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 (Q3 2025 to Q3 2024) unless otherwise stated.
Note: Our normal quarterly analysis was slightly disrupted by the October 1 to November 12 US federal government shutdown, which impacted Federal Railroad Administration and Surface Transportation Board data. We will update the Q3 report when this data becomes available (safety data and some BNSF numbers).
Railroads see solid performance in Q3 2025
Overall, the railroads had another solid quarter financially in terms of revenue growth; they were able to drive better results due to growth in international intermodal traffic and continuing strength in a number of bulk commodity areas.
Revenue per unit was more mixed, but only CN and CSX had lower average revenue per unit, which could be due to several 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). The railroads also continue to squeeze out costs, and despite a weak pricing environment, have kept costs down more than any decreases in revenue per revenue ton-mile.
Over the past three years, railroad revenues have been fairly static, but six of the seven Class I's reported their highest Q3 revenues for the period (the exception being CSX). Similarly, compared to the past three years, the western and Canadian carriers all reported record operating income in Q3. NS had a large increase in operating income in Q3 2024 due to insurance payouts for East Palestine. Over the past two years, only CSX and FXE have not reported increasing operating income.
Rail intermodal grows, revenue ton-miles increase
Railroad unit volumes showed growth for all railroads except UP and FXE, although this growth was generally in the low single digits; the exception being the Canadian carriers, which benefited in the comparison due to a labor work stoppage in August 2024.
Carload traffic was up about 2.1% and intermodal up around 3.5% over Q3 2024 levels. Only UP and NS experienced a decline in intermodal. (NS attributed this decline to traffic shifts after the merger announcement). Most intermodal volume growth since 2023 has been international traffic and the domestic intermodal (and trucking markets) remain fairly weak.
On the carload side, volumes excluding coal were a mixed bag, with NS and UP showing a solid increase in non-coal carload traffic. Growth in coal carloadings for the quarter were also mixed: International export coal traffic via the East Coast was down, impacting both CSX and NS, while export coal from Canada via the West Coast to Asia was up significantly. UP showed robust growth in domestic coal traffic, while BNSF showed a modest decline.
All carriers showed an increase in revenue ton-miles, with FXE outpacing the rest at 12.4%. Revenue per RTM, however, showed a decline for Q3 for all carriers except CN. This could be a result of traffic mix changes and fuel surcharge declines.
Railroad operating margins improve industry-wide
The industry’s most watched metric, operating ratio (OR), showed improvement year-over-year for all carriers except CSX and FXE. UP is still the consistent industry leader on operating margin. Four of the seven railroads reported adjustments to OR due to various write-offs of goodwill and merger expenses in Q3.
The only railroad that both grew revenue and reduced cost per RTM was CN. CSX had both metrics move unfavorably. FXE had a small improvement in cost per RTM, but this was more than offset by the largest revenue per RTM decrease for the quarter.
Cash flow increases, rail ROIC and stock prices mixed
The industry is thus far mostly keeping control of capital expenditures for the year. CPKC, CSX, and UP saw increases due to special projects, while NS had a huge drop in capex compared to last year, when it acquired the Cincinnati Southern Railway (CSR). Although even without that, its capex would still have declined by 13.5%.
Return on invested capital (ROIC) was mixed. FXE and UP led the industry for the quarter, while NS and CPKC increased more modestly. CN, CSX, and BNSF showed declines in ROIC.
The US carriers saw a jump in stock prices in Q3 after the announced acquisition of NS by UP. The Canadian carriers, however, remained in a downward trajectory. CN is the only carrier to have a net decline in stock price since Q3 of 2022.
Rail service and productivity metrics in focus
Both dwell time and train velocity improved for the western US carriers, results were mixed for the two eastern carriers, and both metrics declined for the Canadian railroads. Overall, though, it seems that rail service has been consistently good thus far this year, with no major disruptions.
In terms of headcount, only FXE increased its headcount, but all railroads reported improved productivity, as measured by RTMs per employee.
A less optimistic outlook for 2026
Although rail performed well for the quarter compared to trucking, overall industry metrics have yet to show a convincing trend of rail gaining market share versus trucks. Traffic levels grew modestly through Q3, but Q4 traffic volumes appear to be trending downward. Overall, we expect 2025 volume will be slightly above 2024, but the outlook for 2026 is less optimistic, absent some strengthening of the economy in 2026.
Energy is the one bright spot, with high LNG exports keeping prices high and enabling coal to be competitive in the domestic electricity market (and stalling some of the continuing decline in coal traffic). Propane, a byproduct of natural gas production, also could provide a small boost, as propane moves largely in railcars. The US propane market is oversupplied, and growth in exports would soak up some of the surplus.
