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Second, we recently announced the appointment of Mark Wallace as Executive Vice President, Sales and Marketing. I've known Mark for a long time and his ability to lead, combined with more than 20 years of scheduled railroading experience will allow our sales and marketing team to work more effectively with our customers and drive profitable growth.

Diana Sorfleet will take over most of Mark's former portfolio, assuming increased responsibility as Executive Vice President and Chief Administrative Officer. Diana in her role at CSX as Chief Human Resources Officer has been a big part of our transformation by driving a more productive and engaged workforce. Her new responsibilities, which will now include technology and labor relations provide a significant opportunity to drive a more focused organization.

Now, to get to the slides, let's turn to slide five and start with our results. Two words, I think, sum up everything -- great performance. Just like the first quarter, there's nothing unusual in these numbers. They're very straightforward. EPS increased 58% to $1.01 versus last year's adjusted ESP of $0.64. The new lower tax rate and lower share count, down 6%, contributed to this significant year over year increase.

Our operating ratio improved 490 basis points to a record 58.6 compared to last years adjusted OR of 63.5, clearly, the lowest ever for CSX and I believe the lowest ever by a US railroad. A significant year over year improvement on our results was driven by 6% topline growth, combined with price and lower costs pretty much across the board with the exception of fuel.

Revenue increased 6% as price, fuel surcharge, supplemental revenues, and a 2% increase in volume all contributed to positive growth this quarter. Similar to recent trends, we did see slight improvement in pricing this quarter, excluding coal.

A quick look at the next slide on the business segment, each were positively impacted by higher fuel price. In chemicals, strength in industrial products, plastics, and crude by rail was partially offset by our fly ash losses, which we discussed last quarter.

Auto saw strength based on North American US light truck production, which was up 5%. In forest products, lumber, panels, wall board, and paper products all increased in the quarter. In metals, shipments of sheet steel and construction-related steel products drove increases. Fertilizers -- revenues, as I had mentioned previously, were mainly lower due to the Plant City facility closure last year. And in the coal markets, export coal remained very good during the quarter and it showed healthy gains. Utility coal continued to weaken.

On the intermodal side of the business, growth continued to come from the international markets with domestic relatively flat on a year over year basis because of the line rationalizations that we went through in the fall of 2017.

Other revenue declined due to a $58 million liquidated damages hit, which was in last years results, which did not repeat this year. Excluding that item, we saw gains in supplemental revenue, including demerge. We continue to work with customers to create a more fluid network, especially as we approach the fall peak season.

On slide seven, let's take a quick look at some of the key operating metrics this team is focused on. Train velocity increased year over year and on sequential basis. Terminal dwell saw an 11% year over year and 7% sequential improvement. While we drove improved velocity and dwell, train length increased on both a year over year basis 13% and sequentially 5%. Improving all three of these metrics at the same time is no easy task.

Finally, car miles per day showed low double-digit improvement on both a year over year and sequential basis. This is a good measure of asset efficiency and our ability to effectively turn our assets. The improvements we saw in these metrics clearly translated into our financial results.

Now, let me hand it off to Frank, who will go through the financials in more detail, as well as the benefits of these operating improvements.

Frank Lonegro -- Executive Vice President and Chief Financial Officer

Thank you, Jim, and good afternoon, everyone. Turning to slide nine, I'll walk you through the summary income statement.

Reported revenue was up 6% in the second quarter, driven by 2% more volume, higher fuel recoveries, and solid core pricing gains across all major markets. Same store sales pricing, which reflects year over year increases for stable traffic improved sequentially in the second quarter. Pricing for merchandise and intermodal contracts that renewed in the second quarter were strong, exceeding same store sales pricing growth.

Other revenue was down year over year, though the benefit of higher demerge and storage charges mostly offset the cycling of $58 million in liquidated damages from the prior year. Note that we now expect other revenue to remain on the $130 million to $140 million per quarter range for the remainder of the year.

