Washington Wishes

Railroad Weekly June 23, 2025

courtesy: Leo Ming

Inside This Issue

· Washington Wishes: What RRs Want from Congress

· Automation Regulation Aggravation: RRs Want Tech to Check Track

· CRISI Fit: Don’t Slash Our Cash

· Still Bullish on Barstow: BN All In on BIG Despite Tariff Threat

· Smooth Railing: Standing Ovations for RR Operations

· Sinko de Mayo: Mexico Rail Volumes Appear to be Plunging

· Japanese Tease: New Owners of U.S. Steel Promise More Output

· Dread of the Fed: Yes or No, Will Tariffs Cause Inflation?

· Crude Awakening? Will Oil Markets Threaten the U.S. Economy?

Track Talk

“The further use of emerging technologies to enhance rail safety and operations… will be needlessly stunted if regulators at the FRA and elsewhere in DOT fail to embrace technological change, or if they lock in existing technologies and processes so that new innovations and new technologies that could improve safety and improve efficiency are stifled.”

- AAR CEO Ian Jefferies

The Latest

· We’re just about a week away from closing the second quarter, a three-month period dominated by tariff talk. In a little over a month, railroads and their stakeholders will report their Q2 financial results, adding their commentary on current conditions. By all accounts so far, demand remained more or less healthy during the past quarter, with a boost from strongly recovering coal volumes. The ag market’s held up well. The chemical market has been O.K. The intermodal market should show at least some growth, thanks to a burst of international activity early in the quarter, reflecting a scramble to import goods before tariffs took effect. Later in the quarter, that burst turned to bust as ports suffered big volume declines. Another burst is coming though, tied to a rebound in orders after tariffs were temporarily paused. As Q3 approaches, tariff policy remains in limbo. But market gloom has eased somewhat from earlier in the quarter, thanks in part to temporary tariff pauses, a rebound in stock markets, and a big drop—notwithstanding recent gains—in oil prices.

· Is that second wave of intermodal imports evident yet? Not as of June 14^th, the latest date of available data from the AAR. Quarterly intermodal traffic across North America was down 2.8% y/y during that week of the 14^th. The decline was 3.5% in just the U.S. alone. Keep in mind that a decline in international container imports has just a limited impact on the rail sector’s domestic intermodal business.

· Let’s look at Mexico for a moment. Despite all the happy talk about the country’s nearshoring potential, total rail traffic is down 9% y/y so far in 2025 (January thru June 14^th), at least according to the AAR’s imperfect data. Broadly speaking, the three largest freight categories for Mexico’s railroads are ag, metals/minerals, and auto. And all are down sharply this year. As always, take care to recognize that AAR’s Mexico figures are indeed imperfect because they exclude CPKC’s Mexican operations, which account for a large part of the market. The AAR’s figures mostly capture what’s happening at Grupo Mexico’s railroads, led by Ferromex. In any case, the big declines strongly suggest the overall market is shrinking.

Read American Places, a book with deep insights into the most important trends and developments throughout the U.S. economy -Jay Shabat, Publisher, Railroad Weekly

Federal Rail Funding: The Reauthorization Debate

· The Senate held a hearing last week on modernizing America’s rail network, a timely