The North American Rail Shippers Association (NARS) held its 2025 Annual Meeting at the Swissotel in Chicago. The meeting opened with a Chicago history lesson from Chicago’s Tic Tok Historian Sherman “Dilla” Thomas, who presented a very light-hearted but accurate account of many events of Chicago’s history—the perfect start for this event given this year’s location.
The morning was filled with rail information, first from CSX President and CEO Joe Hinrichs, who commented about the challenges CSX recently had after a hurricane. Foremost importance for CSX is to get its 2025 performance back to what it was. Next, we heard from BNSF Executive Vice President and Chief Marketing Officer Tom Williams, who followed with the same comments we have previously heard from the BNSF: customer collaboration and relationships, capacity and efficiency. Last from the rail side was Union Pacific Senior Vice President Northern Region John Turner, who gave a good explanation on how AI can be utilized in train operations switching and blocking processes. This means “converting from being reactive to proactive,” he said.
Interesting was that the railroads made absolutely no comments about the tariff-driven decline in international intermodal traffic. It took FTR Transportation Intelligence Chairman Eric Starks to dive into the economic issues facing us today. For the sake of brevity and the opportunity to view so much more, Eric has made his complete presentation available on line (download below).
CREATE Program Manager Rebecca Wingate gave a concise overview of the many projects completed and or planned for the Chicago area. She also pointed out that more than 47% of the intermodal containers moved by rail, 29% of the railcars and more than $652 billion worth of goods utilize and pass through the Chicago freight rail system.
Norfolk Southern Vice President and Chief Marketing Officer Ed Elkins gave an overview of NS’s “focus on reliable and consistent customer service” and its drive for productivity improvement. “The goal is a future that outcompetes the past,” he noted.
Tony Hatch, ABH Consulting, gave a closing presentation titled 2025: Rails at the Crossroads—Growth Vs. the Cult & Chaos Vs. Clarity. He covered the various obstacles rails have faced most recently and asked the question whether 2025 finally be the pivotal year for North American freight rail. “Will operating ratios no longer be the driver of rail policy?” he commented. “Rail seems to be in a good position to complete this.”
“The railroads emphasized long-term volume growth that will likely require service improvements,” TD Cowen’s Jason Seidl (Railway Age Wall Street Contributing Editor), Elliot Alper and Uday Khanapurka noted. “Carriers highlighted network investments including double track, automated inspection and telematics, but evidence of meaningful share gains from the road remains elusive. Macro forecasts point to intermodal weakness that could bleed into 2026 in the bear case. STB offered positive commentary on regulations.
“Near-term macro conditions were hard to ignore for every presenter and came up in numerous conversations we had during the two-day conference. The consensus view seems to be that we will see a notable slowdown soon, but the views after that seemed murky at best. Shippers appear to be staying on the sidelines, and one presenter likened the current environment to driving in the fog where ‘you may know the road, but you have to slow down.’
“CSX CEO Hinrichs emphasized the need for volume growth to drive long-term EPS and multiple expansion while noting that margin dilution from intermodal growth had little bearing on the organization’s ability to cross its cost of capital hurdle. We believe the Class I’s would need to obtain consistent structural share gains from truck to entice investors on earnings dollars growth even as margins dilute. Presently, the rails are not priced for a growth phase on the horizon as the Class I’s are yet to demonstrate any meaningful share gains. This will likely require establishing resilient service through an up cycle in our view and is a show-me story for investors and shippers as we have not seen an industrial economy inflection in the post COVID congestion period.
“Class I’s continue to focus on building service quality and resilience as long-term growth remains a priority. Norfolk Southern and BNSF highlighted service recoveries out of severe 1Q2025 weather that have been quicker than in the past. BNSF attested to a significant increase in merchandise train velocity in 1Q and highlighted $2.6 billion in investments, including double track construction that has reduced eastbound intermodal transit time considerably (most U.S. rail is single track). NS highlighted the importance of minimizing steps involved in booking freight for customers, something we have also heard from other Class I’s in the past.
“Near-term intermodal weakness was emphasized by multiple panelists, and one freight consultancy offered incrementally worse 2H and 2026 outlook. This speaker’s economic model (which incorporates a host of macro variables) forecasts only 1% volume growth this year with 4Q2025 seeing negative Y/Y consequences of pull-forward and weakness persisting into 2026 with only 0.8% growth projected, which would be well below our Class I estimates. We believe this scenario likely constitutes a possible bear case as the forecast incorporates increasingly bearish contemporary macro data.
“All Class I presenters emphasized tech initiatives including telematics, automated inspection and inventory management as well as deploying AI in customer support. Telematics initiative RailPulse, which offers shippers enhanced visibility (and also received a shoutout from the STB) and went live last year was also highlighted. This initiative’s promise lies in backing from a broad coalition of industry stakeholders including Class I’s, short lines and lessors. Indeed, CSX emphasized the need for cooperation across Class I’s, given that 40% of their traffic touches another railroad.
“Macro data shows inventories have built up but are not at high levels presently, potentially leaving room for further restock if trade flows resume. However, this does rely on a persistently healthy consumer market, which has been the case up until this point but is hardly a given in the current environment. We came away feeling that a sluggish environment is the base case, while resumption of normal seasonal build into peak after truck capacity exits is the potential upside scenario.
“STB Chair Fuchs addressed the gathering, and we came away optimistic on signs of a more balanced regulatory environment. Commentary on permitting and competition barriers was encouraging. Fuchs highlighted a case of permitting where the STB approved the Uinta Basin Railway in Utah. The Board took the view that the environmental assessment (which was cleared by a different regulator) was outside its purview, and Fuchs noted that the prior approach to environmental regulation was onerous. The STB is also participating in an Executive Order intended to reduce regulatory barriers rails face in acquiring abandoned rail lines to the extent that these in fact reduce competition. Chairman Fuchs did hint that we may see the final STB seat be filled by the Administration in the coming weeks. Industry focus, however, will likely remain on the appointment of David Fink as Federal Railroad Administrator, as most practitioners believe this agency has the potential to provide more impactful relief for rail.”
