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12/12/2024
By Jeff Stagl, Managing Editor
How’s this for a promising forecast: The U.S. economy will continue to provide most of the thrust for global growth in 2025.
That’s what the International Monetary Fund (IMF) projected in its “World Economic Outlook” released in late October. The IMF raised its 2025 economic growth forecast for the United States.
With the new year closing in, that outlook is exactly the type of shot in the arm the rail industry needs after suffering a number of body blows throughout 2024. The punches included growing economic uncertainty, a highly uncertain and polarizing U.S. presidential election, contentious labor wranglings, flat consumer spending, multiple powerful hurricanes and other severe weather, and some frustrating regulatory and legislative developments.
Yet, the rail industry registered some growth in 2024 despite all the jabs. And industry leaders are hopeful there will be much more of it generated — and much less pain inflicted — in 2025.
For the Class Is, some important growth drivers next year figure to be intermodal services, industrial development projects and traffic generated with short-line partners. For BNSF Railway Co. President and CEO Katie Farmer, intermodal is one of the railroad’s biggest growth opportunities.
But the Class Is won’t be able to fully reach their volume potential if their operational performance isn’t up to snuff. Service has been improving for most throughout 2024, but still hasn’t reached the necessary difference-making level to win or divert a lot more traffic.
“Customers want consistency and reliable service. We need to listen,” said Union Pacific Railroad CEO Jim Vena on Nov. 15 at Progressive Railroading’s RailTrends® conference in New York City.
For transit agency leaders, the customers who demand attention are riders. Ridership patterns have changed greatly over the past several years because of the pandemic and other factors. To grow ridership and revenue, transit agencies need to roll more with the changes.
Metra for one has tried harder to do just that, and has grown ridership as a result. Passenger trips in 2024 are projected to climb 14% to 37 million compared with 2023’s mark.
“We have worked to adapt our schedules to the new norms by adding more off-peak and weekend trains and creating service patterns that are easier for riders to understand,” said Metra CEO and Executive Director Jim Derwinski in an email.
Meanwhile, railroad contractors are counting on both freight and passenger railroads to continue growing. Although many railroads are still finalizing their capital spending plans for next year, signs point to more opportunities ahead for contractors to partner with Class Is, short lines and transit agencies, said Ashley Wieland, the president of the National Railroad Construction & Maintenance Association, in an email.
“The railroad contracting business is concluding a strong year and we are bullish on continued growth in 2025,” she said.
Read the separate Outlook 2025 sections (on Class Is, transit agencies and railroad contractors), which in total include comments from 17 leaders in various sectors of the rail industry that help explain why hopes are high for a prosperous year.
Email questions or comments to jeff.stagl@tradepress.com.