Iran’s railways play a modest role in China-Europe rail freight traffic, serving as an alternative route to operations through Russia and along the Middle Corridor. At the same time, Iran’s railways serve as a key part of the International North-South Transport Corridor. It connects Russia to the Indian Ocean, offering quicker access to some export markets, particularly India.

International rail operations through Iran have already been disrupted due to the ongoing war, but targeted attacks on the rail network could have a more lasting impact. Following the B1 bridge strike, Israel and the United States could target the Ghotour or the Veresk rail bridges. The former links up to Türkiye, the latter is a vital part of the INSTC’s eastern branch.

For a railway whose territory runs from Memphis to Maine, and Montreal to Miami (but not Texas), the numbers are less surprising. Long distances, heavy trains and high utilisation reward large, standardised fleets. CSX says the programme will improve fuel efficiency, reliability and operational consistency. Deliveries of the new locomotives are scheduled to begin this year, while rebuilt units are expected to enter traffic from 2027.

Evolution series at the core

Financing the deal should not be a problem. CSX turned over about $15bn in 2025, and cleared about $4bn (see the full report on WorldCargoNews.com). Most operators this side of the Atlantic would just dream of those numbers. With that in mind, the pocket-change order centres on new Evolution Series locomotives, a long-standing North American main line design developed by GE Transportation and now produced by Wabtec. Introduced to meet United States emissions requirements in the mid-2000s, the type replaced the earlier Dash 9 family and has become a staple of heavy haul and intermodal operations. Units are powered by the GEVO diesel engine and can be supplied with either AC or DC traction equipment.

CSX says the new locomotives will offer improved tractive effort and lower fuel consumption while maintaining performance on long-distance services. The emphasis is on steady, predictable output rather than outright power gains. In North American practice, incremental efficiency improvements applied across large fleets can produce significant savings, particularly on corridors handling dense bulk and intermodal traffic. Sustainability and fuel efficiency has been the subject of debate on the North American network (see RailFreight.com feature).

Rebuilding the existing fleet

Alongside the new locomotives, 50 older Dash 9 units will be rebuilt with AC traction equipment. The conversion is intended to extend service life and bring the locomotives into closer technical alignment with newer classes. AC traction is better suited to heavy trains and low-speed operation, offering improved adhesion and reduced maintenance compared with legacy DC systems.

Modernisation programmes of this kind are common in North America. Large fleets justify substantial mid-life investment. For CSX, the approach balances capital expenditure with asset longevity. Rebuilding existing locomotives also allows the railway to introduce updated control systems and diagnostics without waiting for full fleet replacement.

Digital systems and operating efficiency

The agreement includes the installation of “Trip Optimizer with Smart Horsepower per Ton”, an automated driving system designed to manage throttle settings and braking. The technology is intended to support fuel efficiency and more consistent train handling. Such systems are increasingly standard on North American freight railways, where small percentage savings scale rapidly across high-mileage operations.

“Our locomotive fleet is a fundamental element of our safe and reliable railroad,” said Mike Cory, CSX chief operating officer. “Modernising these critical assets strengthens network performance and supports the level of service our customers depend on.” Wabtec added that combining new and modernised locomotives with digital tools would support improvements in fuel performance, operational efficiency and reliability across the network. On a footnote, you do actually sometimes see CSX motive power in Texas – but it’s not gotten lost. They sometimes ‘workthrough’ on customer loads.

Even so, full-year data point to resilience rather than retrenchment. Total rail volumes in 2025 increased slightly compared with 2024, supported by gains in selected commodities including grain, steel and cars (of course, referred to as ‘autos’ by the Association). The AAR says prospects for 2026 will depend heavily on household spending power, labour market stability and interest rates, with intermodal traffic continuing to act as a proxy for consumer confidence.

Intermodal softens as year ends

US rail intermodal volume fell 3.4% in December 2025 compared with the same month a year earlier, extending a run of year-on-year declines to four months, noted the AAR. While still negative, the December result was marked an improvement on November’s steeper fall. The industry body sees the health of rail freight as closely tied to the economy at large – more so than in Britain, for example. “Growth in 2026 will depend largely on how well consumer spending holds up, which in turn will be impacted by whether the labour market softens,” they said.

On a full-year basis, intermodal performance was more encouraging. US railroads handled 14.06 million containers and trailers in 2025, up 1.5% on 2024 and the second-highest total on record. Container volumes alone reached a record 13.65 million units. The AAR noted that “rail intermodal shipments are closely tied to consumer spending,” leaving 2026 volumes exposed to inflation trends, incomes and borrowing costs.

