North American rail traffic is showing surprising strength, particularly when coal carloads are excluded from the figures. Bill Stevens, editor of Trains Magazine, broke down the latest Association of American Railroads (AAR) data on FreightWaves, revealing a robust industrial economy highlighted by significant gains in metallic ores and scrap iron, despite overall flat carload growth. The discussion also covered the proposed Union Pacific–Norfolk Southern merger and its implications for U.S. and Canadian rail networks.

Week 30 Rail Traffic: Headline Numbers vs. Underlying Strength

U.S. rail traffic rose 2.5% in week 30, but the headline figure understates underlying industrial strength once coal is stripped out, according to the latest AAR data reviewed Wednesday on FreightWaves. Carloads excluding coal were up 2.1% for the week and are running 4% ahead of last year on a year-to-date basis — a pace that Stevens said closely mirrors industrial production growth.

Total North American rail traffic increased 2.5% for the week, with intermodal — shipping containers and truck trailers moved on rail flatcars, widely tracked as a proxy for consumer goods and retail supply-chain activity — up 4.3%, while carloads, which predominantly carry bulk industrial and extractive materials, were up just 0.5%. That represents a deceleration from the prior four-week trend, when total North American traffic was rising at just over 4%.

In the U.S., seven of the 10 commodity groups tracked by the AAR posted gains, but total carloads fell 0.4% — compared with a four-week trend of just under 1% growth — while intermodal rose 4.8%, below the 6.4% pace of the prior four weeks. That yields a total U.S. rail traffic increase of 2.5% for week 30, a slowdown from the 3.8% increase recorded over the prior four-week period.

However, when coal — still the largest carload segment but in long-term structural decline as U.S. power generation has shifted toward natural gas and renewables — is removed from the total, U.S. carloads were up 2.1% for the week. That compares to a 3.1% four-week trend, and 4% growth year to date.

"The carload numbers really closely track with industrial production. And industrial production doesn't really — it's not a hockey stick, right?" Stevens said, noting that 4% year-to-date carload growth ex-coal represents a genuinely strong economic signal. He emphasized that industrial production does not typically grow at 4% annually, making the current trajectory notably robust.

Commodity Breakdown: Steel Commodities Surge

Steel-related commodities were standout performers. Metallic ores jumped 16% for the week, and scrap iron and steel surged 20%, both running above their prior four-week trends — suggesting that steelmaking activity remains on a strong upward trajectory.

Grain, another top-three traffic commodity, was up 4%, in line with its recent four-week trend.

Chemicals, typically the second-largest traffic segment, slipped 2.2% for the week, though they remain up 2.4% year to date. Stevens said the dip could reflect noise in the numbers or modest softening, with oil-price volatility a potential input-cost factor. The hosts noted that chemicals had performed strongly in the first quarter before cooling somewhat.

On a year-to-date basis, U.S. carloads are up 2.7%, total units up 3.8%, and total traffic up 3.3% — with coal the only segment in negative territory. Mexico rail traffic was also reported as significantly higher.

The discussion referenced additional economic indicators supporting the industrial strength narrative, including the Logistics Managers' Index (LMI) and the Institute for Supply Management (ISM) manufacturing data, which reached its highest level since 2022. While the LMI showed slight softening, both metrics were described as affirming a robust industrial economy.

Union Pacific–Norfolk Southern Merger Review

The conversation also covered the proposed Union Pacific–Norfolk Southern merger, which is being held in abeyance at the Surface Transportation Board (STB) — the federal body that regulates freight rail competition and reviews rail consolidations — while regulators review more than 400 pages of supplemental information the two carriers filed a week ago Monday. Stevens noted that the STB has not yet set a procedural schedule, and it remains uncertain when the review process will resume. Once it does, a flurry of public comments both supporting and opposing the merger is expected.

The U.S. freight rail network consolidated over decades following the deregulatory Staggers Rail Act of 1980, leaving two dominant western carriers — Union Pacific and BNSF — and two eastern carriers — CSX and Norfolk Southern. A UP-NS combination would bridge that historic east-west divide for the first time, creating a single railroad reaching from the Pacific to the Atlantic seaboard.

Canadian National Drops Opposition

Stevens noted that Canadian National (CN) recently dropped its opposition to the merger after reaching a deal with Union Pacific. Under the agreement, CN would gain access to St. Louis and Kansas City and the ability to serve customers between those points across Missouri — routes where UP would pick up duplicate Norfolk Southern lines in the event of a merger. CN would also potentially gain access to Mexico. In exchange, UP would receive improved Chicago access over CN lines. CN stated that the arrangement eased its competitive concerns regarding the merger's impact on its network.

Whether UP and NS can secure similar agreements with other remaining opponents remains an open question.

BNSF's Opposition

The discussion referenced a recent FreightWaves interview with BNSF's Chief Strategy Officer, who articulated the anti-merger position. BNSF has been particularly critical of the committed gateway projections that UP and NS have offered. While UP and NS said they doubled the number of shipments eligible under the program and added bulk grain trains, BNSF maintains that the numbers remain small and questioned why the commitments have expiration dates rather than being permanent.

