CSX raised its full-year outlook after reporting higher second-quarter volume, revenue and operating income, citing a continuing rebound in traffic and stronger financial performance.

“We now expect full-year revenue growth in the mid to high single-digits, operating margin expansion of greater than 350 basis points, and free cash flow growth of greater than 80%,” Chief Executive Steve Angel said Wednesday on the railroad’s earnings call. The railroad (NASDAQ: CSX) had previously forecast mid-single-digit revenue growth and operating margin improvement of between two and three points.

“The updated outlook reflects strong volume growth, improved financial performance, and the continued focus on productivity and cost control,” Angel said. “We continue to see opportunities to strengthen service execution, improve productivity, and drive long-term efficiency across the railroad. Those efforts remain central to our goal of delivering sustainable improvement over time.”

For the second quarter, operating income increased 17% to $1.5 billion, while revenue rose 10% to $3.93 billion. Earnings per share climbed 23% to 54 cents. CSX’s operating ratio improved by 2.4 points to 61.7%. Operating ratio, a closely watched railroad profitability measure, represents operating expenses as a percentage of revenue, so a lower figure indicates improved efficiency.

Total volume rose 6% during the quarter. Intermodal was the strongest category, with 9% growth. Merchandise and coal carloads each increased 4% from a year earlier. Within merchandise, all commodity categories posted gains except automotive, which declined 1%, and forest products, which was unchanged.

CSX said it expects continued highway-to-rail freight conversions in intermodal and merchandise, supported by tight truck supply, stronger demand and a forecast for stable to slightly positive coal volume in the second half of the year. The conversion opportunity is important for railroads because intermodal and merchandise traffic can broaden revenue beyond bulk commodities while testing network reliability as volumes rise.

“Customers are increasingly turning to rail for their supply chain needs,” said Maryclare Kenney, chief commercial officer, “and we are focused on earning their business through competitive service offerings and reliable execution.”

Service metrics were mixed in the quarter. Average train speed improved 3%, but terminal dwell increased 6%. Intermodal trip-plan performance fell two points to 88%, while carload trip-plan performance declined four points from a year earlier to 71%. On-time train departures improved by one point to 70%, while on-time arrivals slipped by one point to 54%.

Those measures matter to shippers because they reflect how consistently freight moves through the network, not only how much freight the railroad can handle. The gap between stronger volumes and weaker dwell and trip-plan performance frames the operational issue CSX said it is now focused on improving.

“The bottom line is that the quarter showed we can handle stronger volumes and do it safely and efficiently,” Chief Operating Officer Mike Cory said. “And while we count on those two things to continuously improve, our next step is really to convert that into more consistent fluidity and service.”

Cory said CSX would make a “modest increase” in headcount. Addressing terminal dwell and trip-plan performance, which he said “aren’t where we want them to be,” Cory said demand was stronger than expected and that some locations were tight on crews.

“The short version of that is the demand came in much stronger than we expected, and we were tighter on crews in some of our locations. But we managed through that by being safer and more efficient,” Cory said.

Among the railroad’s efficiency initiatives, Cory cited a 5% increase in average tonnage per merchandise train.

CSX also reported a 4% improvement in fuel efficiency, though Chief Financial Officer Kevin Boone said fuel costs remain a significant concern.

“The big factor here on the margin side will be the fuel,” Boone said. “We’ve seen a lot of volatility in the fuel price. Certainly, we face the fuel lag in the second quarter of the year, and that should go away. But all bets are off on where the fuel could go. We saw a pretty dramatic increase this past week.”

Boone pushed back on a suggestion that CSX’s productivity and cost-control improvements reflected the capture of “low-hanging fruit.”

“I would say expenses and efficiencies are never low-hanging,” Boone said. “There’s a lot of work that goes into the efforts. Coming into the year, we had a plan, and we’re delivering on that plan, which I’m encouraged about.”

Boone said one early area of focus was outside expenses. “We’re looking at all of our contractors, everything that we pay outside of the company first. And quite frankly, Mike and his team have come to the table with ideas on insourcing, and we found opportunities to insource activity and use our employees to do that work. And that’s materialized in the savings as well. We see other opportunities there.”

CSX’s key safety metrics improved in the quarter, with the personal injury rate down 19% and the train accident rate down 30%.