Our quarterly "North American Class I Freight Rail Performance" report provides comparative operating and financial metrics for the continent's seven largest railroads: BNSF Railway (BNSF), Canadian National Railway (CN), Canadian Pacific Kansas City Ltd. (CPKC), CSX Transportation (CSX), Ferromex (FXE), Norfolk Southern Railway (NS), and Union Pacific Railroad (UP). All comparisons are for the current reporting quarter to the year-ago quarter (Q2 2025 to Q2 2024) unless otherwise stated.
Railroads outperform trucking in Q2
Railroads had a good Q2 2025, at least compared to the trucking industry. In an uncertain economy, trucking has been mired in something of a freight recession: Class I carloads increased by 1.7% in Q2 2025 year-over-year, but truck tonnage was roughly flat.
Railroads have been able to drive better results due to increases in traffic types that are not very truck competitive. Modestly higher rail revenues compared to Q2 2024 were largely due to strong bulk traffic (primarily coal and grain). International intermodal traffic (imports/exports) was up significantly from its low in 2023.
Looking over the past three years, railroad revenues have been relatively static, but five of the seven Class I carriers reported their highest Q2 revenues in the past three years (the exceptions being CN and CSX). Similarly, compared to the past three years, the industry reported record Q2 operating income (except for CSX and FXE).
Intermodal and carload unit volumes see Q2 growth
Railroad unit volumes showed growth for all railroads except CN and FXE. The top two volume growth railroads for the quarter compared to a year ago were CPKC and UP. This volume growth was somewhat offset by declining revenue per unit. This was due to a number of factors, including traffic mix (intermodal generates lower revenue per unit) and declining fuel surcharge revenue (due to a year-over-year decline in diesel prices).
Both intermodal and carload units were generally higher for most railroads. Most intermodal volume growth since 2023 has been international rather than domestic, and international has surpassed domestic intermodal in terms of rail intermodal unit share.
On the carload side, volumes excluding coal were a mixed bag, with only NS and UP showing an increase in non-coal carload traffic. Growth in coal carloadings for the quarter was driven by strong electricity demand and higher natural gas prices due to growing natural gas exports.
Another measure of volume growth is revenue ton-miles (RTM). Here CPKC and UP led for Q2, but RTMs for other carriers were flat or down slightly. Revenue per RTM was more modest, with FXE, NS, and BNSF showing increases. Fuel surcharge declines created a headwind, as did coal traffic growth: Coal generates decent revenue per car, but carloads are heavy, and so revenue per RTM tends to be lower than for other commodities.
Railroad operating margins improve industry-wide
On the industry’s most watched metric, operating ratio (OR), all carriers except CSX showed improvement year-over-year, although CSX saw strong improvement compared to the prior quarter. Overall, Class I railroads are converging on ORs in the 60-65% range.
Most railroads’ OR benefitted from cost per RTM reductions, which more than offset any decline in revenue per RTM. The exceptions were NS and FXE, which reported higher revenue per RTM, offsetting cost per RTM increases. Only BNSF managed to both reduce cost and grow revenue per RTM, which resulted in the largest improvement year-over-year in OR among the railroads.
Most of the industry, except CSX and FXE, reported a reduction in headcount. This resulted in higher productivity as measured by RTMs per employee.
Railroads boost cash flow but ROIC and stock prices stall
Year-to-date capital expenditures increased at CSX, CPKC, and UP, with the other railroads posting reduced capex so far in 2025. All of the railroads increased cash flow, except CSX (which had the largest increase in capex) and FXE.
Overall return on invested capital (ROIC), however, has been mixed. UP led the industry for the quarter with an ROIC of 14.3%. CN moved down to second place, with ROIC dropping from 14.1% in Q2 2024 to 11.1% in Q2 2025. Overall, industry ROIC hovered around 11% for the quarter.
Railroad stock prices started to diverge from the S&P 500 in Q1 2024 and continue to do so. Since mid-year 2022, the public railroads have generally managed only low double-digit increases in their stock prices, while the S&P 500 has jumped by more than 60%.
Railroads show mixed service gains and safety progress
A quick look at service performance shows improvements in both dwell time and train velocity for the western carriers, mixed results at NS, and declines in both metrics for the Canadian railroads and CSX. Safety metrics continue to improve for the industry year-over-year, continuing a long-term trend.
Economic and structural uncertainties lie ahead for the rail industry
Although rail performed well for the quarter compared to trucking, broader industry metrics have yet to show a convincing trend of rail gaining market share. Coal may continue to provide a tailwind, but international intermodal traffic growth is at greater risk from tariffs that were reinstated this August.
The headline news that has dominated this earnings season, however, is the transcontinental merger announcement. Will this pave the way for US coast-to-coast single-line railroads, echoing the model Canada has depended on for more than 100 years?
