CSX's Margin Improvement Will Face Hurdles in 2025, but Long-Term Growth Opportunities Remain

Railroad turnaround legend Hunter Harrison led Eastern Class I railroad CSX from early 2017 until his death in December that same year. Harrison's successor, James Foote (who retired in late 2022), was familiar with Harrison's precision scheduled railroading model from years working at Canadian National. At its core, PSR focuses on rightsizing assets, including real estate, sorting yards, motive power, and rolling stock. Fewer assets and longer trains drive up network fluidity, resulting in labor productivity gains, better service levels, and higher potential incremental operating margins. Better service also creates greater opportunities for intermodal, which is highly truck-competitive. CSX's intermodal volume is facing near-term headwinds from depressed rates in the competing full truckload industry, but that pressure is subsiding and we still consider intermodal to be a key long-term growth opportunity.