A central concern for BNSF is what happens to the interchanges it currently maintains with Norfolk Southern and at other gateways following a potential merger.

West Coast Port Implications

Port of Los Angeles Executive Director Gene Seroka, who appeared on FreightWaves the prior day, expressed support for the merger, arguing that single-railroad intermodal service from the West Coast to Midwest and Northeast markets would benefit shippers routing cargo through LA.

Stevens said the deal could shift the competitive balance between East and West Coast ports. In the central section of the country — the Ohio Valley, the Mississippi Valley, and even Chicago — where markets can be reached equally well from either coast, the merger could give West Coast gateways an advantage. If one railroad could handle shipments from the West Coast all the way through to interior markets such as Detroit, Pittsburgh, Cincinnati, and Buffalo — cities that currently sit on the eastern side of the Class I east-west divide — it would represent a significant competitive shift.

Canadian Stake in the Merger Review

When asked whether the current administration's "America First" orientation would diminish Canadian input in the STB review, Stevens confirmed that Canadian perspectives remain relevant. Canadian National's lines enter the U.S. at the Michigan border and in Minnesota, converge in Chicago like a Y, and then extend south to Memphis and New Orleans. The STB examines competition within the U.S. rail network, making CN's cross-border routes an important element of the analysis.

America 250 Locomotive Celebration

Stevens will attend the America 250 locomotive celebration later this month at the North Carolina Transportation Museum in Spencer, North Carolina. Approximately three dozen locomotives painted in red, white, and blue liveries will be on display, alongside bicentennial units from 1976, including the Norfolk and Western 1776. Stevens noted he had not yet seen any of the America 250 units in person and was particularly looking forward to seeing the Norfolk and Western 1776 for the first time in approximately 50 years.

Full Interview Transcript

FreightWaves: Today is the best day of the week — we're halfway through, and it's time for our weekly segment sponsored by Trinity Rail: the AAR Weekly Report. Our editor from Trains Magazine, Bill Stevens, is with us. How are you doing, Bill?

Bill Stevens: I am well. How are you?

FreightWaves: How are the railroads? Are they putting up good numbers? Is the rally continuing?

Stevens: They are, if you set aside coal and chemicals.

FreightWaves: Coal is in a perpetual decline. It's not coming back.

Stevens: It is, but it had a pretty big impact on the carload numbers. So we'll go over those, including coal and not including coal. When you start at the top of the list and look at North American rail traffic, carload traffic was up 0.5% — basically flat. Intermodal was up 4.3%, which gives us a total increase of 2.5% in North American rail traffic for the week. That is a bit of a slowdown compared to the prior four weeks, where it was up a little over 4%.

In the U.S., seven of the 10 commodity groups tracked by the AAR posted gains. But carloads were still down 0.4%, compared to the four-week trend of just under 1%. Intermodal was up 4.8% — also a slowdown from the 6.4% increase over the prior four weeks. So that gives us a total increase for week 30 U.S. rail traffic of 2.5%, a slowdown from the 3.8% over the prior four-week period.

However, if you subtract coal — and coal is still the largest carload segment — carloads were up 2.1%. That compares to a 3.1% four-week trend and 4% year to date.

Drilling down further: chemicals, which is often the second-largest traffic segment, were down 2.2%. Year to date, they're up 2.4%. So a little bit of a blip there. Grain, the other top-three commodity, was up 4%, in line with its trend for the past four weeks. And steelmaking is apparently still on a tear according to the AAR data: metallic ores were up 16% this week, scrap iron and steel were up 20%, and both are higher than their prior four-week trends.

FreightWaves: Real solid, Bill. The industrial economy continues to be robust. Take coal out of it, and that's real strong. It's interesting — 4% growth, and immediately you get naysayers saying that's not a lot. But this is hardcore GDP growth right here.

Stevens: The carload numbers really closely track with industrial production. And industrial production — it's not a hockey stick, right?

FreightWaves: It doesn't grow 4% a year. That's a real strong number. We're also getting other data points. Julie reported on the LMI today, the ISM yesterday — both affirming that the industrial economy is doing quite well. ISM was at the highest level since 2022. LMI shows a little bit of softening, but it's still very robust. When you're at an extreme high, it cools a little. But I think it's telling us the economy is doing quite well.

Stevens: That's what the data suggests — that the underlying industrial economy is strong, based on this broad commodity growth, seven out of 10 commodities that the AAR tracks.

FreightWaves: I like to look at the year-to-date numbers compared to 2025. When you look at U.S. rail traffic, carloads up 2.7%, total units up 3.8%, total traffic up 3.3%, and literally everything is up year-to-date except coal.

FreightWaves: What about chemicals? They came on real strong in the first quarter and have cooled a bit. Any read on that — commodity inflation due to energy and oil? Oil is such a big input into chemicals.