Carloads reflect uneven industrial demand

Total US rail carloads (wagonload freight in European parlance) fell 2.3% in December, marking their third year-on-year decline in the final four months of 2025. Seven of the twenty major commodity groups tracked by the AAR posted gains, led by grain, steel-related products and cars. These were offset by declines in chemicals, metallic ores and construction materials such as crushed stone and sand.

For the year as a whole, total carloads rose 1.5% compared with 2024, the strongest annual increase since 2021. The AAR linked the muted pace of growth to sluggish manufacturing output, warning that “to the extent output remains sluggish in 2026, rail carload volumes will remain under pressure.” Carloads excluding coal still reached their highest level since 2019.

Commodities send mixed signals

Commodity data reinforced the mixed picture. Grain volumes strengthened further, with December carloads up 2.9% year on year and full-year volumes rising 5.2%, driven primarily by higher US exports. Chemicals ended the year on a weaker footing, with December volumes down sharply amid soft housing demand, auto-sector uncertainty and higher input costs tied to natural gas prices.

Steel-related traffic provided a clear bright spot. Primary metal carloads rose 2.0% in December and finished 2025 up 3.2%, while iron and steel scrap volumes reached their highest level since 2008. Coal also saw modest improvement, with 2025 carloads up 3.1%, although the AAR cautioned that US coal production and consumption are forecast to fall again in 2026.

When Union Pacific announced the takeover in late July, it said that the move would help the US supply chains and the economy, strengthen domestic manufacturing and position railways to move forward technological innovations that would foster freight competition.

If only everyone would see it that way, this deal would be a lot easier to sell for UP and NS. After months of deliberation, three trade unions have spoken out against the acquisition, citing concerns about job security and competitiveness.

From competition to monopoly

Some 50 years ago, the US counted around 40 large rail freight operators. Now, the country only counts six, stifling competition. The UP-NS merger would be a “de facto monopoly”, say trade unions BLET (Brotherhood of Locomotive Engineers and Trainmen) and BMWED (Brotherhood of Maintenance of Way Employes).

“This debt-ridden tie-up won’t make rail more competitive with trucks as merger proponents claim”, said BLET President Mark Wallace. “We believe this transcontinental railroad will make shipping by rail less attractive as the merged carrier passes off rail lines that serve small towns, factories and farms to short line railroads while running miles-long slow-moving trains on the main line. For rail customers it will be a choice between ‘Hell or the highway.”

Earlier, chemical companies voiced similar opposition to the acquisition. They argued that the reduction of rail freight operators would turn shippers into “captives” with little to no choice.

Forced relocation of dispatchers

BLET and BMWED also say that the merger of two companies with different cultures risks a deterioration of safety. And when it comes to job security, some of the reassurances offered by UP to other unions have “loopholes big enough to traverse freight trains through”, according to BMWED President Tony Cardwell. They refuse to accept the same terms.

The American Train Dispatchers Association (ATDA) likewise opposes the merger. It cites possible job eliminations, workload concerns and a planned forced relocation of NS dispatcher from Atlanta, Georgia to Omaha, Nebraska as major obstacles.

However, that characterisation is rather deceptive: BNSF and other rail freight operators in the US emit large amounts of pollutants. The American rail industry produced more nitrogen oxide, the primary component of smog, than all coal-fired power plants in the USA combined, according to Reuters calculations (485,000 tonnes versus 452,000 tonnes). To illustrate, in 2023, coal power plants generated 16.2% of all electricity in the States.

Reuters says that locomotive pollution causes an estimated 48 billion dollars in healthcare costs and 3,100 premature deaths annually in the United States, citing the Environmental Protection Agency’s Co-Benefits Risk Assessment tool.

Diesel-only

The underlying reason for this level of pollution is that American rail freight companies run 100% on diesel locomotives. That is a stark difference compared to other parts of the world, including Europe, where electrification is much more prevalent and expanding. The drive to find more energy-efficient traction is evidently not as much of a concern to American companies.

Moreover, the average age of the American locomotive fleet has gone up significantly, from 20 years in 2009 to 28 years currently. That does not help in reducing pollution. Despite the introduction of new locomotive standards by the Environmental Protection Agency in 2008, the railway companies have made little effort to modernise their fleet. Instead, they have opted to slow down new locomotive purchases.

The tariffs have introduced new economic uncertainties, which is prompting CN Rail to take action. “Adjusting cost structures is critical, especially in a soft macro environment, and we’re pursuing all opportunities across our whole work force and asset base”, CN Rail’s CEO Tracy Robinson said earlier as a justification of cost-cutting measures.

Layoffs and spending

CN Rail is therefore planning to lay off managers and slash its capital spending, Canadian media write. The operator has recently fired 400 workers, for a total of 1200 since October 2024. Capital spending plans for 2026 are down by 600 million Canadian dollars (371 million euros) compared to 2025. This year, CN Rail is spending 3.4 billion dollars (2.1 billion euros).

