As the rail industry turns the calendar to 2026, the signals coming out of 2025 provide important context for what lies ahead. In the latest episode of FTR’s Rail and Intermodal Update, Senior Analyst Joseph Towers steps back from the week-to-week noise to assess full-year rail traffic performance, evaluate the evolving Union Pacific–Norfolk Southern merger process, and examine a potentially consequential regulatory shift from the Surface Transportation Board (STB). Taken together, these developments help frame expectations for rail demand, competition, and policy risk in the year ahead.
FTR will be on-site at the Midwest Association of Rail Shippers Winter Meeting in Chicago, January 13–15, where Joseph Towers and Derek Young will be available for industry discussions, client meetings, and strategic conversations about the freight outlook.
At the headline level, North American rail traffic finished 2025 essentially flat, rising just 0.3% year over year. Beneath that modest aggregate figure, however, were meaningful divergences by commodity group—highlighting how uneven the operating environment remains.
Grains emerged as the strongest growth driver in 2025, supported primarily by corn shipments tied to ethanol production and animal feed demand. Coal also posted year-over-year gains, though that increase largely reflected easier comparisons against historically weak 2024 volumes rather than a structural improvement in coal demand. Chemicals and non-metallic minerals rounded out the list of modest gainers, with sulfur products playing an outsized role within the latter category.
On the other side of the ledger, industrial commodities struggled. Metals and forest products recorded some of the steepest declines, pressured by high interest rates, tariff-related uncertainty, and weak industrial activity. Motor vehicles also finished the year lower, though the relatively modest decline was notable given the extent of tariff headwinds facing the sector.
The takeaway from 2025 is not one of collapse, but rather stagnation. The industry appears to have moved into a trough—one defined more by sideways movement than by a sharp recovery or further deterioration.
Beyond traffic trends, the episode also addressed the latest developments in the proposed Union Pacific–Norfolk Southern merger. With the formal application now submitted to the STB, attention turns to process and timing.
The Board’s initial step—determining whether the application is complete—will set the stage for a lengthy review process that could extend into late 2026 or beyond. While Union Pacific and Norfolk Southern have highlighted potential benefits such as truck-to-rail diversion and network efficiency, industry opposition remains strong, particularly around competition and service reliability concerns.
For rail customers and investors alike, the key message is patience. Regardless of one’s view on the merits of the merger, the regulatory path forward is likely to be measured, procedural, and highly scrutinized.
The final topic covered in the episode also involves the STB and focuses on their initiative to reduce the regulatory burdens faced by rail shippers. The STB has proposed eliminating Part 1144 of its regulations, which currently requires shippers to demonstrate anti-competitive conduct to obtain reciprocal switching access.
If adopted, this change would lower the threshold for shippers seeking competitive rail access and move the Board’s approach closer to what it views as the original intent of the Staggers Act. The proposal follows years of debate, including the failed EP 711 rulemaking, and aligns with broader federal efforts to reduce regulatory barriers.
While still in the proposal stage, this development bears close watching. Easier access to reciprocal switching could alter competitive dynamics in certain corridors and introduce new considerations for railroads and shippers alike.
The overarching message from this episode is one of cautious realism. Rail markets are not collapsing, but they are also not poised for a robust rebound. Instead, 2026 appears likely to be another year defined by uneven demand, lingering policy uncertainty, and incremental—not transformative—change.
For industry participants, the value lies in understanding where the pressures and opportunities are emerging, rather than reacting to short-term volatility. As weekly data accumulates and regulatory processes advance, FTR will continue to provide context and clarity on what matters most for rail and intermodal decision-makers.
For deeper analysis and ongoing updates, listen to the full episode of FTR’s Rail and Intermodal Update or contact Joseph Towers directly at jtowers@ftrintel.com.