CSX’s second-quarter profits slumped as unfavorable changes in traffic mix drove a revenue decline and costs rose amid congestion and detours related to a pair of main line outages.
But executives said they were encouraged by the pace of the railroad’s (NASDAQ: CSX) operational recovery during the quarter, which produced improvements in on-time performance.
“We are proud of how our network performance has bounced back from the challenges of the first quarter,” Chief Executive Joe Hinrichs told investors and analysts on the railroad’s earnings call Wednesday.
The railroad’s operating income declined 11%, to $1.28 billion, as revenue decreased 3%, to $3.57 billion. Earnings per share declined 10%, to 44 cents. CSX’s operating ratio, including its trucking operations, was 64.1, a 3.2-point increase from a year ago as expenses rose 2%.
Overall quarterly volume was flat. Intermodal was up 2%, merchandise declined 2%, and coal volume increased 1%.
International intermodal volume grew during the quarter, while domestic volume was stable. In the merchandise segment, growth in metals, minerals, and agricultural shipments were not enough to offset declines in automotive, forest products, chemicals, and fertilizer traffic.
“Many of the industrial markets we serve continue to face challenges with uncertainty around tariffs, trade, interest rates, and the overall direction of the economy,” Chief Commercial Officer Kevin Boone said.
CSX still expects overall volume growth this year thanks to dozens of industrial development projects coming on line and conversion of freight from highway to intermodal, Boone said.
CSX also is encouraged by the progress of its new Southeast Mexico Express interline intermodal service launched with Canadian Pacific Kansas City in December via their new interchange at Myrtlewood, Ala., on the former Meridian & Bigbee short line.
The Howard Street Tunnel clearance project remains on schedule toward completion early in the fourth quarter, while related bridge clearance work in Baltimore is on pace for completion in the second quarter of 2026. The tunnel will reopen when work is complete, allowing CSX to end daily detours around Baltimore.
The tunnel and bridge clearance work will open up the carrier’s I-95 corridor for double-stack intermodal service for the first time and allow Baltimore-Midwest stack traffic to take the direct route via the former Baltimore & Ohio main line, rather than the current roundabout routing via Selkirk, N.Y., on the former New York Central Water Level Route.
Work to reopen the hurricane-damaged Blue Ridge Subdivision – the former Clinchfield Railroad in rugged western North Carolina and eastern Tennessee – is expected to be completed on schedule in the fourth quarter, as well.
“We are very pleased with the progress that has been made at our Howard Street Tunnel and Blue Ridge rebuild projects. We expect completion in the fourth quarter, which will remove two key constraints from our network,” Hinrichs said. “Finishing these two projects will open back up two of our four north-south routes, and … we’re excited about removing the last impediment to double stack intermodal on the I-95 corridor.”
A string of harsh weather, combined with the main line outages, led to congestion after the Feb. 1 shutdown of the Howard Street Tunnel.
CSX’s operations accelerated as the quarter went on, with average train speed increasing 8% from April through June and dwell declining by 18%. The number of cars online — a key congestion metric — declined 10% as the quarter progressed.
“Our recovery is a true testament to the hard work and dedication of every railroader at CSX,” Chief Operating Officer Mike Cory said.
Intermodal trip-plan compliance held steady at 90% compared to the first quarter but was down 4 points compared to a year ago. Merchandise trip-plan compliance of 75% was 6 points higher than the first quarter but 5 points lower than a year ago. Customer switch data of 94% was flat compared to last year’s second quarter and a 1-point improvement over the first quarter.
The on-time performance figures are not yet where CSX wants them, Cory says, but he expects ongoing improvement, particularly after the Howard Street and Blue Ridge projects wrap up and allow the railroad to end the related detours of up to 22 trains per day.
“While these projects unlock significant capacity for the entire network, we are also upgrading our capacity and throughput at our yard in Indianapolis, with the extension of the hump pullback,” Cory said of Avon Yard in Indiana, one of five hump yards on the system. “While this project is small in nature relative to the other two, it’ll give us the ability to hump more cars … at a very critical yard in our network.”
Despite the service issues, CSX’s customers gave the railroad the highest marks ever in a second-quarter internal survey, Boone said. And Hinrichs added regulators received zero complaints from shippers despite the impact of congestion.
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