BNSF Railway needs to close the operating-ratio gap with the other Class I railroads, new Berkshire Hathaway Chief Executive Greg Abel said on Saturday in his first annual letter to shareholders.
BNSF (BRK-B) continues to perform well from a safety standpoint and has improved its efficiency and service, Abel wrote. “In 2025, shipments spent less time idling at terminals and moved through the network faster than in nearly any year in the company’s history.”
“These gains matter, but they are not enough; more progress is needed to translate operational improvements into stronger financial results,” Abel wrote. “We view operating margin (the inverse of the industry’s operating ratio) as the best measure of performance. In 2025, BNSF’s operating margin improved to 34.5% from 32.0% in 2024. It remained only modestly above its five-year average.”
Abel took over for legendary Berkshire Hathaway founder Warren Buffett in January.
BNSF’s 2025 operating ratio of 65.5% was 5.7 points behind the 59.8% performance of western rival and industry leader Union Pacific. (NYSE: UNP)
“The gap to the industry’s best remains too wide and closing it will require continued improvements in efficiency and service. Each one-percentage-point improvement in operating margin generates approximately $230 million of incremental operating cash flow for our owners,” Abel wrote. “The team recognizes the significance of this opportunity, and we will be disappointed if we do not deliver a substantial improvement over the next few years.”
Abel’s letter indicated that the core principles Buffett set remain intact – including letting the conglomerate’s companies have a large degree of autonomy.
This past year BNSF produced $8.1 billion in net operating cash flows and returned $4.4 billion to Berkshire in the form of dividends. That was slightly above the five-year average of $4.1 billion.
BNSF’s operating earnings increased 7.8% last year, to $8.05 billion, on flat revenue of $23.3 billion. Net earnings increased 8.8%, to $5.47 billion. The railroad’s operating expenses declined 3.7%.
For the year, the railway’s overall volume was relatively flat at 0.3% over 2024. Three of BNSF’s four business segments gained volume for the year.
Consumer products – which includes intermodal and automotive traffic — increased 1.2%. “The volumes increase was primarily due to higher intermodal shipments resulting from higher West Coast imports and a new intermodal customer, and an increase in automotive vehicle volumes,” Berkshire said.
Industrial products segment volume declined 4.6%, largely due to declines in shipments of construction products, plastics, and petroleum products.
Agriculture and energy products shipments increased 3.2% due to higher grain exports and petroleum fuel shipments, partly offset by declines in domestic grain and feed volume.
Coal traffic was up 1.1% as higher natural gas prices made coal more competitive for electricity generation.
Subscribe to FreightWaves’ Rail e-newsletter and get the latest insights on rail freight right in your inbox.
Related coverage:
Intermodal rail makes weekly gain but trails 2025 traffic
After 2019 flood, Arkansas port gets $8M for rebuild
Medeiros new CAO for Short Line Safety Institute
CSX CEO: Flat industrial results holding back railroad freight growth
Freight Fraud Symposium
Double brokering. AI deepfakes. Identity theft. Freight fraud is an existential threat to the industry. Get ahead of it.
Supply Chain AI Symposium
Past the hype. Join operators, founders, and enterprise leaders figuring out how to deploy AI in supply chain.
Future of Rail Symposium
Reshoring is rewriting freight demand. Join shippers, rail executives, and government officials to shape the next decade.
Double brokering. AI deepfakes. Identity theft. Freight fraud is an existential threat to the industry. Get ahead of it.
Rock & Roll Hall of Fame • Cleveland, OH Register NowPast the hype. Join operators, founders, and enterprise leaders figuring out how to deploy AI in supply chain.
The Old Post Office • Chicago, IL Register NowReshoring is rewriting freight demand. Join shippers, rail executives, and government officials to shape the next decade.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register Now