United States rail carload and intermodal volumes saw annual gains, according to the new edition of the “Rail Industry Overview (RIO),” which was recently published by the Washington, D.C.-based Association of American Railroads (AAR).
This free publication is issued monthly by the AAR and provides insights from AAR’s economists, regarding what rail traffic is saying about the current state of the economy, as well as where things may be headed. It also features a Freight Rail Index (FRI), which AAR said “tracks movement across the most economically sensitive rail traffic commodities,” including U.S. carload commodities (excluding coal and grain) and intermodal containers and trailers.
AAR Chief Economist Rand Ghayad told LM that the RIO essentially provides a summary of the key findings from the roughly 45 reports AAR produces for various industry stakeholders, with some of those reports geared towards those in the freight rail industry, as well as policy makers, and academics, with data and information coming from what he called a wide range of sources.
“Rail volume or rail traffic data in general is usually seen as a very important and solid indicator of what’s happening in the economy,” he said. “So, if you want to know how is the economy is going to be moving over the next couple of months, one way is actually to look at what’s happening in the rail industry. The whole idea of RIO is to summarize the findings from everything we’re putting out there and connect the dots with what’s happening in the economy. If the industry is doing well, it means the economy is on the right track. If the industry is not doing well, it means there are some concerns about how the economy is proceeding. It’s meant to be very easy to digest. It’s not meant to be very technical. It’s not meant to be only for, rail folks. It’s meant to be for everybody who’s interested to know about the economy, and mostly about how rail drives the economy.”
The May FRI was down 3.2% from April to May, for its steepest decline in five months and its lowest level in a year. AAR noted that this decline reflects broad-based softness in economically sensitive freight, especially intermodal, while also hinting at challenges for consumer goods and intermediate materials traffic.
May U.S. carloads, at 897,154, increased 5.9% annually, below April’s 6.2% annual growth rate (which is the largest annual percentage gain in 17 months, as well as the third-largest increase in almost four years), with 13 of the 20 carload commodity groups tracked by the AAR seeing annual gains.
The weekly carload average, at 224,000, was slightly below March and April, with AAR observing it indicates a, “still-steady flow of freight on the rails.
May intermodal volume, at 1,037,766 containers and trailers, rose 0.6% annually, representing the 21st consecutive month of annual gains, while posting its lowest annual growth rate over that period—as evidenced by weekly intermodal loadings, at around 259,400 units, representing the lowest tally in a year and close to matching the 10-year May average.
“Rail freight volumes in May 2025 tell a story of an industry navigating crosscurrents,” the report said. “On one side, carload traffic showed solid growth, reflecting resilience in key sectors of the domestic economy. On the other, intermodal container volumes barely eked out a gain, hinting at softening global trade and cautious consumer demand. Mixed economic signals—from cooling manufacturing output to consumers pulling back on goods purchases—underscore the uncertainty facing railroads. Recent data on factory activity, consumer spending, and housing all paint a cautionary picture for the coming months, even as the labor market remains a relative bright spot.”
Regarding the second half of the year, AAR made the case that there are some signals pointing to cautious optimism, in the form of things like strong carload gains in coal, chemicals, and grain, as well as the labor market still supporting consumer spending, and purchasing power remaining intact, as inflation remains under control. As for intermodal, it explained that May’s sharp volume reduction, following almost two years of increases, serves as a sign of “potential headwinds,” like softening consumer demand and high inventories, while manufacturing output remains flat, and the amid the ongoing housing slump.
Looking ahead, the report said that railroads need to keep a close eye on various indicators, including jobs, factory activity, housing, and global trade, to “stay ahead of whatever comes next,” in what it called an uncertain environment.
