Surface Transportation 2025 Annual Review & Outlook
Executive Commentary
ABH Consulting
Anthony B Hatch
Rail / Intermodal Analyst NYC
My hope for the North American freight rail industry is for 2025 to be a lot less exciting than the past few years . Consider since 2022 the rails were held up as major players in the “ Supply Chain Crisis ”; held very public national labor negotiations , regularly scheduled but very contentious ( and an actual strike in Canada , not to mention the effects of labor situations at the docks ); endured the East Palestine derailment and its very public fallout . The rails ’ reputation cratered as they were considered inept , greedy and dangerous . To top it off , Norfolk Southern endured a vicious activist attack / proxy fight that if lost would have had huge negative implications for all of the rails – indeed all freight stakeholders .
Canadian National ( CN )
Derek Taylor
Executive Vice President and Chief Field Operations Officer www . cn . ca
At CN , we are committed to powering the economy by supporting global and North American supply chains through efficient rail transportation . We are focused on creating growth opportunities with our customers .
As we look to 2025 , monitoring supply chain labor issues and mitigating any potential impacts will remain a priority , as will navigating proposed regulatory changes in surface transportation . Although most proposed regulations , such as restricting the length of trains , aim to address safety concerns , they could , in fact , have the unintended consequences of hindering rail safety , efficiency and the economy .
We believe it ’ s possible to deliver for our customers without compromising safety . This mindset has enabled CN to operate trains , no matter the length , safely across the US and Canada while simultaneously improving safety , efficiency and resiliency across
What has been the rail industry ’ s response ? It was perhaps not as swift as could be hoped , but it was and is sustained :
Service levels have been restored with the hiring & training of crews
Major efforts have been made to restore stability on the labor front and three-fourths of the major US rails have signed perhaps half of their employees to new contracts – ahead of the next round of labor negotiations that began in November .
NS paid a lot of money to “ make things right ” in East Palestine and headed off the most extreme reactionary efforts to over-regulate
Defeated the activist funds , for now ….
So , for 2025 ? It ’ s time for the arrival of the “ pivot to growth ” first called for in 2020 , before the pandemic . Skepticism is natural , short -term margin-focused investors ( the “ Cult of the OR ”) remain .
Most importantly , the lengthy freight recession also remains . This causes unneeded tension and a race between the rising tide and the impatient Cult . Who will win ? It ’ s critical for all stakeholders to keep the barbarians at the gate ….
Association of American Railroads ( AAR )
Ian Jefferies
President and CEO www . aar . org
Intermodal presents a clear growth opportunity . Railroads can grow market share by capturing more truck traffic in intermediate mileage bands . Greater reliability and visibility will empower railroads to win this business , reducing emissions and infrastructure damage in the process .
As it stands today , however , railroads operate at a competitive deficit . While trucks are the largest customer of railroads and certainly pay taxes , they are also the biggest competitor for railroads and fail to cover the cost they impose on the highway system . This creates an unequal playing field and yields subsidies that distort freight markets .
“ When roads are underpriced , for example , more freight traffic moves by
our network . Continued investment in advanced technologies , including automated safety systems that proactively scan our equipment and infrastructure , help us detect and correct issues before they become bigger problems . Coupled with extensive training at state-ofthe-art facilities , our railroaders are equipped to operate trains of all lengths safely and effectively .
CN ’ s scheduled operating model , implemented over 30 months ago , has proven to be most effective in enhancing our network ’ s agility , velocity and resilience while supporting strong customer service levels . That ’ s why this model dictates how we build the plan , run the plan and sell the plan . Sometimes that means running longer trains to help our customers move more goods safely and cost-effectively . Limiting train length would necessitate running more trains to move the same volume of freight , adding additional train starts and increasing customer delays and commuter delays at rail crossings . Rather than imposing restrictive limits , let ’ s find solutions that prioritize both safety and efficiency — benefiting businesses , communities and the environment together .
“ It ’ s time for the arrival of the ‘ pivot to growth ’ first called for in 2020 , before the pandemic .”
Anthony B Hatch
“ Trucking capacity is often strained , and highway congestion is here to stay . Railroads can alleviate these challenges and grow in the process .”
Ian Jefferies
“ Limiting train length would necessitate running more trains to move the same volume of freight , adding additional train starts and increasing customer delays and commuter delays at rail crossings .”
Derek Taylor
74 Journal of Commerce | January 6 , 2025 www . joc . com