Stevens: It could be a little bit of softening. It could be a little bit of noise in the numbers.

Merger Discussion

FreightWaves: We had the BNSF Chief Strategy Officer on earlier this week. He obviously is not supportive of the merger and said it's bad for consumers. Any thoughts?

Stevens: He really boils down the anti-merger argument, and it is night and day from what UP and NS say their merger will bring. We're going to see this debate play out over the next 12 months as the Surface Transportation Board reviews the deal. The important note is that this is being held in abeyance until the STB fully reviews the 400-plus pages of supplemental information that UP and NS filed a week ago Monday. We don't know when the procedural schedule will be set or when it will resume. Once it does, there will be a flurry of inbound comments to the board, pro and con.

FreightWaves: Did we learn anything new from that interview? It felt like he was talking his own book.

Stevens: He did speak to the supplemental information. BNSF has been particularly critical of the committed gateway projections that UP and NS are offering. UP and NS said they doubled the number of eligible shipments and brought bulk grain trains into the program. BNSF still looks at it and says, well, that's such a small number, and it has an expiration date — why wouldn't it be full-time? One of their big concerns is what happens to the interchanges that BNSF currently has with Norfolk Southern or at other gateways. How do those hold up after a merger?

FreightWaves: We had Gene Seroka on yesterday, Port of LA director. He was very supportive. That arguably benefits the West Coast ports, because faster intermodal service from the West Coast should benefit shippers routing through the Port of LA.

Stevens: That's right. There's this battle between East Coast and West Coast ports. In the center section of the country — the Ohio Valley, the Mississippi Valley, even Chicago — if you can reach it equally well from either coast, this would give the West Coast ports perhaps a leg up if one railroad can handle the move all the way through to places like Detroit, Pittsburgh, Buffalo, and Cincinnati that are currently on the eastern side of the east-west divide between the U.S. Class I railroads.

FreightWaves: Has there been any shift in sentiment around the merger in the last couple of months?

Stevens: Really the only shift has been Canadian National reaching a deal with Union Pacific for access to Mexico. UP in exchange gets better access through Chicago over CN lines. CN, if the merger were approved, would also gain access to St. Louis and Kansas City, serving customers between those points across Missouri where UP would have duplicate parallel routes from Norfolk Southern. CN says this eases their concerns about the merger's competitive impact, so they will drop their opposition. Whether UP and NS can cut similar deals with other railroads that remain opposed — we'll have to wait and see.

FreightWaves: Does the administration or STB really care what the Canadians think? This administration is very America First.

Stevens: There definitely is an audience for that, because Canadian National's lines come into the U.S. at the Michigan border and up in Minnesota. They come down like a Y, join in Chicago, and then go all the way south to Memphis and New Orleans. The STB looks at competition within the U.S. rail network, and CN's routes are an important part of that.

Locomotive Liveries and Railroad History

FreightWaves: You're a big train livery guy, Bill. What is your favorite?

Stevens: That's like asking me to name my favorite kid. They're all interesting and in some cases historic. CN has the "noodle" logo developed in the 1960s — it's iconic. Union Pacific's logo has remained pretty much unchanged since 1862. Canadian Pacific was really the railroad that created Canada — they've got the beaver, the Canadian symbol, as part of their logo.

What I'm really excited about is the America 250 locomotive celebration later this month at the North Carolina Transportation Museum in Spencer. We'll have about three dozen America 250 locomotives painted up in red, white, and blue, and also bicentennial locomotives from 1976.

FreightWaves: Are there going to be any surprises, any liveries we haven't seen?

Stevens: I haven't seen any of them in person, so I'm looking forward to seeing all of them. As a kid, I remember seeing bicentennial units come through town, and one of those — the Norfolk and Western 1776 — will be there. I'm looking forward to seeing that for the first time in 50 years.

Passenger Train Discussion

Stevens discussed two pieces of railroad art visible behind him during the interview. One depicted the Canadian Pacific's "The Canadian" passenger train, with equipment dating to the mid-1950s including a dome observation car still in use today on Via Rail Canada. Stevens recommended riding the Via Rail Canadian, which now runs on Canadian National tracks and offers what he described as fantastic service, food, and scenery.

The hosts expressed interest in potentially conducting a remote broadcast from the train's dome car, discussing the logistics of using satellite internet equipment to broadcast live.

The second artwork depicted an Amtrak train in the Hudson Valley of New York.

The conversation also touched on scenic rail experiences including the Star Train in Santa Fe, New Mexico, and Alaska Railroad routes through Denali National Park, an eight-hour journey from Anchorage to Fairbanks. Recent aurora borealis activity visible as far south as Chattanooga, Tennessee due to strong solar storms was also noted.

The hosts reflected on the historical role of Canadian railroads in developing the country's southern provinces, noting that Canada's population is concentrated along the U.S. border largely because the Canadian Shield — a vast expanse of ancient rock — makes construction impossible across most of the country's territory.

Source: FreightWaves