I Don’t Have That ‘Peaceful, Easy Feeling’

Written by Jim Blaze, Contributing Editor
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BNSF photo

2022 was going to be the recovery year for freight, rail freight included. As the first quarter ended, I’m not so sure anymore. A group of statistics keep whispering in my ear.

This outlook is based upon selected statistics from multiple published sources, wrapped around several themes and evidence seen at the Rail Equipment Finance 2022 conference the first week of March, further researched with data from the Michigan State University Eli Broad College of Business, and bolstered with graphs published by Susquehanna Financial Group and FTR Transportation Intelligence, using a mix of data from groups like the AAR and FreightWaves. It’s all sanity tested with observations by a group of experienced railroad colleagues across the U.S. 

There now appear to be too many signs of selective slowdowns in both the U.S. economy and the railroad sector’s role in freight movement volumes ahead. The same view of partial indicators was recently seen last in independent analysis shared in FTR presentations by Eric Starks and Todd Tranausky. There is no comforting view with a cloudless night sky showing billions of stars.

As market demand and volume showed when first-quarter 2022 ended, freight market volume patterns and pricing both signaled a slowing if not indeed an absolute drop. Looking closer, U.S. rail freight volumes overall were down about 3% year over year (Y/Y) for the quarter’s final full week, but up by about 9% Y/Y on a four-week basis compared to 2020. However, that 2020 value is not comforting since that was the period when the start of the pandemic witnessed significant volume drops. 

Here is a graph of the trailing four-week total carloads changes between March 2019 and into March 2022 showing the changes as a Y/Y percentage. The most significant growth period Y/Y was limited to that between February 2021 to mid-summer 2021 vs. 2020:

Susquehanna Financial Group

A more accurate economic view is found by examining this long-term railroad freight change graph, showing 2008 through 2022, Week 11. This graph also uses a trailing four-week average plot, but in absolute volumes rather than percentages:

Susquehanna Financial Group

Years 2009 and 2021 during the first quarter of each year were the low point comparisons. The highest-level year in the past two decades would have been 2006 (not shown here), at above 600,000 units. A major takeaway is that the railroads are just not growing their market. So far, 2022 doesn’t look to be changing that overall pattern, although there are a few commodities showing rail growth.


The Week 11 average train velocity for just the four largest U.S. Class I rail companies shows a decrease of 7% Y/Y. That matches the –7% Y/Y change on a four-week trend basis. Terminal dwell was up 8% on a four-week basis. Here’s a two-year plot:

Susquehanna Financial Group

The PSR business model, practiced by three of the Big 4 (not BNSF) continues to show financial benefits for railroad shareholders, but few service improvements for railroad customers. Instead, the graph using the railroad’s own data display more than 15 months of continuous negative performance under their definition of a precision-like business model. 

Now let’s look at the patterns over just first-quarter 2022. But before we examine rail, let’s start with a review of trucking, because trucks are still “overall” the shippers’ first choice. Rail is still chasing trucks. Using several data sources including FreightWaves SONAR, here are some of the trucking market signals:

  • Real-time (one-day lag) contractual truckloads tendered by shippers to truckers are down a significant 15% Y/Y. This pattern continues a sub-seasonal trend into the end of March 2022. 
  • Spot truckload rates remain up Y/Y (+9%) but are now trending below the rates seen during the fourth-quarter 2021.
  • The spot market demand index (a proxy for spot volumes) is down a noticeable 33% Y/Y; and is also down 8% sequentially.

FreightWaves’ dry van outbound tender rejection index has fallen significantly. Craig Fuller, founder and CEO of FreightWaves, reported as March ended that his company’s unique measurement system showed that this trucking demand/supply index was back down to its lowest level as March ended since mid-year 2020. From a market demand side, this is indeed an uneasy feeling. It can’t be good news for rail freight and for rail intermodal freight. 


On the intermodal side, domestic (53-foot container size) volumes moved by U.S. railroads remained somewhat elevated compared to 2021 volumes (+5% Y/Y). However, international intermodal (mostly FEU (40-foot) boxes with some TEU 20-foot length rail-moved units continues to lag—down 15% Y/Y. And compared to the most recent “normal” economic years of 2019 and 2018, intermodal rail volumes are not really growing. 


