U.S. railroads set an intermodal traffic record in October as shipments rose across much of the freight economy, evidence of resilient demand despite inflation, higher interest rates and weak consumer confidence.
Intermodal volume rose 9.6% from a year earlier, with railroads handling an average of more than 298,000 containers and trailers per week — the highest weekly average for any month on record, according to the Association of American Railroads. Total carloads increased 3.4%, their strongest percentage gain in eight months, while carloads excluding coal climbed 4.5%.
Fifteen of the 20 carload categories tracked by the AAR posted year-over-year increases in October, and 16 were higher through the first 10 months of 2026. The association said that breadth pointed to underlying industrial strength rather than simply a shift of freight from highways to rail.
The past three months were the three strongest U.S. intermodal months on record, according to the report. October, traditionally the busiest month as retailers prepare for holiday demand, included the first-, third- and fifth-highest-volume intermodal weeks ever recorded. Through October, intermodal traffic was up 4.7% from the same period last year, putting the industry on course for a new annual record, the AAR said.
The association attributed the growth to a combination of competitive advantages and sustained demand. Higher diesel, insurance and maintenance costs for truckers, fewer available truck drivers amid a federal crackdown and solid rail service performance supported intermodal shipments. Resilient consumer spending and inventory replenishment by some retailers provided additional momentum.
Motor vehicles were a standout in October, with U.S. carloads rising nearly 10%, or about 5,900 shipments, from a year earlier. Including Canadian and Mexican railroads, the increase exceeded 8,000 carloads, or 9%, the strongest percentage gain since December 2023. The report attributed the increase to strong buyer demand, although year-to-date vehicle carloads remained only slightly above last year in the face of higher interest rates.
Several industrial categories reached multiyear highs. Petroleum-product carloads were the highest since February 2020, while iron and steel scrap shipments reached their strongest level since September 2008. Steel products recorded their best October since 2018, and grain mill products set an October record.
Chemicals, the second-largest source of rail revenue after intermodal, recorded their fastest carload growth in seven months. The AAR said chemical shipments were virtually certain to reach an annual record, supported by a resurgence in manufacturing.
Grain remained the largest contributor to year-to-date carload growth, increasing about 10%, or 92,000 carloads, through October. But October grain shipments declined from a year earlier for the first time in 12 months. The report linked fluctuations in grain traffic largely to exports, which rose 13% by volume in the first half of 2026 before declining in the third quarter.
Coal traffic rose fractionally in October after seven consecutive monthly year-over-year declines, but shipments remained down 1.6% for the year to date. Higher coal exports partially offset weaker domestic coal-fired electricity generation, according to the report.
Relatively inexpensive natural gas continued to weigh on coal demand. Inflation-adjusted U.S. natural gas prices over the preceding six months averaged about 25% below their average over the past decade, making gas-fired electricity more competitive with coal-fired generation, the AAR said.
The AAR Freight Rail Index, which excludes coal and grain and seasonally adjusts the remaining traffic, reached its second-highest level on record in October. Meanwhile, railcars in storage fell for the eighth time in nine months, reaching 17.5% of the North American fleet, or the lowest share since December 2022.
Economic headwinds persist
The association’s assessment acknowledged a gap between freight activity and household sentiment. Consumer prices in September were 23% higher than five years earlier, while rising interest rates, housing affordability problems and weak consumer confidence remained sources of strain, the report said.
Yet, the economic figures cited in the overview pointed to continued expansion. Preliminary data showed third-quarter U.S. GDP growth of 3.4%, an unemployment rate of 4.1% and an initial October payroll gain of 165,000 jobs. Manufacturing PMI remained in expansion territory for a 10th consecutive month, while services activity and consumer spending also continued to grow, according to the report.
The AAR cautioned that policy changes following the mid-term election could create uncertainty. But broad-based freight gains supported its expectation that rail volumes would continue growing into 2027.
Why it matters: Rail freight on U.S. lines continues to have a strong year led by intermodal, overcoming some economic headwinds and pointing to underlying industrial strength.
Read more articles by Stuart Chirls here.
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