports and rail operators have so far been spared that volatility, but they are not immune.
The UK’s shorter haul lengths and closer integration of port and rail terminals may cushion the blow. However, with globally connected trading systems, tariff turbulence in one hemisphere can reverberate in another. If anything, the North American situation underlines the strategic value of resilient, responsive intermodal infrastructure. It’s proving dangerous to take stability for granted.