Moving to expenses, total operating expenses were 8% lower in the second quarter or 2% lower after normalizing for last year's restructuring charge. Overall, labor and fringe savings of $82 million or 11% year over year were driven by an 11% reduction in average headcount. This smaller labor footprint spans both the operating and G&A departments. On the operating side, year over year improvements of 7% in velocity and 13% in train length drove more efficient use of our train crews and rolling stock.

Even with 2% volume growth, train and engine employee road starts were down 9%, while yard and local starts also fell 9% and the level of recruits, a signal of network fluidity, dropped by 15%.

Shifting to mechanical, the active locomotive count was down 13%, reflecting our ability to keep over 600 locomotives in storage despite higher volumes. The smaller fleet, along with freight car repair efficiencies helped drive an 18% decrease in our mechanical craft workforce. We recently aligned the engineering function to the regional structure we have for mechanical and transportation, which will also yield headcount and other efficiencies moving forward.

Our G&A headcount continues to decline as we look for every opportunity to absorb attrition. Over the past year, we have eliminated unnecessary layers of management, yielding a structure that is cost-effective, that enables rapid communication and decision making across our network. MS&O expense was down 5% against the prior year. As you look at the year over year comparisons in MS&O, recall that we are cycling a $55 million gain from a favorable legal judgement in the second quarter of 2017.

This year, results benefited from $37 million of real estate gains as we continue to make headway in monetizing our surplus real estate portfolio. These gains are consistent with our guidance to achieve $300 million of cumulative real estate sales through 2020. From an operational perspective, many of the key drivers of labor expense favorability also yielded savings in MS&O in the quarter, as lower asset and resource levels helped drive down MS&O expense. Material savings attributed to the smaller locomotive fleet are complemented by our decision to store units that are less reliable.

The decisions we've made around storage, combined with additional fleet and reliability efforts drove a 33% year over year improvement in our locomotive out of service measure and for the reduced costs related to materials and contracted services.

Looking at non-labor costs associated with our train crews, the reduction in road crew starts, combined with better network fluidity yielded lower hotel and taxi costs. Additionally, MS&O continues to benefit from our efforts to streamline contractors and consultants, particularly in our technology department. Consistent with our prior guidance, we remain on track to reduce our total workforce by 2,000 resources by the end of 2018.

Looking at the other expense items, depreciation increased slightly as the benefit of asset sales mostly offset the impact of capital investments. Yield expense was up, primarily due to a 36% increase in the per gallon price, though we were pleased to achieve record fuel efficiency in the quarter. We will continue to drive further fuel savings through continued improvement in network fluidity, train length increases, and the use of fuel optimization technologies.

Higher equipment rent expense is mainly attributed to volume growth. These volume-related increases were partially offset by improving car cycle times across most markets. Equity earnings were favorable due to improved performance of our affiliates, in addition to a non-recurring benefit from an affiliates property sale in the quarter. Given the recent strong performance, we now expect core equity earnings of affiliates of $20 million to $25 million in Q3 and Q4. Lastly, just as a reminder, we are cycling 2017's restructuring charges.

Looking below the line, interest expense increased primarily due to the additional debt we issued earlier this year, partially offset by a lower weighted average coupon rate. Tax expense was lower year over year, even with higher pre-tax earnings, given the benefits of a new lower corporate tax rate.

Our effective tax rate was 23.3% in the quarter, slightly lower to our prior guidance, mainly due to a one-time benefit from state legislative changes. Going forward, absent one-time events, we expect our effective rate to be around 24.5% for the back-half of the year. Closing out the P&L, as Jim highlighted in his opening remarks, CSX delivered record operating income of nearly $1.3 billion and record operating ratio of 58.6%.

Turning to the cash side of the equation on slide 10, year to date capital investments are lower by 14% and keep us all on track for a three-year, $4.8 billion capital target. The reduced capital intensity of the scheduled railroading model, the substantial core earnings progress detailed on a prior slide, and the benefits of tax reform helped drive a nearly $600 million increase in year to date adjusted free cashflow.

Significant improvements in free cashflow generation combined with higher leverage enabled us to nearly double our shareholder returns compared to the first half of 2017. We have now completed approximately $2 billion of the current $5 billion buyback authority and remain on pace to complete the program by the end of Q1 2019. As we stated at our investor conference, CSX will continue to evaluate cash deployment and shareholder returns on an annual basis.

