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.
