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In the first quarter, total U.S. rail volumes increased 6 percent, which reflects slower traffic growth compared with the fourth quarter’s 10 percent year-over-year gain, “but remains above typical carload growth rates,” according to Robert W. Baird & Co. Inc.’s “Domestic Truck, Intermodal and Rail Trends” report for April.

“Healthy rail volume growth continues to reflect secular intermodal mode conversion, as well as strength in automotive, chemical and industrial end markets, offset by weak agricultural growth due to tough prior-year comparisons,” Baird analysts said in the report. “Looking forward, we expect secular intermodal growth, improved coal demand (largely export related), and continued industrial end-market recovery to drive volume growth in excess of GDP growth.”

U.S. railroads’ chemical volumes remain above seasonal levels, but slowed notably in 2011’s 14th week after an “abnormally strong” 13th week.

“That said, we remain encouraged as volumes continue to reflect solid year-over-year growth and above average seasonal trends compared to fourth-quarter volume,” Baird analysts said.

The report also states that the coal outlook remains positive despite recent slower volume growth.

“Broadly, railroad coal commentary remains optimistic regarding export and utility demand as global economic recovery continues,” Baird analysts said. “Notably, recent CSX coal volumes remain depressed with negative volume growth the past seven weeks, likely a function of domestic utility coal.”

Meanwhile, U.S. railroads’ intermodal growth continues, particularly in the East, the report states. West Coast traffic was weak in the first quarter, reflecting slower international moves, Baird analysts said.

“Intermodal volumes have generally trended higher the past few weeks, which we view potentially as a sign of international growth,” they said.