In closing, I will reiterate the three key priorities that drive this management team on a daily basis, ensuring the safety of our employees and communities, delivering great service for our customers, and appropriately rewarding our shareholders.

With that, let me turn it back to Jim for his closing remarks.

James M. Foote -- President and Chief Executive Officer

Great. Thanks a lot, Frank. Turning to the last slide, number 12 -- while we've achieved a lot in a very short period of time, we are far from where I believe we can go. As many of you know, we just rolled out our trip plan compliance a few months ago. We're in the early stages of driving improvement in this metric and there is significant opportunity there to get better.

Trip plans are so important as we think about delivering even better customer service and asset efficiency. It allows us to track every car and container on our network and identify at a very discreet level where we may have a problem. This allows us to know why something happens so we can react and, more importantly, fix any problems so it does not repeat.

I mentioned velocity and dwell earlier. Clearly, to be the best, we have more room to improve. Our train speed specifically, we have specific opportunity to improve as we remain below the industry leaders. Our dwell is better than the industry average, but again, there is significant runway for opportunity before we can call ourselves the best.

Cars on line continue to be a focus of this team. We are in the business of moving cars and the more efficient we get, the less cars we need to move with the move to save volume. Returning cars faster, it also frees up capacity for us to take on additional business. Finally, fuel efficiency -- diesel prices are up, so this becomes even more important. There are many ways to drive improvement in this area. Fuel alone this quarter was $270 million in cost. So, we are in the $1 billion run rate range for the full year. These are big dollars. From trip optimizer to distributed power, we will use all of these to drive improvement and lower cost.

Now, on revenue -- we are raising our full-year guidance from up slightly to up mid-single-digits. At some investor conferences, I said we were trending to be a little better than where we thought we would be at that time of the year. This slightly higher outlook is a reflection of a number of factors, including our belief that export coal strength will continue, higher fuel prices will remain, and a healthy economic backdrop.

Obviously, there are factors we cannot control, mainly, the economy. That can provide some variability as we get into the back half and fourth quarter, specifically. But this is how we see it today.

In closing, we have shown as relentless focus on executing our business model. But let me assure you, we have an eye in the horizon to develop long-term sustainable growth. Our business practices are new to CSX employees, but are becoming part of our DNA as we work hard every day with the goal of becoming the best-run railroad in North America.

Thank you and I'll turn it back to Kevin.

Kevin Boone -- Chief Investor Relations Officer

Alright. Thank you, Jim. In the interest of everyone's time today, I would ask that everybody limit themselves to one question and one short follow-up if needed. Operator, we'll take questions.

Questions and Answers:

Operator

Thank you. We will now be conducting a question and answer session. Our first question comes from Amit Mehrotra. Your line is open.

Amit Mehrotra -- Deutsche Bank -- Analyst

Hey, thanks a lot. Congrats on the great results. Jim, the OR, obviously, in the second quarter is below the target that you set for 2020. Fully understand the nuances, the seasonality and the risks around the macro, but would it be fair to characterize the 2020 target as conservative based on what the team's achieved so far? If so, what do you feel maybe is the structural limit of where you can take that OR over that time period? Thanks.

James M. Foote -- President and Chief Executive Officer

Well, over the time period, what we laid out just three months ago when I stood up there and said we had a target of 60 in three years and I think everybody in the room kind of thought I was crazy, that we'd never be able to get there. We're only two quarters in. So, we're clearly not changing our guidance here and what we think is achievable. As I said, we have a lot of work to do. We got a lot of help this quarter from coal.

So, if things continue to align, I continue to say I have confidence that we can get a number, 60, which everybody, I think, thinks is extremely impressive. So, there's no change in this short period of time from what we laid out just a quarter ago.

Amit Mehrotra -- Deutsche Bank -- Analyst

Right. Okay. Kind of related to that is my follow-up. Your comments at the end there with respect to where you are in implementing PSR and just a lot more room to go in terms of low-hanging fruit on the cost side in particular, I would imagine -- can you just talk about where PSR is not represented in the network today?

