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AAR Predicts Manufacturing Rebound Could Boost US Rail Activity in 2025
The US rail volume outlook for 2025 appears optimistic as the manufacturing sector shows signs of recovery. According to the Association of American Railroads (AAR), an upturn in manufacturing activity could significantly increase demand for rail transportation. After 26 months of contraction, US manufacturing expanded in January, potentially signaling a reversal in industrial trends.
Manufacturing Recovery and Challenges in Rail Demand
January marked the first increase in manufacturing output after a prolonged downturn. This shift could lead to higher demand for rail-hauled goods such as motor vehicles, steel, and crushed stone. The AAR noted that sustained manufacturing growth would primarily benefit non-coal rail shipments.
US carload volume rose by 0.2% year-over-year in January, the first increase in five months. Grain loadings continued their upward trend, climbing 6.1% and extending a 12-month streak of gains. Chemical traffic also grew by 4.8%, maintaining its 17-month expansion streak.
Despite these gains, some segments of the rail industry remain weak. Industrial product volume declined in January, reflecting broader struggles in the US industrial economy. Auto shipments fell by 6.7%, while primary metal product volumes dropped by 8.5%. These declines suggest ongoing challenges in manufacturing-dependent rail freight.
Coal, however, may be stabilizing. January saw a 2.3% decline—the smallest in 13 months—raising hopes for improved coal shipments. As coal remains the largest single carload commodity, even slight stabilization could positively impact overall rail volumes.
Intermodal Growth and Optimism for 2025
Intermodal shipments, which mainly consist of consumer goods, remain a bright spot in the rail sector. These shipments increased by 10% year-over-year, marking the 17th consecutive month of growth. January’s weekly average volume reached 265,943 containers and trailers, the highest for that month except in 2021.
Despite this strength, intermodal volume remains vulnerable to trade fluctuations, tariffs, and inflation. Global economic conditions will continue to influence the movement of containerized goods via rail.
While certain industrial sectors still face hurdles, the overall US rail volume outlook for 2025 is cautiously optimistic. Manufacturing expansion, stable trade flows, and potential rebounds in key sectors could support continued rail freight growth. The AAR’s analysis suggests that with a sustained recovery in manufacturing and economic trends, the rail industry may experience positive momentum in the coming year.
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