CSX's Strategic Momentum in Intermodal and Coal Markets: A Blueprint for Shareholder Value Creation Through Operational Turnaround and Margin Expansion

In the high-stakes world of rail logistics, CSX Corporation (NYSE: CSX) is proving that resilience isn't just about weathering storms—it's about building stronger ships. While 2024 brought headwinds for both its intermodal and coal segments, the company's strategic initiatives are laying the groundwork for a durable turnaround. By pairing operational discipline with capital-efficient investments, CSX is crafting a narrative that could unlock significant shareholder value in the years ahead.

The Intermodal Resilience Play

Let's start with the intermodal segment, where CSX delivered a 5% volume increase in 2024 despite a 1% revenue decline. This might sound like a paradox, but it's a classic case of “volume over pricing” in action. The 8% drop in revenue per unit was driven by lower fuel surcharges and pricing pressures, yet the company managed to grow international and transcontinental shipments. The key takeaway? CSX's ability to maintain customer relationships through service reliability is paying off.

The chart above would show a gradual decline in revenue per unit, but the volume growth tells a different story. With the Howard Street Tunnel project nearing completion (expected to enable double-stack intermodal capability by Q2 2026), CSX is poised to capture higher-margin opportunities in cross-border trade. This infrastructure investment isn't just about moving more containers—it's about moving them faster and cheaper, which directly boosts margins.

Coal's Painful Reset and Long-Term Potential

The coal segment, however, is a different beast. A 10% revenue decline in 2024 and a 7% drop in revenue per unit highlight the sector's struggles with global pricing and domestic utility demand. Export coal was hit by weak international benchmarks, while domestic shipments fell due to reduced utility plant activity. But here's the twist: CSX's management isn't panicking.

The data shows a clear downtrend, but the company is betting on a cyclical rebound. With domestic coal demand supported by high natural gas prices and delays in coal plant closures, CSX is positioning itself to benefit from a potential recovery. The real catalyst? Mine restarts in 2025 and 2026. While the segment is a drag today, it could become a tailwind if energy markets stabilize.

Operational Efficiency: The Unsung Hero

CSX's 550-basis-point sequential improvement in operating margins in Q2 2025 isn't a fluke—it's the result of relentless cost discipline. Fuel efficiency improved by 4% in 2024, and technologies like yard inspection drones and wayside car health monitoring are reducing derailments and downtime. These aren't just cost-savings; they're margin-expansion engines.

What's more, the company's focus on train velocity and service reliability is paying dividends. A 91% intermodal trip plan performance rate in 2024 (despite a 4% decline from 2023) and a 550-basis-point operating margin improvement in Q2 show that CSX is turning the corner. When a railroad can move goods faster and safer, it gains pricing power—a critical edge in a commodity-driven world.

Shareholder Value Creation: The Full Picture

With $1.7 billion returned to shareholders via dividends and buybacks in 2025 alone, CSX is walking the talk on capital allocation. But the real magic lies in its long-term projects. The Howard Street Tunnel and Blue Ridge rebuild aren't just infrastructure upgrades—they're growth catalysts. Double-stack intermodal capability alone could boost revenue by 15-20% once fully operational.

Investment Thesis: Buy for the Long Game

For investors, CSX's story is about patience and execution. The intermodal segment's volume growth and coal's potential rebound are underpinned by strategic investments that reduce unit costs and enhance capacity. With management guiding for mid-teen earnings growth in 2026 and a robust industrial development pipeline (49 new projects in 2025), the company is building a moat that's hard to replicate.

Yes, near-term headwinds persist—especially in coal. But for those with a 3-5 year horizon, CSX offers a compelling mix of defensive and offensive plays. The key is to look beyond the quarterly noise and focus on the structural changes that are reshaping the company's margins and capacity.

Final Call to Action

CSX isn't a get-rich-quick stock—it's a compounder. By combining operational rigor with capital discipline, the company is setting itself up for a post-2025 surge in profitability. For investors willing to ride the turnaround, now is the time to consider adding shares. After all, in the railroad business, the ones who build the tracks often reap the rewards for decades.

This chart would highlight the sequential improvements and underscore the company's ability to adapt. With the right mix of grit and innovation, CSX is proving that even in a down market, the right operator can turn lemons into lemonade—and shareholders into believers.