Tracking trade
The amount of freight that railroads carry might signal how President Donald Trump’s new steel and aluminum tariffs are affecting international trade because much of what the railroads deliver is imported.
The Association of American Railroads estimates that at least 42 percent of railroad traffic and more than one-third of its revenue is directly tied to international trade.
That includes the metal shipping containers that arrive at ports by boat before being loaded onto railroads or trucks for delivery. And part of nearly every commodity railroads carry includes some imports, such as metals, cars and other goods.
The variety of goods that railroads deliver mean that the industry can serve as something of a barometer for international trade and the economy.
“Trade plays a critical role not just in the freight rail industry, but the economy as a whole,” said Ed Hamberger, president and CEO of the AAR trade group. “While industry supports modernizing trade pacts, including NAFTA, wholesale change and stepping away from the global stage would put the U.S. economy in peril.”
So railroads are closely watching the tariffs and the ongoing negotiations on the North American Free Trade Agreement, but Union Pacific CEO Lance Fritz said it’s too early to determine what effect those will have on rail traffic.
“We do not think the tariff approach will be good for the US economy in the long term. In an increasingly competitive global trade market, the US needs to strengthen its trade partnerships to help US companies compete where 95 percent of the world’s population is, which is outside the US,” Fritz said.