Profitability strengthens on higher volumes and operational efficiency
CSX recorded a significant improvement in financial performance in the third quarter, benefiting from increased freight traffic, higher fuel surcharge revenue and efficiency improvements across its network.
The U.S. railroad reported operating income of $1.57 billion, up 44% year over year, while revenue rose 12% to a record $4.02 billion, according to results released Wednesday. Earnings per share increased 54% to 57 cents. Excluding the effect of a one-time goodwill impairment recorded in the third quarter of 2025, operating income grew 25% and earnings per share advanced 30%.
CSX’s operating ratio improved to 60.9%, an 8.8-percentage-point reduction compared with the same period last year. Operating expenses declined 2%, contributing to the stronger results. The company also reported what it described as an all-time U.S. quarterly record for fuel efficiency, consuming 0.92 gallons per 1,000 gross ton-miles.
Productivity increased 6% during the quarter, measured in million gross ton-miles per employee. At the same time, the railroad’s total employee headcount fell 6.2% year over year.
Higher full-year revenue expectations
The combination of improved financial results and a stronger outlook prompted CSX to revise its revenue growth forecast upward. The company now expects growth in the high single digits, compared with its previous projection of mid-single-digit growth.
Chief Executive Steve Angel said continued productivity improvements were contributing to substantial gains in profitability, earnings and free cash flow. He reiterated the company’s ambition to become the best-performing railroad in North America, crediting the workforce for responding to that objective.
Looking ahead to 2027, Angel said the company would concentrate on ensuring that its network has sufficient resources to accommodate business growth. This will include expanding the pipeline of train and engine employees while aligning workforce levels with the requirements of a safe, reliable and efficient railroad.
Freight traffic advances across major segments
Overall freight volume increased 5% in the third quarter. Intermodal traffic rose 7%, merchandise shipments increased 3%, and coal volumes gained 2%.
Domestic shipments accounted for all the growth in intermodal traffic, while international volumes edged down slightly.
Maryclare Kenney, CSX’s chief commercial officer, said reduced trucking availability, elevated truck rates and higher diesel costs continued to support demand for the company’s intermodal services.
CSX is also seeking to attract more freight from road transport through new service offerings. These include interline services with BNSF through Birmingham, Alabama, and with CPKC through Myrtlewood, Alabama.
The completion of the Howard Street Tunnel clearance project in Baltimore this spring has also enabled double-stack operations, supporting additional intermodal capacity along the I-95 Corridor.
Terminal investments target growing intermodal demand
Despite the increase in traffic, CSX has encountered congestion at its Fairburn terminal near Atlanta. The railroad is investing in track infrastructure, switching operations and processing capacity to manage the higher volume of intermodal freight.
The investments are intended to strengthen the network’s ability to accommodate demand while maintaining operational efficiency.
Coal traffic presented a mixed picture. Export coal tonnage rose 7% during the quarter, but domestic coal tonnage declined 3%. Higher volumes of metallurgical coal were insufficient to compensate for weaker traffic associated with utility coal.
Service performance comes under pressure
Although CSX moved more freight during the quarter, several operating indicators weakened as the network handled increased volumes.
Average train velocity declined 2% year over year, while terminal dwell time increased 12%. Service reliability also deteriorated, with intermodal and carload trip-plan compliance each falling by 10 percentage points compared with the same quarter last year.
Intermodal on-time performance stood at 83%, while the carload segment recorded 73%.
Angel acknowledged that the railroad was handling additional traffic safely and efficiently but said there was still room to improve network performance.
The figures highlight the operational challenge facing CSX: translating higher freight demand into stronger financial returns without allowing congestion and service delays to undermine reliability.
Leadership changes place operations under direct CEO oversight
Angel also addressed the retirement of former Chief Operating Officer Mike Cory, who announced his departure on October 12.
Following the announcement, CSX’s two senior vice presidents of operations, Doug Ryhorchuk and Casey Albright, began reporting directly to Angel.
The chief executive emphasized his own operational background, explaining that he joined CSX a year ago after leading industrial gas company Linde. Earlier in his career, he managed manufacturing operations at GE and introduced one of the first lean production systems in the United States during the 1990s.
Angel said operational management had always been central to his professional experience, underscoring his continued focus on improving the railroad’s performance.
Safety indicators continue to improve
Safety performance was one of the quarter’s more positive developments. CSX reported a 17% decline in its personal injury rate and a 5% reduction in its train accident rate.
The improvement marked the seventh consecutive quarter of progress in the personal injury rate and the fifth straight quarter of improvement in the train accident rate.
These results indicate that the railroad has continued to improve its safety record even as freight volumes have expanded and service performance has come under pressure.
What the results mean for the rail freight sector
CSX’s third-quarter performance illustrates the benefits and limitations of a strategy centered on productivity, cost control and higher network utilization. The railroad increased traffic and profitability while reducing expenses and achieving better safety results.
However, declining service reliability and increased terminal dwell time raise questions about whether its leaner operating model can sustain further growth without additional capacity and resources.
The company’s investments in intermodal infrastructure, plans to strengthen staffing pipelines and commitment to operational improvements will be important factors in determining whether it can maintain financial momentum while restoring service performance.
Editorial note: This article incorporates the correction published on October 22 concerning earnings per share, which improved by 57 cents.
