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 (Q1 2026 to Q1 2025) unless otherwise stated.
Q1 saw modest rail industry volume and revenue growth
All four US Class Is saw an increase in revenue for the quarter compared to Q1 2025, versus a decline for CN, CPKC, and FXE. Overall, however, revenue growth over the past two years has been trivial (less than 1% per year on average) and negative for the two eastern US railroads.
Intermodal volume growth for the quarter was mixed, with one carrier in each region growing while the other saw a decline, suggesting small market share shifts. CSX, BNSF, CN, and FXE reported increases in intermodal volume, while NS, UP, and CPKC reported declines.
In contrast, carload traffic excluding coal showed gains across the board, except at CPKC. Based on reports from the Association of American Railroads (AAR) and the carriers, grain was the strongest performing commodity in Q1. Coal volumes were mixed, with UP and NS showing increases and all other carriers showing a decline.
All carriers grew revenue ton-miles (RTMs), with BNSF, UP, CN, and FXE showing the largest increases. But the red flag for the industry is that revenue/RTM declined for all carriers except BNSF (and CSX was flat). Meanwhile, the two-year trend for each carrier is flat. If an RTM is considered as a unit of paid work, then the industry’s pay per unit of work is not increasing in a period of significant inflation. This could suggest a shift toward lower revenue commodities, weakened pricing power, or both. None of this is good for the industry and makes a continued focus on cost-cutting more likely. The caveat is that if cuts run too deep, a surge in traffic or some external disruption can trigger a service crisis — disrupting shipper supply chains and trust.
Railroad operating margins tighten in the US, expand in Canada
Operating margins stayed largely flat in Q1. UP led Q1 with a margin of 40.1%, while NS trailed the others at 31%, and FXE had the lowest operating margin at 20.9%. Over the past two years, operating margins industry-wide have been flat.
Maintaining margins has been due primarily to cost control rather than revenue expansion. Cost reductions per RTM were reported by all carriers except NS. All railroads except FXE also reported workforce reductions compared to Q1 2025. This focus on employment resulted in all carriers reporting greater RTMs/employee compared to a year ago.
Operating income for the quarter increased for UP and BNSF to levels not seen since 2024. CSX had a significant increase in operating income but was still below 2024 levels. All of the other railroads reported lower operating income. The two-year trend in operating income has been mostly flat, with NS as a noticeable exception: Operating income spiked after the East Palestine derailment — a 2023 Norfolk Southern train crash and chemical spill that led to major cleanup and recovery costs — but has been slowly declining again since Q2 2025.
Rail cash flow and ROIC improve, stock performance remains uneven
We have updated the metrics in this section to reflect the trailing four quarters of data, so as to remove quarterly “noise.”
Trailing four-quarter capex was generally flat or down, except for the two western US carriers. FXE had a significant drop in capex. Cumulative free cash flow over the past four quarters has been negative for all carriers except CN. CSX was dragged down by its Q2 2025 performance and higher capex requirements.
FXE leads the industry in return on invested capital (ROIC) at 16.6%, followed by UP at 14.6%. CSX and NS dropped below 10%. CPKC trails the industry at 5.8%, largely due to the debt incurred for the CPKC merger.
The industry’s stock performance has detached from the S&P 500 since March 2024 and now lags it, although most railroad stocks are above their 2023 levels, except CN.
Railroads improve safety and service performance across the industry
We look forward to the new STB service metrics that will become available in July of this year — original estimated arrival time (OETA) and industry spot and pull (ISP). These metrics should be more relevant for shippers in gauging rail performance than average dwell and train speed. That said, Q1 dwell time decreased for all railroads, except CN. Average train speed also declined for most railroads, except CSX and UP.
The industry’s focus on improving safety post-pandemic continues to pay off, with overall declines in both employee injuries and equipment incidents this quarter. Only CN reported an increase in employee injuries, and CN and CPKC reported an increase in equipment incidents. Over the longer term, injuries and incidents have dropped by 6.2% since 2019.
Rail industry needs innovation to drive future growth
While Class Is showed solid financial performance this past quarter, there were red flags for the future. In particular, the industry needs to consider how it can move past a reliance on cost-cutting to stimulate volume and revenue growth, such as by refocusing on customers and adopting advanced technologies (like AI) to stay competitive with other transport modes (see our recent Shipper Survey for more).
In addition, the FRA has begun reviewing and improving the rail regulatory landscape, which it is hoped will level the playing field somewhat, by enabling technology deployment to improve efficiency on par with trucking.
