Rail volumes surge as truck costs spike, merger jitters grow
The gist
U.S. rail volumes are surging as soaring diesel costs and a trucking squeeze shift freight off highways—just as rail’s biggest merger in decades throws shippers into a fresh panic.
What to know
- Rail traffic jumped 7.2% in October 2026, with intermodal up 10.4% year over year, marking the broadest surge since the pandemic.
- Truck-to-rail price gaps have ballooned to 34% as diesel hits $6.37/gallon, pushing shippers to abandon costly highway moves.
- The proposed $85B Union Pacific–Norfolk Southern merger has shippers bracing for 'higher rates, less reliable service'—with UP’s CEO calling approval a '99.99%' certainty.
Rail Recovery Hits Full Speed
October’s surge wasn’t just a spike—nearly every major category of rail freight saw gains, signaling a structural shift as western and eastern carriers both posted standout growth.
October 2026 is the moment the rail rebound became unmistakable because the gains were broad, fast, and visible across both major traffic buckets. FreightWaves, citing Association of American Railroads data relayed by Bill Stephens, reported that in week 40 U.S. intermodal rail traffic jumped 10.4% year over year while domestic carload volume rose 3.4%, lifting total U.S. rail traffic 7.2% versus the same week in 2025; a separate early-October report showed intermodal volume up 10% year over year to 302,252 units in the week ending Oct. 10, confirming the surge was already underway. The day before that weekly data, AAR’s September and third-quarter Rail Industry Overview had already underscored the breadth of the recovery, finding that 17 of 20 carload categories posted year-over-year gains in September.
The breadth of the move helps explain why October felt like an inflection point rather than a one-off spike, and why merger politics heated up alongside it. North American traffic also advanced, with carloads up 2.6% and intermodal up 9.1% for a 5.9% combined gain, while western carriers led the intermodal jump—BNSF up 12.5% and Union Pacific up 19.4%, which Stephens tied to “record container volumes moving through the ports of Los Angeles and Long Beach”—and eastern lines still posted solid gains, with CSX up 8.9% and Norfolk Southern up 5.4%, even as parties filed to participate in the Surface Transportation Board’s merger review.
Shippers Flee Costly Highways
As diesel prices and contract rates soar, shippers are abandoning trucks for rail at record rates, with intermodal containers up 10% and the truck-rail price gap at an unprecedented 34%.
The freight shift is showing up not as a vague preference for rail but as a direct substitution away from highway moves when trucking becomes too expensive or hard to secure. Analysis said, “Interotal is picking up its share… Domestic truckload volumes across the interotal, these are domestic containers are up 10% year-over-year… So the railroads are picking up a predominance amount of the share,” while the same discussion pointed to broader momentum in rail traffic with “We’re up 4.4%,” underscoring that freight that would normally ride trucks is instead landing on rail networks.
That diversion is being driven by economics: analysts said they track “the delta between truck and rail prices, intermoal prices” and put the gap at “34% as of this morning,” adding that it “feels as if that’s one of the primary reasons” trucking freight has slowed. The pressure is intensified because “Diesel is up 72% year-over-year and contract rates are up 18% year-over-year, but costs are eating those increases in those contract rates,” helping explain why “Our loaded o rail index for 53 ft containers is up 10% year-over-year” even as shippers remain alert to whether rail service and pricing will hold up.
Regulations Squeeze Trucking Supply
Federal crackdowns and stricter enforcement have slashed available trucks and drivers, forcing carriers to turn down freight and prioritize only the most profitable loads.
Trucking tightened first because enforcement actions shrank the usable supply of trucks and drivers across several lanes and operating models. In the September 13 YouTube discussion, the speaker said authorities were “cracking down on every single truck,” including cabotage, Mexican cross-border truckers, CDL schools, and allegedly fraudulent carriers under federal investigation, describing “a very different world… because there’s just so much going on,” with cross-border stress showing up as “tender rejections are now moving back up… We’re back above 10% Larredo.”
The squeeze then intensified because carriers did not simply haul everything available; they became choosier about what freight they would accept. The same discussion cited “Tinder rejection rates 10 12 13% in the drive van sector” and said “Harriers are repricing their business” as they “prioritize better paying customers and better operational customers,” with one carrier that “made a commitment for like… 100 loads a week” now “only taking 50 because they know they can get it from either other parts of their mix or spot.”
Diesel Spikes Hit Freight Bills
Soaring diesel costs are instantly inflating shipping surcharges, pushing carrier margins lower and ratcheting up costs for every load moved by truck or rail.
Diesel has become a central cost shock in freight, with September commentary on YouTube warning that “the average retail price of diesel [is] up… getting close to $6 a gallon” and calling it “definitely… something to watch.” By late October, that pressure had intensified into a near five-year high: “When you look at DTS, you can see that we're at a near 5-year high… About two weeks ago, we were at the high,” with diesel averaging $6.37 a gallon in October versus $3.70 a year earlier, a 72% increase and up 27% since July.
That inflation is not staying abstract on energy charts; it is moving directly into freight bills through fuel surcharge formulas tied to diesel benchmarks. YouTube analysis explained that the DOE-style retail diesel figure is reported weekly and then “normally gets implemented on Tuesdays for a lot of the fuel search charges that the shipping community pays,” while another warning was even blunter: “You're going to pay more this week in fuel search charges and you're probably going to pay more next week,” a pass-through that raises shipper costs even as carriers face weaker margins from fuel, recruiting, onboarding, and other operating pressures.
Merger Fears Roil Rail Customers
Shippers are bracing for a new era of uncertainty and higher costs as the Union Pacific–Norfolk Southern merger appears all but inevitable, sparking widespread anxiety over competition and service.
Merger talk is no longer abstract for rail customers; it is being absorbed as a live planning risk. DC Velocity described shippers and intermodal rail operators as heading into “uncharted territory” as the prospect of a mega-merger looms, and that uncertainty sharpened when Fox Business ran the headline, “Union Pacific CEO Jim Vena Says 99.99% Chance $85 B UP-NS Merger Will Win STB Approval,” signaling to customers that they may soon have to operate under a radically altered competitive map rather than merely debate a hypothetical transaction.
What makes that anxiety potent is not just the scale of the deal, but the specific harms opponents say could follow approval: weaker competition, higher rates, and shakier service. FreightWaves captured those fears directly with the warning “Higher rates, less reliable service” from family farmers opposing the merger, and then again with a report that the UP-NS combination was sparking customer anxiety over service and car usage, while UP CEO Jim Vena stated there is a “99.99% chance” the “$85 B UP-NS Merger” will “win STB approval,” raising the stakes for every shipper dependent on rail access.
