CSX Sees Volume Uptick From Spike in Truck-to-Rail Conversions: Iran-War Fuel Costs Push Intermodal Volumes Up 6%

U.S. Class I railroad CSX reported a volume uptick on its Q1 2026 earnings call, citing higher fuel and trucking costs as the catalyst pushing shippers onto rail. Senior Vice President and Chief Commercial Officer Maryclare Kenney said the railroad handled 1.56 million units in the quarter, up 3% year over year, with intermodal volumes up 6% YoY and intermodal segment revenue also increasing on the period.

The conversion is being driven by elevated diesel and trucking rates tied to the Iran war. Shippers are moving to rail before intermodal pricing catches up to truck rates, creating a narrow window of opportunity for the rails. Kenney said the current market dynamic has made CSX more optimistic than earlier this year about truck conversion opportunities, particularly for the company's domestic intermodal business.

CSX is also building new capacity to capture the trend. The railroad plans to soon launch the Southeast Mexico Express (SMX) service with CPKC, providing what Kenney called "truck-competitive transit between major markets in the southeast with Dallas and Mexico, and recent investments will enhance both speed and efficiency." Competitors Union Pacific and Norfolk Southern echoed cautious optimism on the same earnings cycle: UP's EVP of Marketing and Sales Kenny Rocker said a more sustained fuel-price step-up would lift volumes through the year, while NS EVP and Chief Commercial Officer Ed Elkins said dry-van pricing strength and tightening capacity were supportive, even as competitor activity around the planned UP-NS merger tempered the outlook.

For supply chain managers the takeaway is threefold. First, the truck-to-rail modal shift is accelerating with the current fuel cycle and could keep intermodal volume growth elevated through 2026 if the rate gap stays in rail's favor. Second, the CSX-CPKC partnership opens a fresh corridor for U.S.-Mexico cross-border nearshoring flows — directly relevant to companies scaling production in semiconductors, automotive, and durable goods who need cheaper southbound logistics. Third, as NS CEO Mark George noted at a J.P. Morgan industrials conference, high gas and fuel prices also boost coal and utility freight, suggesting a secondary volume tailwind for thermal-power-linked cargo categories.

Key Takeaways:
1. CSX moved 1.56 million units in Q1 2026, with total volume up 3% YoY and intermodal volume up 6% YoY.
2. The driver is elevated diesel and trucking rates tied to the Iran war; shippers are converting to rail before intermodal pricing catches up.
3. CSX is preparing the CPKC-partnered Southeast Mexico Express (SMX) service for truck-competitive U.S.-Mexico cross-border transit.
4. Union Pacific and Norfolk Southern voiced cautious optimism on the same earnings cycle; UP-NS merger competitor activity tempers NS's outlook.
5. High fuel prices are also lifting coal and utility freight volumes, providing a secondary tailwind for rail.

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