I guess some of the new initiatives that you're taking on, specifically on the intermodal franchise in terms of implementing scheduled railroading, that strategy on that particular business -- if you can talk about some of the places where it's not represented and the opportunity there more concretely in terms of reductions in dwell time or things like that, that would be great.

James M. Foote -- President and Chief Executive Officer

One answer -- intermodal. Our intermodal network needs a ton of work in order to become the efficient part of our system that it needs to be. We are just really beginning to get in there and start to figure out how to rationalize that big part of our business so we can become much more efficient and have a much better product for our customers.

Amit Mehrotra -- Deutsche Bank -- Analyst

And should we be watching origin dwell time, yields in that business? How we should monitor looking outside in terms of your progress there?

James M. Foote -- President and Chief Executive Officer

Yeah. It will be reflected in all of our metrics. Again, our terminal dwells are pretty good. But we have a network franchise here that, to a large degree, is dysfunctional. And it is a product of, for many, many, many years, CSX having a stand-alone intermodal entity. So, we need to kind of go forward and reconfigure the franchise and make sure that it is properly and appropriately integrated into the rail company so we can achieve the benefits of operating more effectively and efficiency.

So, we are in the very early stages, a lot of work to do in that area and every other area. As I said, yeah, we had some great results and we did that. We don't have the highest velocity. We don't have the lowest dwell. So, we have a lot of opportunity ahead of us to get even better.

Amit Mehrotra -- Deutsche Bank -- Analyst

Yeah. It makes it seem, just that 60 OR, so conservative. Those are my two, so I'll leave it there. Congrats again. Appreciate it.

Operator

Our next question comes from Ken Hoexter with Merrill Lynch. Your line is open.

Ken Hoexter -- Bank of America Merrill Lynch -- Managing Director

Hey, great. Good afternoon. Again, congrats. That's a phenomenal job on the operating ratio so quickly. Jim, I guess on the on-time originations and arrivals, both are down year over year, but you noted the calculation has changed in the details, but the results were restated to conform. Why are they down, given a network improvement and how everything is accelerated on the network?

James M. Foote -- President and Chief Executive Officer

We're pretty comfortable, obviously we'd like to be better, on the originations. We depart our trains pretty close to on schedule. We don't get them across to the network as effectively as we should. If we give ourselves, which we don't, but if we did, from a counting standpoint, give yourselves a couple of hours of flexibility on either end, we depart at a high 90% of our trains to schedule and again, we get to destination, again, with that two-hour cushion over a three-day operating period, in the 80% range. That's not acceptable. That always comes up for a number of different reasons.

So, we need to continue to be able to work to eliminate the causes of failures. That's why our trip plan compliance is in the 60% range. We need to get that up to 100%. When the trains fail to arrive on time, they miss their connections and therefore, we're off a trip plan. So, all those things need to improve and a lot of it has to do with culture, with people recognizing there's going to be a failure and they go above and beyond the call of duty to make sure we get the box to make the connection on the next train.

As I've said many times, what does a UPS employee do when he sees that a box is not going to get in the truck? He runs behind the truck down the road and makes sure that he gets the box on the truck. Our guys kind of wave to the train, "See you later," and the car runs a day later. So, it's culture and it's all kinds of changes that we need to take place in order to get better.

Ken Hoexter -- Bank of America Merrill Lynch -- Managing Director

Wonderful. Thank you. And if I can get the follow-up on pricing -- Frank, you mentioned that pricing accelerated on a pure pricing basis. Are there levels you can talk to, especially given how tight the truck market is? Can you be any more specific in terms of are you seeing it going 100 basis, 200 basis points up on a sequential year over year basis from where you were?

Frank Lonegro -- Executive Vice President and Chief Financial Officer

Yeah, Ken. I think you probably know the answer to that question. I think what we're trying to help you understand is the environment is a strong environment. That's why we're seeing the contract renewals come in higher than the same-store sales, pricing. I think the last public number we have out there is in Q3 of 2017 at 2.2% for merchandise and intermodal. What we can say is that we have seen sequential improvement every quarter since then and same store sales and the discretionary renewals in Q1 were better than that and the discretionary renewals in Q2 were better than that.

