The unprecedented supply chain challenges of 2021 and 2022 have abated and the 24/7 freight rail network is as busy as ever, preparing to meet transportation demands for fall harvest and the holiday shopping season. We’ve taken a look at some of the trends currently driving freight rail.

Demand is Down, But Rail Service is Strong

While freight volumes are generally down for trains and trucks so far in 2023—a function of lower consumer demand and excess inventory—railroad performance today is a bright spot for shippers, with data from the U.S. Surface Transportation Board (STB) showing improvements in key service indicators. The percentage of time railroads were on-time or less than 24 hours behind schedule was 91% at the end of August, an 11% increase over the same week the previous year.

“Rail performance is at all-time high levels, and customers are unloading at levels similar to pre-pandemic,” said Schneider CCO Jim Filter during the company’s August 5 earnings call. Railroads have submitted biweekly service and employment reports to the STB since last Spring as part of an effort to achieve new service targets.

Certain markets also continue to surge despite the overall slowdown, thanks in part to expanded or enhanced rail operations. The South Carolina Port Authority announced at the end of August, for example, that port volumes were up year over year. In particular, SC Ports’ two rail-served inland ports handled 55% more rail moves in July 2023 than the previous year.

New service routes from CN and CPKC led to a 34% rise in intermodal volume out of Mexico year over year in July. Schneider Senior Vice President of Intermodal Michael Baumgardt, in an interview with the Journal of Commerce, said he doesn’t anticipate changes to rail service when demand returns.

“The type of service that we’ve been experiencing provides opportunity to go after freight that’s been moving on trucks because it is truly a truck-like service,” said Baumgardt.

Headcounts Rise as Hiring Continues

The railroad workforce has also steadily grown over the last 18 months. As of August, employment at the largest, Class I railroads is up nearly 10% over the start of 2022. Five of six employment categories increased from May to June of this year. In particular, the train and engine staff category, which includes the largest share of employees, logged an 8.6% year over year increase to 52,000 employees.

Workforce capacity is crucial to meeting harvest needs, and railroads are well-positioned this fall. At the 2023 National Grain Car Council Meeting, held in Kansas City in mid-August, CN reported that its Train & Engine (T&E) workforce was at pre-COVID levels and that its retention rate for T&E employees in the U.S. this year is at nearly 96% as hiring continues.

“I’d say the grain companies are cautiously optimistic about rail service levels for the fall and winter. We have seen good rail service in recent months, which hopefully carries into harvest,” said Wade Sobkowich, executive director for the Western Grain Elevator Association, to FreightWaves.

Twelve rail labor unions voted to ratify new contracts in December 2022, solidifying rail workers as among the most highly paid in the U.S. Since then, railroads have reached over 40 agreements extending paid sick leave to employees. The unions representing 78% of all rail craft employees now have paid sick days in addition to the short- and long-term paid sickness benefits that had already been in effect across the industry.

As the world’s top grain producers, U.S. farmers rely on the more than 600 railroads across the U.S. to move their bounty. In fact, about 40% of grain exports move by rail. This feat requires both long- and short-term planning, including the more than $250 billion spent by North American Class I railroads on their networks over the last decade.

Fortunately, railroads are poised and ready with the workforce, network capacity, and reliable infrastructure that is required to move fall harvest.