AAR sees ‘uncertainty’ for US railroads in 2025

The first word in the Association of American Railroad’s annual Rail Industry Outlook is “uncertainty,” as a slew of economic and policy issues weigh on the business in 2025.

To further temper optimism, the report says that uncertainty is more pronounced amid cyclical factors and expectations for policy changes in the year ahead.

“Potential shifts in fiscal policy, trade, immigration, taxation and regulatory frameworks — alongside evolving monetary policy from the Federal Reserve — are contributing to heightened economic uncertainty as we enter 2025,” wrote Rand Ghayad, AAR chief economist and senior vice president of policy and economics, in the report. “The interplay between these policies will be critical in determining whether the labor market remains resilient enough to sustain consumer spending and support continued rail intermodal growth, as seen in 2024.

“Similarly, the trajectory of the manufacturing sector, which has faced two years of persistent weakness that has weighed heavily on rail carload volumes, will depend on how broader economic conditions evolve in response to both fiscal and monetary measures in the months ahead.”

What the report doesn’t say explicitly is that much of that uncertainty is driven by expectations for business under a second Trump administration.  

Railroads posted a strong finish to 2024. Intermodal volume saw its third-highest year ever, capped by record December traffic on continued strong consumer spending and percolating port activity.

Dec…

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