Here, we look at weekly operating data through Jan. 10. U.S. West Coast container imports were strong last year, particularly in the second half, driven initially by diversions from the East Coast and Canada due to highly telegraphed strikes at East Coast ports and the two Canadian railroads, CN and CPKC. Late 2024 loads also caught a tailwind from anticipated incoming Administration tariffs and importers desire to beat them, and we expect this tailwind to continue until the scope and scale of tariffs are known.
One of the things we like to do is sit around and think what could possibly go wrong (born out of painful experience), and there was clearly a scenario where January intermodal loads would come in higher than the railroads anticipated, and possibly resourced for, and then run into some ugly January weather, hitting network efficiency. Let’s look at both pieces.
1. Western Load Strength
If we look at the two U.S. western railroads, BNSF and Union Pacific, you can see the tariff tailwind still very much present in the weekly loading data in early January. Here’s Union Pacific, showing total intermodal loads during each week in January over the past 10 years. The red column on the far right is 2025, with loads in the week ending Jan. 4 the highest in the company’s history, at 61,662.
Moving to the next set of columns, for the week ending January 11, it’s the second-best Week 2 in Union Pacific history, with 77,126 loads. Putting the two weeks together results in loads that are 21% higher than the trailing three-year average.
Here’s the same chart for BNSF, with loads in Week 1, straddling New Year’s, the second strongest in company history, and Week 2 loadings the third strongest. Added together, BNSF intermodal loads start the year 17% above the trailing three-year average.
Incidentally, we visited with Union Pacific operations management in December and discussed the risk that January loads will likely be atypically strong, and were assured a resourcing plan exists and is ready to go for such an eventuality. Presumably, BNSF is the same.
2. January Weather
Higher than expected January loads are only a problem if combined with a big weather hit, and many will know we segment winter into three buckets: 1) normal winter conditions; 2) arctic blasts; and 3) polar vortexes.
That last one is the killer and represents the single biggest risk to network operations due to the need to shorten trains as air brake pressure cannot be maintained in extreme cold, plus a higher incidence of brittle, broken rails. We therefore weren’t thrilled when we looked at the Washington Post and saw this: Here’s the updated chart that went along with it:
It might not be as bad as it looks. The 2014 polar vortex was so devastating because it hung around and hit the railroads with three temperature troughs over several weeks. If it’s one-and- -done in January 2025, the networks can absorb that.
In terms of current forecasts, the cold arctic air is expected to move in over the weekend, peak on late Monday into Tuesday, and then temperatures are expected to return to winter norms by Thursday. If we look at a couple of key rail nodes, Chicago temperature forecasts only reach daily highs of 8 and 5 degrees on Tuesday and Wednesday, respectively, while the numbers for Kansas City are 15 and 19 degrees.
We may only be talking about two really brutal days here, which is easy to type sitting in a heated office sucking on a cappuccino. Imagine being out in this running trains in the upper Midwest or Canada.
Wrap Up
Admittedly we’re highlighting low probability tail risk here, and likely the rail networks will be OK, particularly as they go into peak winter adequately resourced and with good fluidity. Still worth keeping an eye on …
