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 (Q4 2025 to Q4 2024) unless otherwise stated.
Railroads see mixed performance in Q4 2025
Overall traffic volumes were down across the industry by 1.3% compared to Q4 last year. This was driven by weaker volumes at NS, UP, and BNSF but offset by growth at CSX and favorable comparisons for CN and CPKC.
Intermodal was muted. Overall, the industry saw a 2.4% decline in Q4 2025, as the three largest intermodal carriers, NS, UP, and BNSF, each saw lower volumes. CSX intermodal volume grew in part due to conversions from NS. CN and CPKC saw a positive uptick due to a weak Q4 2024, returning to roughly their 2023 intermodal volume levels.
Merchandise volumes also were down for the quarter, with only NS seeing an increase in carloads, primarily due to higher chemicals and automotive volumes.
Coal continues to be a tailwind: All railroads except BNSF were able to grow coal volumes, with UP and CPKC growing near or above 10% from Q4 2025. Eastern metallurgical export coal was not quite as strong but still represented a growth area for CSX and NS.
Even though unit volumes declined, revenue ton-miles (RTMs) were steady overall. CN grew RTMs by 4% due to increased grain, fertilizer, and intermodal volumes, and UP’s RTMs were 2% higher due to growth in coal. This was offset by a 3% decline in RTMs at BNSF.
Railroad operating margins tighten in US and expand in Canada
Operating margins tightened in Q4 compared to a year ago, with only CN and CPKC improving their quarterly operating ratio (OR). Both Canadian railroads and UP achieved an operating ratio of 60% or below.
Full-year results paint a better picture, as the industry was successful in expanding margins compared to 2024. CN notably returned to near 60% OR, reclaiming its historically strong margin performance.
Margin expansion was due primarily to cost control, rather than revenue expansion. Only CPKC was able to improve both revenue and expense per RTM, while almost all of the other railroads offset a decline or weak growth in revenue per RTM through reduced cost per RTM.
This expense improvement was in large part driven by higher employee productivity as a result of workforce reductions. Q4 2025 was part of a long-term trend of the railroads trimming their workforces as volumes stagnate.
Cash flow increases while rail ROIC and stock prices remain mixed
The railroads generally increased capital expenditure spending in 2025. CSX capex increased by nearly 15% as it eliminated the Howard Street Tunnel bottleneck and rebuilt after Hurricane Helene. CPKC also invested heavily, expanding capex by 9.7%. Early announcements in 2026 suggest the railroads may tighten their belts on capex in 2026, which we will monitor during the course of the year.
The combination of tighter OR and increased capex resulted in a mixed free cash flow picture at the end of 2025. CN and BNSF both improved free cash flow, while NS, after removing its 2024 Cincinnati and Southern acquisition, would have grown cash flow by nearly 30%. On the other hand, CPKC’s cash flow declined by nearly 10%, due to increased capex investment.
Return on invested capital (ROIC) was generally positive across the industry. FXE and UP led the pack at 18% and 14.5% ROIC, respectively, while the remaining railroads converged on an ROIC of around 10%. CPKC’s ROIC remains lower, though improving, due to its higher capital base arising from the CP-KCS merger.
Rail safety and service strengthen across railroads
The railroads continue to demonstrate solid service and safety performance. CSX, UP, and BNSF notably saw improvements across both metrics, and the remaining Class Is are performing well.
On safety, employee injuries continue to fall across the industry. This has been a consistent trend from 2019 onward, with most railroads converging around 0.7 injuries per 200,000 employee-hours.
Equipment incidents declined as well, with only CN seeing an uptick in Q4 compared to a year ago. The railroads have been consistently improving equipment safety over the past two to three years.
Overall, the North American Class I rail industry saw solid performance in both Q4 and full-year 2025. There are red flags for the future, however, if the industry cannot find a path toward volume growth. Rail also must look to how it can improve productivity and better capitalize on artificial intelligence and new technologies to stay competitive with other transportation modes.
