From the Editor: Tariffs and the 'trade storm' — the impact (so far) for rail

Evidence the tariffs and trade war are impacting — or soon will impact — the North American rail realm began to surface last month, and Class I leaders answered questions from analysts about said impact during first-quarter earnings conferences. Here’s a sampling of their responses:

“We see the same macro headlines you all see, the risk of lower GDP, heightened recession concerns. We are not immune to those same pressures, but we are staying in contact with our customers. There’s just been no clear sign from our customers that they’re concerned. And we’re not seeing it in the numbers yet. So, we’ll see how things play out. But we’ve got to be realistic.”
— Norfolk Southern Railway President and CEO Mark George on April 23

“We anticipate a slowdown in international intermodal as we move through the second quarter. And we expect decreased volume in the second half of the year due to the higher comparisons as customers diversify back to East Coast and Canadian ports. However, we remain optimistic about growth in domestic intermodal driven by our over-the-road conversions because of our strong service product and multiple channels to win. We are keeping a watchful eye on the market and potential tariff changes that could further impact overall consumer spending.” — Union Pacific Railroad EVP of Marketing and Sales Kenny Rocker on April 24

“The uncertainty that’s created by these shifting trade policies ... is also accelerating opportunities that we always eventually felt would develop when we combined these two companies. We stepped into this trade storm that we’re facing to become market makers. We’re seeing opportunities with new trade flows between Canada and Mexico. We’ve got increased refined fuels, LPGs, plastics and grains that our customers in Canada are sending south as they look to diversify their end markets. So, if we lose here, we’re going to gain there, and it’s our job to go out and convert those opportunities.” — Canadian Pacific Kansas City President and CEO Keith Creel on April 30

‘Precipitous’ May volume drop at LA port

Meanwhile, during the April 29 edition of CNBC’s “Squawk Box,” Port of Los Angeles Executive Director Gene Saroka said he expected the port’s incoming volume the week beginning May 5 to drop by more than 35% compared with the same 2024 period.

“It’s a precipitous drop in volume, with a number of major American retailers stopping all shipments from China based on the tariffs,” Seroka said. “Realistically speaking, until some accord or framework can be reached with China, the volume coming out of there — save a couple of different commodities — will be very light at best.”

How has the tariff and trade uncertainty — and now, certainty — impacted your business? How are you adjusting accordingly? I’ll ask stakeholders those questions at a couple of industry events this month, including Railway Interchange in Indianapolis (May 20-22). Hope to talk with you there.