Gone With The Freight

Telegraph’s first-ever Market Consist is here and Harris + David are pulling back the curtain on what the data really tells us about the state of freight rail.

From intermodal’s potential slowdown and Chicago hub velocity to the role of USMCA in protecting critical cross-border flows, they dig into where the industry stands and where it’s headed. Is the growth runway for intermodal as wide as many assume, or are capacity constraints closer than expected?

This inaugural report isn’t about saying “up a little here, down a little there.” It’s about actionable insights: what shippers can do, how to navigate tariff turbulence, and why even in a turbulent market, opportunities remain.

📈 Want to read the full Market Consist? Visit telegraph.io/insights.

Talk Track, hosted by Harris Ligon + David Correll of Telegraph™, is a spin-off series dedicated to timely rail industry news. From service shakeups to technology breakthroughs, each episode delivers a behind-the-scenes perspective on all the happenings shaping the future of freight rail. 

Harris + David will bring their decades of rail experience to help them parse through the latest industry headlines, evolving regulations, + the long-term forecasts for how railroads move freight across North America. Find us at telegraph.io/insights, Apple Podcasts, Spotify, or wherever you listen to your favorite podcasts. 

About Our Hosts

Harris Ligon is the co-founder + CEO of Telegraph. Prior to launching Telegraph, he spent nearly 15 years in surface transportation at Uber Freight, Norfolk Southern, + BNSF Railway. During this time, he led teams in operations, strategy, business development, + product development. 

David Correll is the Director of Freight Market Intelligence at Telegraph. He has spent two decades in transportation and logistics with the US Department of Transportation, the US Department of Energy, the Massachusetts Institute of Technology, and Clark University.

About Telegraph

Telegraph is a leader in delivering digital solutions to railroads, shippers, logistics service providers, terminals, + railcar leasing companies. With an integrated platform that prov...

Transcript

SPEAKER_00 0:02

I'm Cindy Tribe. And I'm Harris Liggan. You're listening to Don't Dwell On It, the podcast where we pause just long enough to figure out what's really moving Freight Rail forward. Let's get into it. David, great to see you again. How are uh how are things?

SPEAKER_01 0:21

Things are going well. Glad we got an opportunity to have this conversation again.

SPEAKER_00 0:25

Yeah, I'm I'm really looking forward to it. So, one of the things that has really impressed me about you is your ability to kind of take all of your broader knowledge and put it together and you know create some and curate some really interesting points on freight rail. You've got a market report coming out soon. And I I'm really excited to dive into that today. Um, maybe before we dive in, what are some interesting things about rail data that you've been surprised by compared to the other modes that you've worked with previously?

SPEAKER_01 1:01

Gosh, well, thank you for your kind words at the top. Uh uh, you know, rail is especially interesting in that there's such a variety of sectors moving on the rails and a variety of car types. And, you know, that makes the forecasting challenge a little bit more complex, but maybe a little bit more exciting then, in that, you know, things that we might see happening in one part of the country where one sector dominates don't necessarily apply to other parts of the country where other sectors and other car types dominate. And that's certainly different than, you know, the work I've done with ocean freights. And I think even different than trucking. Of course, trucking has different truck types, but you know, I found the rail sector to be a little bit more disparate in terms of commodity and car type relationships than other modes. So I was really excited to dig in.

SPEAKER_00 1:46

Yeah. So I think one of one of the one of the interesting things when when you and I got together and and were really kind of talking through a market update, we really wanted to, I think the division was we wanted to provide consumers of that information a nuanced but applicable view of the next three months that that were coming up. As as we were working through this process, um, we came across a lot of interesting, surprising things about what has been happening maybe in the past 12 months, three years, five years. And I and I I'm really interested to understand of all the surprises that that we came across, what were some of the the unique things that in this exploratory initial inaugural study that you've done, what are some what are some really interesting points that that they're really like you were excited about?

