US rail sets intermodal record in October as freight demand holds

U.S. railroads moved an average of more than 298,000 containers and trailers per week in October — the highest weekly average for any month on record — as intermodal volume jumped 9.6% from a year earlier, the Association of American Railroads reported.

Total carloads rose 3.4%, their strongest percentage gain in eight months. Carloads excluding coal climbed 4.5%. The growth spread across the network rather than clustering in a few lanes: 15 of the 20 carload categories the AAR tracks posted year-over-year increases in October, and 16 were higher through the first 10 months of the year. That breadth, the association said, points to underlying industrial strength — not simply freight shifting from highways to rail.

The past three months rank as the three strongest U.S. intermodal months on record. October, traditionally the peak as retailers stock up for the holidays, contained the first-, third- and fifth-highest-volume intermodal weeks ever recorded. Through October, intermodal traffic was up 4.7% versus the same period last year, putting the industry on course for a new annual record.

What's driving the shift to rail?

The AAR credited a combination of rail's competitive position and sustained demand. Truckers face higher diesel, insurance and maintenance costs, and a federal crackdown has sidelined drivers and thinned the available pool. Solid rail service performance helped too. Add resilient consumer spending and inventory replenishment by some retailers, and intermodal had tailwinds on both price and volume.

Motor vehicles stood out in October. U.S. carloads rose nearly 10%, or about 5,900 shipments, from a year earlier. Counting Canadian and Mexican railroads, the increase topped 8,000 carloads, or 9% — the strongest percentage gain since December 2023. The report tied the jump to strong buyer demand, though year-to-date vehicle carloads remain only slightly above last year as higher interest rates bite.

Several industrial categories hit multiyear highs:

• Petroleum-product carloads: highest since February 2020
• Iron and steel scrap: strongest since September 2008
• Steel products: best October since 2018
• Grain mill products: an October record

Chemicals, the second-largest source of rail revenue after intermodal, grew carloads at their fastest pace in seven months. The AAR said chemical shipments are virtually certain to set an annual record, supported by a manufacturing resurgence.

Grain remains the largest contributor to year-to-date carload growth, up roughly 10%, or 92,000 carloads, through October. But October grain shipments fell year over year for the first time in 12 months. The report linked grain swings largely to exports, which rose 13% by volume in the first half of 2026 before declining in the third quarter.

Coal ticked up fractionally in October after seven straight monthly year-over-year declines, but remains down 1.6% for the year. Higher coal exports partially offset weaker domestic coal-fired generation. Cheap natural gas keeps weighing on demand: inflation-adjusted U.S. gas prices over the preceding six months averaged about 25% below their decade average, making gas-fired electricity more competitive.

What does this change for shippers and carriers?

Capacity is tightening. The AAR Freight Rail Index — which strips out coal and grain and seasonally adjusts the rest — hit its second-highest level on record in October. Railcars in storage fell for the eighth time in nine months, to 17.5% of the North American fleet, the lowest share since December 2022. Fewer idle cars means less slack for shippers negotiating seasonal surges, and it signals carriers expect the demand to stick.

The AAR acknowledged a gap between freight activity and household sentiment. Consumer prices in September were 23% higher than five years earlier, and rising interest rates, housing affordability problems and weak consumer confidence still strain households. Yet the macro data the report cited pointed to expansion: preliminary third-quarter GDP growth of 3.4%, unemployment at 4.1%, an initial October payroll gain of 165,000 jobs, and a manufacturing PMI in expansion for a 10th consecutive month.

The association cautioned that policy changes after the mid-term election could create uncertainty. Still, broad-based freight gains underpin its expectation that rail volumes will keep growing into 2027.