Rail Volume Up 2% to 6%, Intermodal Gains Drive Truck-to-Rail Shift

Why are railroads seeing volume growth now?

Four of the six Class 1 railroads reported volume gains in Q2 2026, with CSX up 6%, Norfolk Southern up 4%, Canadian National up 5% on a revenue-ton-mile basis (flat at 0.35% on carloads), and Union Pacific up 2%. Three of the four raised their financial or volume outlooks for the year. Intermodal led the gains: CSX intermodal rose 9%, Union Pacific domestic intermodal posted its fourth straight quarterly volume record with double-digit growth, and Norfolk Southern intermodal climbed 5%, driven in part by truck-to-rail conversions tied to high fuel prices.

The volume upturn comes as railroads compete more directly for truck freight. Union Pacific executives said they expect manufacturing gains to outpace overall industrial production, implying market share gains from truck. Norfolk Southern cited industrial activity and global energy prices as positives, along with truck market tightening. CSX pointed to data center construction as a driver of construction-related traffic. Norfolk Southern said new plant openings and expansions across its network are running at double last year's pace.

What's driving the intermodal shift?

High diesel prices are pushing shippers to rail. Norfolk Southern executives said they are seeing strong truck-to-rail conversions amid fuel costs that hit owner-operators and small fleets hardest. Union Pacific's domestic intermodal volume set a fourth consecutive quarterly record, with double-digit growth. CSX intermodal was up 9%.

Canadian National lagged its American peers on domestic intermodal. CN Chief Commercial Officer Janet Drysdale said on the railroad's earnings call that truck capacity in Canada is not as tight as in the U.S., explaining the weaker performance. CN flagged tariff uncertainty, forest products weakness tied to slow U.S. housing starts, and strength in petroleum, chemicals, and grain as the key variables shaping its outlook.

How coal results split by railroad

Coal results diverged sharply. Norfolk Southern coal was up significantly on exports of metallurgical coal. Union Pacific coal fell due to high utility stockpiles and low natural gas prices. Union Pacific's business is predominantly utility coal, which faces headwinds when stockpiles are high and natural gas remains cheap. Norfolk Southern's export-driven met coal traffic moved in the opposite direction.

What the CN-Union Pacific deal means for cross-border freight

Canadian National Railway will not oppose the proposed Norfolk Southern-Union Pacific merger after reaching two separate agreements with Union Pacific, one tied directly to the merger and one that stands on its own, rail analyst Bill Stevens said. The deal that is independent of the merger grants CN haulage rights over Union Pacific's tracks between Memphis and the Mexican border crossing at Eagle Pass, Texas, covering traffic moving between Canadian origins or destinations and Mexico.

The arrangement gives CN a faster, more direct route to compete against CPKC, which already offers single-line service across Canada, the U.S., and Mexico. Currently, CN hands traffic to Union Pacific in Chicago, resulting in a shorter length of haul. In exchange, Union Pacific gains rights to use CN's Chicago bypass (the EJ&E corridor acquired in 2009) to avoid the city's notoriously congested rail network.

The merger-contingent piece grants CN trackage rights over Union Pacific through Missouri, running two parallel routes across the state. CN gains access to the Kansas City market for the first time operating its own trains and gets the use of Union Pacific's underutilized Neff Yard in Kansas City. The arrangement addresses competitive concerns for roughly five shippers whose railroad options would drop from two to one under a NS-UP combination, and approximately two dozen shippers (mostly in the St. Louis area) who would go from three options to two.

"CN said, hey, this solves our competitive concerns about the merger. We get growth opportunities out of it, and as a result, we will not oppose the merger," Stevens said.

What happens next on the NS-UP merger

The Surface Transportation Board is set to receive a supplemental merger filing from Norfolk Southern and Union Pacific on Monday, ahead of a Future of Rail Symposium in Chattanooga on Tuesday where both railroads' CEOs are scheduled to appear. CPKC reports earnings Wednesday. BNSF will report alongside parent Berkshire Hathaway next month.

What small fleets should watch

Rail volume growth of 2% to 6% signals tightening truck capacity in the quarters ahead. When railroads pull double-digit intermodal gains and cite truck-to-rail conversions, that's freight leaving the highway. For small fleets, the question is whether the shift sticks. High fuel prices are the immediate driver, but if railroads continue to add capacity and service options (like CN's new Mexico route), the competitive pressure on truckload rates intensifies. Watch for whether intermodal growth holds when diesel prices moderate. If it does, the rail shift is structural, not cyclical, and truckload spot rates will face a longer headwind.