SPEAKER_01 2:36

Gosh, yeah, that's a great way to frame it up. And and it really is sort of the inaugural take for you know myself as a new team member in our team to go out with with a forecast. And and I guess one thing I want to highlight about the framing of that that you brought out is that in our first conversation, you know, I remember you made it very plain, like we want to say, what could readers of this do with this information? And so I really sat with that for a while and I I kind of meditated on that, if you will, while I took in other forecasts, because I want to be, you know, in line with what other great experts are, well, great experts are saying. Uh, and and I thought to myself, all right, the the mantra I had in my head was like, don't do a weather report. You know, don't just say things are up a little bit over here, they're down a little bit over here. We'll call you again tomorrow and tell you where they're at. Like, say, what action can you take given the forecast that we've made? So with that framing, I think what struck me the most, and and this is, I think we're not out of bounds with other uh takes on this uh future state here, is you know, a coming slowdown in intermodal volumes. And and I say that's surprising because the history up until you know when we started the forecast is intermodal is really on a growth trajectory.

SPEAKER_00 3:49

Oh, yes.

SPEAKER_01 3:49

And in the way that we've read the data and the way that other analysts have read the data, there's a lot of headwinds there that, you know, it was an interesting time to get on the ship right as it faced those headwinds.

SPEAKER_00 4:00

Right. So I thought one of the interesting things within the forecast is that when you did a kind of you were looking in the rearview mirror and looking to see what was happening in the backseat or maybe in the in the trunk or further down the highway that you had already passed. Um, you you marked that there were some, there were there were basically uh like a handful of high water marks that both carload and intermodal had experienced. And for me candidly, David, I I had to wrestle a little bit with that you kind of called the top on where intermodal had been and kind of said that from your perspective, you consider that to be the the maximum capacity of the system. And and the more that we've kind of dug into that, I'll I I'll be interested to hear the audience's take on whether we think that the the high water mark that you called, that way, we we're effectively operating somewhere between 90% to 91% of the capacity of the intermodal system actually holds water because I I think we are kind of looking around, wondering where the intermodal volume actually is, considering the tariff um infused environment that we are operating within.

SPEAKER_01 5:05

Oh, I'm I'm so glad you zoomed in on that point because that is probably the most provocative thesis in our report going out, and and I look forward to stress testing it, continuing to stress test it with readers of this report. We've been circulating it internally and at conferences. And yeah, the basic idea is how much more can intermodal grow? Well, that would be governed by the capacity of the intermodal network. And so then I said, all right, what's the capacity? Not a lot of great measures out there. No. So the approximation we took was all right, let's look at intermodal volumes over the last 20 years, see where the high water mark is, as you mentioned, and see how close we are to that. The high water mark for intermodal volumes hit shortly after the COVID-19 pandemic when everything ramped backed up, which is probably not a huge surprise to you know listeners of something like this. But what they might be surprised to know is that intermodal volumes have hovered at around 90% of that rate of that monthly volume ever since. And, you know, as as someone sort of trained in operations management and operations research, that's a red flag. You know, a system operating at over 80% of its estimated capacity is one where you would expect, you know, buildup of inventory and slowdown of processing rates. And so the maybe a provocative part of our thesis is, huh, you know, maybe that sort of explains some of the congestion experiences that that shippers tell us they suffer. And maybe the growth potential for intermodal is from my desk anyway, not as big as everyone else might think.

SPEAKER_00 6:33

So it's interesting that that you say that because I um am not an OR practitioner, but I tend to think about the intermodal capacity as being more than just how many boxes or trailers happen to be on the railroad at any given time. And I think the thing that you and I have wrestled with is that the capacity for the intermodal network more broadly, right? We're talking if it's an international shipment, vessels, ports, and yes, trucks and yes rails, but you've also got chassis, empty containers, terminal capacity at each each location. And so it's it's interesting because I think though the way that you and I are thinking about it within this report is that the the amount of volume that we are seeing on any given day running across the North American Rail Network is a proxy for that. But to your point, David, if we go much higher, do we begin to see the railroads not even getting close to their availability metrics that they've either put into a contract or publicly disclosed? And I don't, you know, it's copper season. You and I have both been out on the circuit. I haven't talked to a ton of shippers that have said, oh, absolutely, my intermodal service is uh is so much better than it was five years ago. I I have yet to hear that point.