Ken Hoexter -- Bank of America Merrill Lynch -- Managing Director

Wonderful. Thanks for the time and great job.

Operator

Our next question comes from Brandon Oglenski with Barclays Capital. Your line is open.

Brandon Oglenski -- Barclays -- Analyst

Hey, good afternoon, guys. Thanks for taking my question. I don't know if Mark is on the call, but for Jim or Mark, it seems the improvement here is coming maybe a bit faster, as the first two questions kind of alluded to. Does this in any way change your philosophy on the revenue outlook?

I think at the analyst day, you were saying, "Look, maybe we'll get a little bit of growth in '18," but obviously, you're seeing a bit more now. Is that because of the changes you made in the network? Is the market that much stronger? Now at the lower cost base, does that change the dynamic on focusing between price and volume at all?

James M. Foote -- President and Chief Executive Officer

As I said at the investor day and as I've said basically ever since I've been here, number one, I don't differentiate in the implementation of scheduled railroading that you ignore your customer and don't focus on growing the topline as you implement your operational changes. You do that at the same time. We have been looking to improve the quality of our service and work with our customers to grow our business throughout the last six months with, I would say, pretty favorable results and responses from our customers.

They went from, when I showed up here, hating me, to now, on occasion, even buying me a drink. So, we've made great improvements in our customer relationships. But I don't see a differentiation here. I also don't look at this as, "Oh, you're a price leader or a price taker? You're focused on volume or you're focused on price?"

We're focused on growing our business with long-term, sustainable, profitable business that people recognize that we have differentiated ourselves in the marketplace, we have a better product to sell to our customers, and our customers recognize that by working with us and paying us more because we're a better quality product, they can save money in their business. That's our strategy. That's our strategy to grow the business, and that has been our strategy since day one and will continue into the future.

Brandon Oglenski -- Barclays -- Analyst

Appreciate it, Jim.

Operator

And next, we'll go to Tom Wadewitz with UBS. Your line is open.

Tom Wadewtiz -- UBS -- Analyst

Yeah. Good afternoon. Great results. I'm sure everybody's going to refer to that, but they're obviously very impressive. What do you think about OR in the second half? You were sub-60 in second quarter, probably implies numbers ought to go up in the second half. Is it pretty reasonable to think you'd be sub-60 in the second half as well or is there anything in terms of incentive comp as a tailwind that would be a headwind or anything else we ought to consider when we think about second half OR relative to the really strong results in the second quarter?

James M. Foote -- President and Chief Executive Officer

Sure, Tom. From a seasonality standpoint, the second quarter for CSX is always the best. So, one would assume that's going to always be the best this year too. Going forward into the second half of the year, number one, the way we account for our vacations, we have a disproportionate amount of labor expense associate with vacations in the second half of the year. We have a 3% wage increase, around 3% wage increase in the second half of the year. So, those are headwinds that we have planned for and have expected all along.

Then the most reliable variable is the weather here in the fourth quarter, which is a new phenomenon for me and Mark, where you've got a hurricane in Florida and the Gulf, while you're worrying about freezing rain in Atlanta and snow in Chicago and on Lake Erie. So, we always seem to have weather that makes it more difficult for us to operate in the third quarter and fourth quarter.

So, those are the kinds of things that we look at and say it is totally rational and what we believe to be the case that our expenses in the third and fourth quarter will be higher than the second. I can tell you that they'll be lower than they were last year. How about that?

Tom Wadewtiz -- UBS -- Analyst

Okay. Sure. That's fair. I appreciate the color on that. Let me ask you also -- you made a comment on the intermodal network. It seems to imply you might simplify it further. I don't know if that's accurate or not. But how do you think about the potential changes to get the intermodal network right? Is that simplifying the flow, fewer touches? What might be the timing for that? Is that something that you can do pretty quickly or is that something you need to plan and execute over multiple quarters and maybe you see that result in 2019?

