Berkshire's New Chief: BNSF Must Close Profitability Gap With Rivals

Key Details Berkshire Hathaway's new CEO Greg Abel laid out clear expectations for BNSF Railway in his first shareholder letter: the railroad needs to significantly improve its operating margin to compete with industry leaders. BNSF's 2025 operating margin reached 34.5%, up from 32.0% in 2024, but the railroad still lags behind Union Pacific's performance by 5.7 percentage points. Why It Matters Abel emphasized that operational improvements alone aren't sufficient. He noted that each one-percentage-point improvement in operating margin generates approximately $230 million in additional operating cash flow. The new CEO set ambitious expectations, stating Berkshire would be disappointed without substantial margin gains over the next few years. The Numbers BNSF generated $8.1 billion in net operating cash flows in 2025 and returned $4.4 billion to Berkshire through dividends. Operating earnings increased 7.8% to $8.05 billion despite flat revenue of $23.3 billion, while operating expenses declined 3.7%. Volume remained relatively flat at 0.3% growth, though three of four business segments gained volume, with intermodal and automotive shipments showing particular strength. Moving Forward Abel confirmed that Berkshire's core principle of granting subsidiaries operational autonomy remains unchanged under his leadership. The railroad achieved faster shipment times and reduced terminal idling in 2025, demonstrating the foundation for future profitability improvements.