SPEAKER_01 7:49

Exactly. And that's that's kind of precisely the rub. And I suppose at this point, and and this would be great fun of sort of getting in the ring with with many seasoned professionals who have their own takes on this. But you know, as we've pushed around, you know, this idea on the conference circuit, you know, we'd say, well, you know, why do you believe there's a long runway of intermodal capacity? And the answer back is usually, well, there are lots of boxes out there. And I think what you know what we look back on is like, maybe that's not the best measure. Maybe that is a convenient measure, but not an accurate one. And, you know, to give some grace to the people who came back with that response, this happens in in industries all the time. We know we need to measure something. We don't really have the exact measurement that we want. So we grab something that's pretty close because that's available and it's you know uh recordable. Number of boxes could be precisely that. I think we're sort of working towards a thesis that no, what governs intermodal capacity is not the number of available boxes. It's actually, you know, what's going on at the ramps, you know, where where these buildings I think is really the stress point in the system that that we're gonna look into as we you know proceed with successive iterations of this report. Because I think a reader would say, you know, okay, Telegraph, you know, maybe you've got me sold that we need a different measure of intermodal capacity. Give it to me. And I think that's where we need to go next.

SPEAKER_00 9:08

Agreed, agreed. I I mean, uh, you know, one of the one of the things I've always wondered about is um the majority of the ports in the terminals that are considered to be intermodals, whether that's a a uh a shore side depot or um uh you know a birth side vessel operating area, or it's just an inland terminal that's handling domestic Kutti 3s and 40s and 20s, I've often wondered about the staffing as a factor that goes into the processing time. So I think that that's something that I I'm actually really excited for us to uh to explore more. Um I kind of I kind of threw a fastball right out of the gate here. I I'm wondering, embedded in this uh in this report, what's something else that you're excited that you you would love readers to kind of walk away with or take away for from the report?

SPEAKER_01 9:52

Sure, you know, I think two things. One operational and another, you know, a bit more technical, but a technical challenge I hope they take back to their teams too. The the operational one is that if we are suggesting that there is an intermodal volume slowdown in this Q4, and we actually went into Q1 of 2026 as well compared to previous years, it's not just we're saying bad news. I think we're actually saying there's opportunity for shippers who have been thinking about experimenting with more intermodal rail service because you may have more optionality in uh a down market, if you will. And we think, you know, we've also forecasted in this report 12 times at the Chicago rail yard hubs, we think things are going to move faster through there. So there's there's opportunity in crisis. And I hope that you know, a reader who just scans the chart and says, oh wow, look, you know, day's chart goes down. But there's there's things, there's plays you can make when that's the lay of the land. And I hope, you know, readers um sit with those and you know, maybe make those plays and share with us their take on that. The second thing, and this is something I've been thinking about a lot, is when you're trying to forecast the future, particularly if you're doing it quantitatively, the way that we did, you always have to ask yourself is my training data truly representative of the future state? Classic example of this is, you know, when I was um previously at at MIT, you know, people would come to me, say in 2022, 2023, and say, Hey Dave, here's the last four years of sales data. Can you forecast our sales for the next four years? And I would say, Oh man, of course I can, if you think there's going to be another pandemic in the next four years, because that's the history of need to trade models on. And I bring that up in that, you know, we really had to wrestle with I have all this great historical data, but that did not exist at the time of trade war. And so we needed to come up with a way to say, all right, here's all of what the history tells us. How do we adjust that model to take into account essentially reductions in trade flows with our major trading partners? So we came up with the way that that you know we think is defensible to do it, and it's described in the report. And I hope readers will push back where they think that might not work, have worked out best, and and also more importantly, challenge their own assumptions and interrogate their own assumptions. Are we making our decisions based on a training set that is actually fit to task to predict a future state?