Despite the workforce and spending cuts, the Canadian rail freight operator is doing well financially. It saw a 5% increase in profit in Q3 2025 and a 1% rise in revenue. Profit for the quarter ending on 30 September was 1.13 billion Canadian dollars (around 700 million euros), compared with 1.09 billion dollars (674 million euros) one year ago.

When asked by reporters about the tunnel idea, Donald Trump called the idea “interesting”. Kremlin envoy Dmitriev addressed Elon Musk in a post on X, saying: “Imagine connecting the US and Russia, the Americas and the Afro-Eurasia with the Putin-Trump tunnel – a 70-mile link symbolizing unity. Traditional costs are $65B+, but [Elon Musk’s construction company] Boring Company’s tech could reduce it to <$8B. Let’s build a future together!”

US rail freight is following in the tracks of an uneven economy, as growth falters in key sectors. Total US rail carloads fell 1.2% year-on-year in September 2025, with declines across 12 of the 20 major categories tracked by the AAR. Yet overall volumes remained higher than earlier in the year. Average weekly carloads stood at 225,783, above the nine-month average of 221,853.

Industrial resilience amid manufacturing weakness

For the year to date, total carloads were up 2.1%, representing more than 180,000 additional loads compared with 2024. Twelve categories, including metal products, autos and parts, and construction materials, registered gains. The intermodal segment (which American markets define as including ‘piggyback’ road trailers), more closely tied to consumer spending and international trade, also weakened in September. Shipments fell 1.3% compared with the same month last year, averaging 275,559 containers and trailers per week. However, year-to-date intermodal traffic reached 10.57 million units, up 3.5%—the highest since 2021 and the third-largest total ever recorded.

AAR analysts said many shippers front-loaded cargoes ahead of the holiday season to manage risks around consumer demand and supply chain disruption, potentially pulling forward volumes from October. The AAR’s industrial products index, a basket covering chemicals, paper, steel, automotive, ores, and building materials, rose 0.1% in September. That marked the fifth consecutive monthly increase and underlined the resilience of core industrial activity even as manufacturing overall remains subdued.

Metals, grain strong, chemicals and coal volatile

Shipments of primary metal products climbed 2.3%, with iron and steel scrap up 18.4%, extending a seven-month growth streak. Year-to-date scrap volumes were 9.4% higher than in 2024 and at their strongest since 2011. Chemical carloads—an important indicator for industrial output—fell slightly (0.7%) but still ranked among the top six months on record. Through September, total chemical shipments reached a record 1.29 million carloads, up 1.5% year on year.

Agricultural traffic showed continued strength, with grain carloads averaging 20,966 per week, up 3.5% from last September. Year-to-date totals were 6% higher and the best since 2021. By contrast, coal traffic slipped 3.8% year-on-year in September, the first decline in seven months. Even so, total coal carloads for the year to date were 4.4% higher, benefiting from the low base of 2024, when the Baltimore bridge collapse disrupted exports. Excluding coal, total carloads declined just 0.2% in September—their first dip in seven months—and remain 1.4% above last year’s level, the highest since 2019.

Broader economy sending mixed messages

The AAR compiles its own Freight Rail Index (FRI), which reflects wider economic performance in the USA. The FRI revealed that combining intermodal and non-coal, non-grain carloads, fell 0.8% from August, marking the fifth drop in six months. Yet at only 1% below its level a year earlier, the index still suggests a gradual rebalancing rather than a sharp downturn. The latest rail figures coincide with a growing sense of fragility in the US economy. A partial federal government shutdown has delayed official labour data, but private surveys suggest employment has weakened. The ADP National Employment Report showed private-sector jobs falling by more than 30,000 in September, while the “quits rate” and “hiring rate” both dropped to multi-year lows.

Overall, the AAR sees rail freight performance as steady but vulnerable. Through September, total carloads rose 2.1% and intermodal volumes 3.5%, reflecting firm transport demand despite economic headwinds. “Uncertainty remains the dominant theme,” the Association concluded. “Rail traffic continues to demonstrate underlying resilience even as the broader economy struggles for clear direction.” With manufacturing still subdued, consumer confidence fading, and the policy outlook shifting, rail freight looks set to remain a sensitive barometer for the uneven health of the US economy as it enters the year’s final quarter.

Higher revenues but lower quality

This quasi-monopoly has been very favourable for the few Class I companies remaining, but not so much for shippers and customers. The revenues of these companies coming from captive shippers currently make up half of the total, with a 27% surge between 2004 and 2019, AFPM said. However, more money coming in did translate into better services or cheaper rates, quite the contrary.

