Today, we’re thrilled to sit down with Rohit Laila, a veteran in the logistics industry with decades of experience spanning supply chain management and delivery systems. Rohit’s deep expertise and passion for technology and innovation in freight rail and intermodal logistics make him the perfect guide to unpack the current state of the industry. In this conversation, we dive into the health of rail carload and intermodal markets, the impact of service improvements, pricing challenges, and the potential effects of major mergers on the horizon. We also explore how technology and regulatory shifts are shaping the future of rail logistics.
How would you assess the current health of the rail carload market, and what’s driving its performance?
Well, the rail carload market is showing some resilience, with year-to-date volumes up around 3.7%. However, it’s a bit of a mixed bag. Commodities like coal and grain are the real engines right now—coal, in particular, has shifted from a drag to a significant tailwind due to increased domestic electricity demand and higher natural gas prices. Grain volumes are also up substantially. But when you strip out those bulk commodities, the growth in other areas is much weaker, closer to 1%. Consumer-related sectors like housing and autos are still lagging, and without a clear economic catalyst, we’re looking at modest growth in the near term.
What’s holding back stronger growth in carload volumes, especially in consumer-driven sectors?
A big factor is the broader economic softness. Industrial production has been declining for months, and sectors tied to consumer spending—think housing and autos—are feeling the pinch from high interest rates and uncertainty. There’s no strong driver to push volumes up right now. Plus, some of the bulk commodity gains we’ve seen are tied to temporary factors like currency shifts or pre-tariff shipping, which aren’t sustainable long-term. Until we see tariff relief or a shift in monetary policy, I expect these consumer areas to remain sluggish.
Turning to intermodal, how would you describe the balance between domestic and international volumes this year?
Intermodal is more balanced this year compared to recent times, with domestic and international volumes closer to a 50/50 split. That’s a shift back to normalcy for the rails. However, demand is tricky—domestic intermodal is under pressure from low truck spot rates, which are pulling loads off the rails as truckers compete aggressively on price. On the international side, volumes are up from last year, but with tariffs kicking in and pre-shipping trends slowing, there’s a sense that warehouses are full, which could dampen growth soon.
How are low truck rates impacting intermodal demand and pricing strategies?
Low truck rates are a real challenge for intermodal right now. They’re essentially capping what rails can charge because shippers have a cheaper alternative with trucking. This freight recession has kept intermodal pricing below levels that would justify the heavy capital investments needed for maintenance and growth. It’s a competitive disadvantage—truckers are stealing loads, especially on domestic routes, and until truck capacity tightens and rates rise, which might not happen until 2026, intermodal will struggle to regain momentum.
How have rail service levels evolved compared to last year, and what’s driving those changes?
Service levels are a bright spot for the industry. Year-to-date, they’re the strongest we’ve seen since before the pandemic. Western carriers like Union Pacific and BNSF have shown notable improvements in metrics like train speed and dwell time. Even in the East, where CSX has faced temporary declines due to infrastructure projects, shippers aren’t voicing major dissatisfaction. The focus on service as a growth driver, along with better fleet utilization, is paying off. It’s not perfect, but it’s a clear step forward.
What can shippers expect from rail service over the next couple of years?
I’m optimistic that service will continue to improve as railroads prioritize growth and apply new technologies like autonomous inspections. Projects at carriers like CSX should wrap up, smoothing out disruptions in the East. That said, unforeseen events—weather, labor issues, or even a major merger—could throw a wrench in things. A potential Union Pacific-Norfolk Southern merger, for instance, might pull focus and resources into integration, risking temporary congestion or IT hiccups, as we saw with CPKC. But overall, the trend is positive if railroads stay focused.
Do you think current rail pricing aligns with the investments carriers are making in infrastructure and growth?
It’s a split story. For carload commodities, pricing is generally holding up against rail inflation, and shippers seem to accept it as long as service keeps improving. Financially, railroads are in decent shape with solid operating incomes and strong cash flow. But intermodal pricing is a problem—it’s not covering the cost of capital investments due to the freight recession and competition from low truck rates. Until broader economic forces shift, intermodal pricing won’t generate the returns needed for sustained capex.
How would you characterize the relationship between rail carriers and shippers at this moment?
I’d say it’s the best it’s been in years, largely thanks to service improvements. Shippers are noticing better reliability and customer experience, though it varies by carrier and individual customer. There’s still a lingering wariness from past service failures, especially when growth picks up and strains capacity. And rail remains more complex to deal with than trucking. But overall, we’re in a better place, and continued focus on customer-centricity could solidify that trust—unless merger talks stir up uncertainty.
What role do you see technology and automation playing in the future of freight rail?
Technology is a game-changer, even if rail lags behind trucking in customer-facing tools. On the operations side, innovations like autonomous inspections and AI for crisis management are already boosting safety, efficiency, and decision-making. The recent openness from regulators to test these technologies is a breath of fresh air. But rail needs a supportive regulatory framework to keep pace with autonomous trucking, which poses a competitive threat down the line. We’re at the early stages, and the potential for tech to transform rail is huge if barriers are cleared.
What’s your forecast for the rail and intermodal markets over the next five years?
That’s a tough one because so much hinges on variables like economic cycles and mergers. If we see successful reshoring of manufacturing to the U.S., rail could see a 20-25% jump in domestic commodity movements. Intermodal growth could hit high single or low double digits if truck rates rise and service reliability holds. A transcontinental merger like Union Pacific-Norfolk Southern could accelerate growth by targeting new lanes, but it risks losing momentum if regulatory or integration challenges drag on. Without major catalysts, I still expect rail to outpace recent growth rates in a stronger economy, just not at blockbuster levels. It all depends on how railroads balance service, customer focus, and strategic moves.
