OMAHA, Neb. — BNSF Railway needs to close the operating-ratio gap with the other Class I railroads, new Berkshire Hathaway CEO Greg Abel said on Saturday in his first annual letter to shareholders.
BNSF 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,” Abel noted.
“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.”
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.
“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 Chairman Warren Buffett set at Berkshire Hathaway remain intact — including letting the conglomerate’s companies have a large degree of autonomy.
Last 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 a 0.3% gain over 2024. Three of BNSF’s four business segments gained volume for the year, however.
Consumer products volume — which includes intermodal and automotive traffic — increased 1.2% last year. “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.
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