Rates for rail freight services have skyrocketed 42% since 2004, while operating costs have only increased by 8%. “Rates for the largest US railroads have jumped more than twice as fast as inflation and rates for long-haul trucking”, the association underlined. Moreover, the AFPM claims that these companies implemented significant service cuts and imposed higher rates without prior negotiations. And they can do this because they are the only option available after competition was slowly eliminated throughout the second half of last century.

Union Pacific to buy Norfolk Southern

The merger between UP and NS would create the first US railway operator with a network stretching from the west to the east coast. UP is already the largest player in the country, and the acquisition of NS would turn it into a gargantuan entity. Despite the two companies agreeing on a deal, the process might take a while given its size and scope. Bloomberg estimated the value of the deal at around 72 billion dollars (62 billion euros). However, the US Safety Transportation Board would still need to review and approve the agreement, which could take up to two years.

Class I railroads

In the 1960s, there were more than 100 operators classified as Class I railroads in the United States. Many of these companies competed with each other, providing services along the same routes. On the flipside, they were much smaller entities and they were not very profitable. This started to change in the 1980s, when the rail sector was highly deregulated with the Staggers Rail Act.

Since then, the number of Class I railroads plummeted, also because the definition was changed. Initially, companies with a yearly revenue higher than one million dollars were considered Class I. Now, the threshold is at over one billion dollars. Another factor in the lower number of big operators was an increase in mergers, especially in the 1980s and 90s.

Despite creating larger networks which facilitate cross-state traffic and making the sector more profitable, all these policies led to a massive reduction in competition, leaving about a handful of Class I companies free to manipulate the market. “Unfortunately, freight rail consolidation has coincided with higher rail shipping rates, longer shipping times and more infrequent service”, the AFPM highlighted.

For operators and logistics planners in North America, the mixed data underline the sector’s dual exposure. Its health sits between global supply chains and internal industrial trends. For example, some core commodities such as grain and coal remain buoyant. However, weakening international flows are weighing down containerised rail movements, and industrial indicators continue to flash caution.

Wagonloads show recovery momentum

Wagonload (“carload”) freight saw a 2.1% year-on-year increase in June, with an average of 226,259 units moved per week. That’s the best monthly performance since 2021. The growth was led by gains in grain, coal and chemicals, with ten out of twenty key commodity groups recording positive trends. The overall carload sector was up 4.8% for Q2 and 2.4% year-to-date.

Grain traffic stood out with an 11.3% increase, attributed to stronger corn exports and reconfigured international markets following tariff shifts. Coal also rose 2.4% in June, marking a fourth month of consecutive growth, though AAR noted this largely reflected a weaker base last year. Chemicals remained a high-volume category, slightly down year-on-year in June but hitting a record high for the first half of a calendar year.

Intermodal slowdown weighs on volumes

The international market, heavily affected by unpredictable US economic policy, has impacted on the rail freight sector. Intermodal traffic declined 2.9% year-on-year in June, with overall volumes dropping by over 31,000 units. That’s the first annual fall since August 2023. Weekly averages of 260,834 originations came in below long-term expectations, as port activity and consumer-driven demand lost momentum. “Looking ahead, intermodal performance will hinge on a range of factors,” the AAR stated, “including developments impacting global supply chains and the strength of consumer-driven freight demand.”

The intermodal setback is significant for rail operators, particularly those focused on long-haul domestic container services and port-to-inland rail corridors. Slower throughput at maritime gateways and inventory corrections across retail sectors continue to depress rail container demand.

Signs of caution from manufacturing indicators

The broader industrial outlook remains tepid. The ISM Manufacturing PMI (Purchasing Managers Index – often characterised as a valid indicator of economic prospects) edged up to 49.0% in June, still below the 50% expansion threshold. The AAR’s own industrial products category posted just a 0.4% annual gain, with cumulative volumes slightly down over H1 2025. For the Association and its members, that’s far from encouraging.

The Freight Rail Index (FRI)—which excludes coal, grain and intermodal traffic—slipped 0.5% between May and June, the weakest monthly performance in over a year. However, adjusted carloads excluding coal and grain rose 0.7%, indicating pockets of demand.

Rail at the crossroads of global and domestic shifts

Rail continues to mirror the broader uncertainties in the US economy. “In recent months, the US economy has defied easy characterisation,” said the AAR. “[It’s] caught between signals of underlying strength and uncertainty regarding the road ahead.”

The second half of 2025 presents a complex challenge. With intermodal volumes softening and carload sectors showing selective resilience, the freight rail industry is caught between crosscurrents of global volatility, domestic re-industrialisation, and shifting consumer patterns. Strategic agility, particularly among Class I operators and intermodal partners, will be key to navigating the months ahead.