If we take a long, 15-year review, domestic rail volume market demand statistics show a mixed picture. SFG’s snapshot of weekly railroad volumes exiting 1Q 2022 is measured against a 15-plus-year record of seasonality changes. Against that long-term pattern, total carloads are flat. Translation: In 2022’s first quarter, U.S. railroad carloads are overall still trailing typical seasonality. And railroad intermodal is not helping grow the volume during the seasonal weakness.

  • Bulk (grain + coal), down sequentially, are during this year’s first quarter now more seasonal. Note: These should increase significantly over the rest of this year.
  • Merchandise rail carloads (all carloads excluding bulk and intermodal) continue to track in line with historic seasonality.

There are a few commodity exceptions:

  • Gravel and stone have recently been up (now at a four-week +10%).
  • Chemicals are up in double digit range by ~13%.
  • On the bad news side are finished autos. Light motor vehicles are notably down 6%, but might end 2022 down by between 15% and 18% or more relative to a base year volume of 2019. A good year for autos would be about 17 to 18 million units sold in the U.S. market. Expectations as of April 2020 are now as low as possibly 15.3 million units. And the first-quarter 2022 pace was less than 12.5 million. That’s not a good sign for railroads. 
Susquehanna Financial Group

Reminder: When evaluating 2022 traffic patterns, keep 2018 in mind as a relevant comparison base, since 2019 had some recession-like patterns, and 2020 and 2021 were obvious “supply chain shift” years. Susquehanna Financial Group does a particularly good job of reminding us of the actual traffic and service performance over these longer timelines.

Let’s now compare the above data with other economic data. Here we look at analysis offered courtesy of FTR, and at the REF 2022 conference in early March. A few of these slides offer their independent pro forma look at expected patterns across 2022 into 2023. For rail freight, the more important than GDP index might be the Industrial Production index. That rate of change could shrink a bit through the remaining three quarters of 2022.

When considering GDP growth, it’s best for rail relevance to consider breaking out the “goods transport” sector of GDP, as FTR does in this following graph. Here, quarter-to-quarter growth as a percent will likely be positive for transport GDP—but much slower than the surges seen in some quarters of 2020 and 2021. However, the great unknowns will be the combined impacts of inflation, fuel shortages and prices, changes in consumer disposable income, and the impacts from Russia’s invasion of Ukraine.

Durable goods orders during the pandemic, when eating out and travel were down, and house repairs/upgrades were up, surged, but be aware that second-quarter 2022 numbers may decline.

Without much detail impact yet about a possible recession or the impact of the Ukraine invasion upon inflation, FTR predicts a slower carload rail volume change. Their forecast period extends into 2023.

FTR looks specifically at what it defines as economically sensitive for rail freight growth: positive but slowing.

Coal will see an increase (a bump) into 2022 and early 2023 … and then?

The long expected intermodal rail growth engine? “It’s hitting a runner’s wall.” This is a pattern acknowledged by others at the REF 2022 conference.

The so-called PSR business model? It’s not exhibiting evidence of continuous quality improvement. Customers have noticed. Have investors?

A few conclusions from this railroad contrarian economist: There is selective market growth, but no suggestion that rail freight is taking truck market share. Clearly rail freight has a continuing market share role, and opportunities. But its service quality measures are not improving. When might service significantly improve under the PSR model? When might the taking of highway share start?

These market signs suggest a bumpy road ahead for rail freight volume, and for the railroads’ ability to meet the requirements of the improved supply chain carrier offerings that customers will expect. These signals can’t just be ignored. I just don’t have, like The Eagles hit, that Peaceful, Easy Feeling.

Independent railway economist and Railway Age Contributing Editor Jim Blaze has been in the railroad industry for more than 40 years. Trained in logistics, he served seven years with the Illinois DOT as a Chicago long-range freight planner and almost two years with the USRA technical staff in Washington, D.C. Jim then spent 21 years with Conrail in cross-functional strategic roles from branch line economics to mergers, IT, logistics, and corporate change. He followed this with 20 years of international consulting at rail engineering firm Zeta-Tech Associated. Jim is a Magna Cum Laude Graduate of St Anselm’s College with a master’s degree from the University of Chicago. Married with six children, he lives outside of Philadelphia. “This column reflects my continued passion for the future of railroading as a competitive industry,” says Jim. “Only by occasionally challenging our institutions can we probe for better quality and performance. My opinions are my own, independent of Railway Age. As always, contrary business opinions are welcome.”

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