International intermodal traffic has taken an expected downturn, while domestic carloads have risen. The Association of American Railroads (AAR) has reported a fourth consecutive month of year-on-year carload growth in the USA. The industry’s representative body says that offers a glimpse of recovery in the industrial economy. However, this has been tempered by that decline in intermodal volumes, ending nearly two years of gains and reflecting growing uncertainty across freight and consumer markets.
In the AAR’s monthly review, June 2025 saw a 2.1% increase in total rail carloads over the same month last year, driven by gains in grain, coal and other industrial commodities. In contrast, intermodal traffic dropped 2.9%, with containerised volumes weighed down by volatile supply chains and softened demand. As the AAR put it: “Rail freight volumes have followed that lead, reflecting a mix of cautious optimism and lingering hesitation across key sectors.”
A tale of two freight streams
Intermodal traffic in the USA is dominated by containerised international shipments. As might have been predicted, the slowdown in landings at US ports is reflected in the container numbers moved by rail. The overall figure fell by over 31,000 units in June, the first such year-on-year drop in 22 months. Weekly intermodal originations averaged 260,834 units, falling short of the long-term average for the month. “Looking ahead, intermodal performance will hinge on a range of factors,” said the ARR. “[These include] developments and policy impacting global supply chains and the strength of consumer-driven freight demand.”
Conversely, on the conventional carload side, June volumes averaged 226,259 per week. That’s the best performance since 2021. Across the twenty carload commodity categories measured by ARR, ten saw growth, including grain, coal and chemicals. Total carloads were up 4.8% for Q2 and 2.4% year-to-date, making the first half of 2025 the most active period since the pandemic-era freight slump.
Coal, grain and chemicals show resilience
Despite a dependence on service industries, America is still a heavily industrialised economy. As such, domestic movements play a significant role in the rail freight industry. Reflecting that, coal made up the second-largest volume commodity and saw a 2.4% rise in June, its fourth straight monthly gain. However, as the AAR noted, this trend “reflects carload weakness last year more than higher volumes this year”. Year-to-date coal carloads were up 6.4%. That’s nearly 90,000 more than in 2024.
Grain saw the biggest year-on-year gain in June at 11.3%, following improved export demand, particularly for corn. That may be attributable to a reshaping of export markets, in light of decreased demand from China, a collateral effect of the Trump administration’s tariff regime. This did, however, mark the fourth straight monthly increase and the sixteenth rise in 17 months. Chemicals, though slipping 0.6% year-on-year, remain one of the highest-volume categories. Year-to-date totals were up 1.6%, reaching the highest ever for the first half of a year.
Industry is still advancing under caution signals
The manufacturing sector remains subdued. The American Institute for Supply Management Purchasing Managers’ Index, a monthly economic indicator, improved slightly to 49.0% in June, but that is still below the 50% threshold that indicates growth. The AAR’s industrial products category, a measure by the Association that gives a rating for industrial rail freight health, was up just 0.4% year-on-year, with overall volumes still down slightly over the first half of 2025.
The AAR Freight Rail Index (FRI), which strips out coal, grain and intermodal, dipped 0.5% from May to June, its lowest level in over a year. However, there was a 0.7% rise in seasonally adjusted carloads excluding coal and grain, suggesting isolated strength in parts of the industrial economy. The prospects for American railroads do seem to sway considerably, reflecting the volatile economic prospects overall.
Outlook remains uncertain for 2025 H2
Rail has been proving a barometer for the wider American economy. “In recent months, the US economy has defied easy characterisation,” said the AAR. “[It’s] caught between signals of underlying strength and uncertainty regarding the road ahead.” That uncertainty spans core economic indicators, from consumer spending to monetary policy, which is reflected in rail’s mixed performance.
The second half of 2025 will likely test both resilience and adaptability across the US freight market, according to the AAR conclusions. With intermodal faltering and carloads holding on, the rail sector stands at the confluence of global logistics, domestic industry, and economic confidence. Whether the railroads can react quickly to changing economic dynamics remains to be seen.