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.
