Coal shipments expected to rise in Q4
Rail freight analysts are projecting a rare quarterly uptick for coal volumes, a commodity that has spent more than a decade shedding rail share. Freight Market Intelligence Telegraph forecasts under 1% year-on-year growth in national coal carloads for the fourth quarter, according to director David Correll. The firm’s latest Market Consist Report suggests this modest recovery is being driven by export opportunities rather than a resurgence in domestic power generation.
A modest rebound for a declining commodity
Coal rail volumes have been in secular decline for over ten years, but the fourth quarter is expected to buck that trend. The forecast calls for slight year-on-year gains, with specific railroads like CSX and Norfolk Southern reporting volume growth in their second-quarter results. Correll attributes this shift to global energy prices and the data center build-out, which is slowing the retirement of coal-fired power plants while simultaneously raising domestic electricity demand.
“I don’t want to say that we’re completely flipping the script,” Correll said. “It’s gradual and it’s modest.” The outlook relies on a delicate balance between shrinking domestic demand and expanding export markets, a dynamic that rarely produces the volume spikes seen in previous decades. Even with this projected growth, the absolute numbers remain small compared to historical peaks.
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Tank car supply concerns emerge
The freight rail outlook extends beyond coal to the broader chemical and petrochemical sectors. Telegraph projects just under 10% growth in tank car volumes, a figure that could face headwinds if Congress accelerates the existing DOT-111 tank car phase-out. Currently, the phaseout is mandated to end in 2029, but legislative pressure to speed up the timeline could remove a significant portion of the rolling stock precisely when demand is rising.
Harrell noted that the confluence of these two events is what the firm wanted to highlight in the report. U.S. manufacturers are gaining a comparative cost advantage due to natural gas input costs that have not risen in step with global crude benchmarks. This advantage is translating into new export freight flows, creating pressure on an already constrained rail network infrastructure.
For the average shipper moving hazardous materials, the tightening of supply could mean longer lead times and higher costs, particularly if the fleet of older tank cars is retired faster than the railroads can replace them. The infrastructure simply may not be able to handle the sudden influx of new intermodal and bulk shipments without significant investment in additional capacity.
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Intermodal growth faces capacity limits
Intermodal freight continues to drive volume growth, reaching all-time highs as shippers reconfigure supply chains. The spread between truck-to-intermodal pricing currently stands at 34%, incentivizing a shift from road to rail. However, Harrell expressed concern about the structural limits of the current network, questioning how much more volume the system can absorb before bottlenecks emerge.
The interview also touched on the long-standing debate regarding the truck driver shortage. Drawing on seven years of data from the MIT Center for Transportation Logistics, Correll argued that the U.S. does not face a true shortage of drivers but rather a problem of time utilization. He suggested that the time truck drivers spend waiting at pickup and delivery locations creates an artificial sense of scarcity.
“We don’t have a shortage of truck drivers,” Correll said. “We just waste so much time of the truck drivers we have that it feels like a shortage.” This perspective shifts the focus from recruiting new drivers to optimizing logistics operations to make better use of the existing workforce, a factor that could eventually ease pricing pressures in the trucking sector.
