In the first quarter of 2025, Class I railroads in North America are so far demonstrating varied levels of service performance, according to new metrics mandated by the Surface Transportation Board. The STB now requires major freight railroads to report additional data on on-time percentages, train speeds and terminal dwell times in an effort to increase transparency and accountability.
The new STB metrics, which began being collected in September 2024, establish baseline standards for on-time arrival percentage and successful local service percentage. If targets remain unmet, railroads could potentially lose business to competitors, pending shipper petitions to the STB.
On-time arrival percentage is calculated as the number of manifest carloads that arrive at their final destination within 24 hours of the original estimated time of arrival, divided by the total number of manifest carloads. Successful local service percentage measures the number of cars placed at their final destination within 24 hours of the commitment, divided by the total number of cars with local service commitments.
(Chart: Susquehanna)
“Entering 2025, rail service has been far more consistent than the 2021-22 experience aside from some disruption out West as a result from elevated imports (hurting BNSF specifically) and unusual weather in the East (hurricanes & irregular Winter storms having outsized affect on CSX), wrote Susquehanna equity analyst Bascome Majors in a February 5 client note. “All the data supports the story of general service improvement with velocity up across the board from early 4Q levels. In dwell, CSX on a Y/Y basis has significantly lagged peers, but is showing some sequential recoverymore recently. Rails have performed fairly consistently for On-Time Arrival % except CSX who has had notable weakness vs. peers. BNSF since late November has drastically underperformed peers on local service % though is showing some recovery lapping holiday and winter seasonality. In short, this data supports the sound and consistent service at Union Pacific under Vena and the newfound steadiness for NSC under John Orr which should support respective FY25 margin expansion, but we’re watching closely to see how the STB will collect and implement this data practically going forward.”
Western railroads: Union Pacific vs. BNSF
Union Pacific (NYSE: UP) has demonstrated strong service metrics to begin 2025, outperforming rival BNSF Railway in several key areas. UP’s manifest on-time arrival percentage averaged 89% in January, compared to 84% for BNSF. UP also maintained higher average train speeds of 24.7 mph versus BNSF’s 23.1 mph.
“We’re showing our customers what’s possible while at the same time driving productivity,” said Jim Vena, CEO of Union Pacific, on the company’s Q4 2024 earnings call. “What’s exciting for me is that I know we’re not done. There are more opportunities ahead and we have clear line of sight of how we drive further improvements in 2025.”
UP did see slightly higher average terminal dwell times of 25.2 hours compared to BNSF’s 24.7 hours in January. However, UP has made significant strides in this area over the past year.
“Notably, 2024 marked an all-time record for terminal dwell, a meaningful improvement in our service, which reduces customers’ fleet costs through improved cycle times,” Vena noted.
Canadian railroads: CN vs. CPKC
North of the border, Canadian National (NYSE: CNI) has maintained an edge over rival Canadian Pacific Kansas City (NYSE: CP) in the early weeks of 2025. CN posted an average manifest on-time percentage of 91% in January, while CPKC trailed at 87%.
CN also led in average train speeds at 25.9 mph compared to CPKC’s 23.8 mph. However, CPKC demonstrated lower average terminal dwell times of 21.3 hours versus CN’s 23.1 hours.
RTOTC measures the total carloads moved by Class I railroads in the U.S. in a given week. (Chart: SONAR. To learn more about SONAR, click here)
Eastern US railroads: Norfolk Southern vs. CSX
In the eastern United States, Norfolk Southern (NYSE: NSC) and CSX (NASDAQ: CSX) have shown relatively similar performance levels to start the year, with some variations across metrics. NS reported a slightly higher manifest on-time percentage at 88% compared to CSX’s 86% in January.
CSX maintained a small advantage in average train speeds at 22.8 mph versus NS at 22.1 mph. Terminal dwell times were nearly identical, with CSX averaging 24.9 hours and NS at 25.1 hours.
Importance of new metrics
The implementation of these new service metrics by the STB marks a significant shift in how railroad performance is measured and reported. By focusing on on-time percentages and local service success, the STB aims to create a more comprehensive picture of how well railroads are meeting customer needs.
“These metrics are critical for shippers and regulators to assess railroad performance,” said rail industry analyst Jason Seidl of Cowen. “They provide a more granular view of service quality beyond just the traditional measures of train speed and dwell time.”
The STB’s move comes after periods of service disruptions in recent years, particularly during the post-pandemic recovery. By establishing these new reporting requirements, the board hopes to incentivize railroads to maintain high service levels and provide more transparency to customers.
Union Pacific’s momentum
Among the Class I railroads, Union Pacific appears to have built significant momentum in service improvements heading into 2025. The company’s strong performance in on-time percentages and train speeds reflects its strategic focus on operational excellence.
“We operate the largest, most complex rail network in North America and with it comes challenges and opportunities,” Vena said. “The team understands our goal is to deliver what’s possible from this franchise. We intend to do that as an industry leader that keeps raising the bar as we drive value for our shareholders.”
UP’s management team has emphasized that improved service is key to winning new business and driving growth. The company’s ability to handle increased volumes while maintaining strong service metrics will be closely watched throughout 2025.
“Our 2024 performance demonstrates that our strategy to operate with a buffer and connect more closely to our customers is paying dividends, both in terms of meeting our customer commitments and as a direct result winning new business,” Vena noted.
As we move deeper into 2025, industry observers will monitor how well the rails maintain and improve their service levels in the face of potential economic headwinds and regulatory changes. The new STB metrics provide an additional tool for tracking these efforts and holding railroads accountable for their service commitments.
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