SPEAKER_00 12:05

Yeah, I I I think you you raise a really good point. Does the future, and when we say the future, let's just say arguably the next five years, does that look exactly like some of the crazy things that I don't think anybody would have put on their bingo card in the past five years? Probably not. It probably looks it probably looks follows a curve that looks much more like the 60s through the 90s, where we, yes, there were some absolute events, but that yeah, I I uh I I think you're you're making a good point, and I believe the audience will definitely take that in. One of the things I really appreciated about you working this in was the impact and likelihood. Well, actually, it's it's not the impact and likelihood, it's it's it's the USMCA, right? It's this trade agreement that we have gotten so accustomed to here in the United States and some of the near-shoring and cross-border activity. I'd love to hear your perspective about how does that play out into 2026 and and what is what's kind of your your your thesis of how you're kind of thinking that in? Because candidly, that is underpinning the the the the flow of that volume is underpinning a lot of models today.

SPEAKER_01 13:14

No, absolutely, and it was such a call out that we really, you know, I would say late in the game, if you will, I think said we need to up the importance of this in in this report. So so just you know, for listeners who may need a bit of context, you have the US-Mexico-Canada agreement that essentially creates a free trade zone between the three neighboring North American countries, similar to NAFTA, which which you know people may have heard of. The reason it's so important here is that a lot of the tariff talk that's made headlines in the news actually hasn't touched some of the important North American trade because it was protected under the USMCA agreement. Right. That's a lot of the stuff that's moving on these rails. MCA is up for a scheduled review mid-2026. If if you're following these headlines, you know, you've seen the relationship between those three leaders, you know, particularly, you know, Washington with the northern and southern neighbors, have good days and bad days. And so I think if that protection from the trade war is not renewed, we would see significantly reduced volumes across borders. And those are very important flows to rail networks. It's important as the bottom line there. Right. How did we deal with it? The way we chose to do it is to say, all right, I need the historical data because I need all of the seasonality, you know, what typically happens in the fall versus the spring. I need some sense of economic trend. But then we went through and looked at the pending timeline on USMCA, the pending timeline on just bilateral relationships between those countries and ratcheted down the quantitative forecast based on expectations of what would happen there. So it was sort of a way of saying, answering the question we just addressed, we have the history, but the history does not include the kind of stuff we're going to deal with going forward. So we need to amend it to make our best possible prediction.

SPEAKER_00 14:58

Bingo. All right. Last big question for you. You're uh you're consuming this this inaugural report for the first time. What is the one big takeaway you want the reader to have? I always enjoy asking the tough questions here.

SPEAKER_01 15:13

No, I did as an educator, uh, the longer the pause before the answer is really a direct measure of how good the question is. So that one got high marks. I hope that in this report and in future iterations, the shipper feels that they, the shipper reader feels that they do not need to be victims of a turbulent market. There are in fact way to see ways to see plays that they can make in any market. And I hope that the report helps them see them and make those plays.

SPEAKER_00 15:43

All right. Bonus question. Um, what is something you're really excited about for 2026 with infreight rail? Other than other than mergers, other than mergers. I'll go. I think I think the thing that I'm looking forward to um in in 2026 is actually the increased competitive nature. It feels like every railroad every week is trying to do something, and that more than anything, from a competitive standpoint, is something the industry has needed where people feel like they actually need to go out and win and earn their customers' business.

SPEAKER_01 16:18

I I've heard it said, like, railroad got religion. It's true. Praise. I I I think to me, what's most interesting, and and this is merger adjacent, and it's just that how will the argument be made that transcontinental railroads improve um competition. And outside of who the players are, the only way I think to successfully stage that argument is to attempt to reframe it. Railroads don't compete against each other, railroads compete with trucks. And if we have this interconnected network, then we are actually a new entrant into competition to serve shippers with trucks. To my mind, sort of America wrestling with that argument will be fascinating. So I'm very excited to hear, you know, how that plays out, both you know, what we know of what happens before the the STB, but also and I think all of the op-eds and sort of pieces that are going to be written by different players about whether or not they support the merger, watching them wrestle with the idea is it rail versus rail or rail versus truck in this thing, to my mind will be fascinating.

SPEAKER_00 17:28

Oh, great, great way to end it. I uh really appreciate this time. That is a that is a very good point, and I think something we will hear. The the definition of competition is going to be permanent throughout uh every TV and every newspaper article, and hopefully not every market report uh going forward. David, really excited about let's let's ship this thing out the door. Um, glad that we got to catch up and uh looking forward to continue the conversation. Thanks again.

SPEAKER_01 17:56

Likewise.