BNSF’s second-quarter and first-half 2025 financials saw the Berkshire Hathaway-owned Class I post healthy operating income gains and operating ratio and operating expense decreases, with essentially flat revenues and modest volume gains. The 2Q25 operating ratio dropped 340 basis points to 64.8% from 68.2% in 2Q25. It dropped 240 basis points to 66.4% from 68.8% for this year’s first half, compared to the prior-year period. Operating income saw respective gains of 10% and 8%. Operating expenses fell 5% and 3% in 2Q25 and 1H25, respectively.
Volumes and Revenues
Total revenues for BNFS’s second quarter and first six months of 2025 increased slightly compared with the same periods in 2024. Volumes increased 1% and 3% in the second quarter and the first six months of 2025, respectively, compared to 2024. Average revenue per car/unit declined 1% in the second quarter and 3% first six months of 2025, resulting from lower fuel surcharge revenue and “unfavorable business mix, partially offset by core pricing gains,” BNSF said. Revenue changes also resulted from the following:
- Consumer Products volumes increased 1% and 5%, respectively, in the second quarter and first six months of 2025 compared with the same periods in 2024 “primarily due to higher intermodal shipments resulting from increased West Coast imports, along with an increase in automotive volume from higher vehicle production.
- Agricultural and Energy Products volumes increased slightly in both the second quarter and first six months of 2025 compared with the same periods in 2024 “primarily due to slightly higher grain exports, partially offset by lower domestic grain, feed and renewable fuel volumes.”
- Industrial Products volumes decreased 4% and 5%, respectively, in the second quarter and first six months of 2025 compared with the same periods in 2024 “primarily due to lower demand for construction products and lower petroleum products shipments.”
- Coal volumes increased 14% and 7%, respectively, in the second quarter and first six months of 2025 compared with the same periods in 2024 “primarily due to the competitive effects of higher natural gas prices.”
Expenses
BNSF operating expenses for the second quarter and first six months of 2025 decreased 5% and 3%, respectively, compared with the same periods in 2024. A “significant portion” of the decline was due to the following factors:
- Fuel expense decreased 15% and 12% in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024, “primarily due to lower average fuel prices, partially offset by higher volumes.” Locomotive fuel price per gallon decreased 14% and 13% in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024.
- Compensation and benefits expense increased 4% and 1% in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024. The increase in both the second quarter and first six months of 2025 “were primarily due to wage inflation, partially offset by increased employee productivity.”
- Materials and other expense decreased 32% and 20% in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024. The declines “were primarily due to litigation accruals in the second quarter of 2024 and ongoing cost management efforts.”
- Income tax expense decreased 13% and 5% in the second quarter and first six months of 2025, respectively, compared to the same periods in 2024, “primarily due to lower deferred state tax expenses arising from changes in enacted rates during the second quarter of 2025.”
- There were no significant changes in purchased services, depreciation and amortization, equipment rents, or interest expense.
OPERATIONAL PERFORMANCE UPDATE
“Frequent extreme weather across our network has caused some negative impacts on service over the past two weeks,” BNSF said Aug. 1. “As a result, overall car velocity decreased compared to both the previous week and the monthly average. Terminal dwell increased from last week but remains lower than the previous month and is still at record low levels. Our local service compliance measure decreased slightly, but has improved compared to last month, averaging above 89% for the week.
“In the Chicago Division, crews recently completed a significant project at our Galesburg classification (hump) yard in Galesburg, Ill. Our crews worked on key mechanical components to improve efficiency and terminal throughput within the hump yard. A key part of the project involved replacing two retarders, which are crucial for safe and efficient operations at hump yards. They help control the transit and speed of railcars into the bowl.
“Other significant accomplishments include:
- “Nearly 8,900 feet of track lift undercutting.
- “More than 19,000 feet of shoulder ballast cleaning.
- “Nearly 22,000 feet of rail replacement.
- “Nearly 1,700 ties replaced.”
Merger Movement?
In the wake of Union Pacific and Norfolk Southern announcing their intent to merge, with UP as the acquiring railroad, there has been much speculation on whether BNSF and CSX would announce a similar transaction, eventually resulting in two U.S. transcontinentals, transnational/Canadian transcontinental CPKC, and Canadian transcontinental CN, whose U.S. footprint reaches all the way to the Gulf of Mexico. BNSF has been basically silent on that prospect, with the exception of Berkshire Hathaway Chairman Warren Buffet denying reports that BNSF is working with Goldman Sachs on a possible merger with an eastern Class I. CSX President and CEO Joe Hinrichs said at the company’s 2Q25 earnings call that “there are all kinds of opportunities to work together to make it better for our customers, and we’re open to talking about all those possibilities.