James M. Foote -- President and Chief Executive Officer

I think, as I said earlier, Tom, we're just starting to really peel this back and understand what changes we need to make. Obviously, last year, it was well-talked about when Hunter changed the philosophy and got rid of the hub and spoke. That was about 7% of the volume that was taken off the railroad. At that point in time, it was my belief that a large part of that rationalization of intermodal had been accomplished. Well, that's not the case.

But we're going to take it very methodically. We are going to have very good and open communication with our customers about what it is we're trying to accomplish. It involves train design changes. It involves terminals and potential terminal consolidations. And we will do this very methodically and logically and appropriately and do it being fully aware of the fact that we are looking at a peak season this year, which everybody is indicating to us is going to be very strong. So, we're not going to do anything that's going to screw up the railroad. So, if it takes a little longer than a quarter or two, I'm fine with that.

Tom Wadewtiz -- UBS -- Analyst

Okay. Great. Thanks for the time. Appreciate it.

Operator

Our next question comes from Chris Wetherbee of Citigroup. Your line is open.

Chris Wetherbee -- Citigroup -- Analyst

Good afternoon. Thanks for taking the question. I wanted to touch a little bit on the revenue and volume outlooks. You're taking the revenue numbers up. I think some of that is driven by what you're seeing on the other line, but how do you think about the volume outlook and queueing up the competitive environment. You brought the OR down arguably a lot faster than most of us had expected. Does that open up new opportunity to see some of that in the second half? How do you think about those opportunities going forward?

James M. Foote -- President and Chief Executive Officer
I believe that the operating ratio is a reflection of the efficiency of our service, which, in my mind, means that we continually improve the product that we offer to our customers. We are not working diligently to drive down the operating ratio so that we can be the price leader in the marketplace. So, I think, as I said last time, we don't get stickers and bonus points for volume. Therefore, to the extent that we can sell our product as a superior product in the marketplace, we fully intend to do that.

Clearly, we have as much flexibility as we want to if there are unique opportunities in the marketplace where a customer to us is not interested in quality of service, but is only interested in price. And if makes sense for us, being the low-cost provider, to pursue that business, we can do that too. So, we have all the flexibility in the world to pursue whatever business segments we want.

Our principal objective here is to be a better-run network that has a differentiated service product in the marketplace that demands a higher price for that, then we can grow business at the expense of truck, which we already know the customer is paying 15% to 20% more for. So, why discount your better quality product when you know you can save the customer money by having a service that's more truck-like?

Chris Wetherbee -- Citigroup -- Analyst

Okay. So, it sounds like there might be an opportunity there on the volume side. That's helpful. Getting a little bit more specific, when you think about export coal as you look out into the back half of the year, I know this is a tough commodity to predict, but I think you've given us some help in the past -- any changes to that high 30 million ton number that we've talked about for 2018 as we look out to the second half?

James M. Foote -- President and Chief Executive Officer

Yeah. In the second half, clearly one of the reasons that we have talked now about higher volume is because export coal has been better in the first half of the year and appears that it will be better in the second half of the year than what we originally expected. Frank, maybe you have some further comment on that.

Frank Lonegro -- Executive Vice President and Chief Financial Officer

Yeah. So, we were at about 22 million tons in the first half. If the framework holds, as Jim mentioned in his opening remarks, and we see in the indices hold at the 200 and 100 or higher on the med and the thermal index, you can see that same run rate prevail in the second half. So, early to mid-40s would be probably a decent range for you.

Chris Wetherbee -- Citigroup -- Analyst

That's helpful. Thanks very much for the time. I appreciate it.

Operator

Next, we'll go to Scott Group of Wolfe Research. Your line is open.

Scott Group -- Wolfe Research -- Managing Director

Hey, thanks. Afternoon, guys. I wanted to follow up on intermodal and what you've been talking about. Jim, maybe give us some perspective -- what is this OR relative to the rest of the business? Are we 1,000 basis points behind? Maybe 2,000 basis points behind? If you could, directionally give us some color there. Once you've got it all optimized the way you want to, how close do you think intermodal margins can be to the rest of the business?

James M. Foote -- President and Chief Executive Officer

Well, as I think I tried to portray, we have a lot of areas in intermodal where we can make improvements. We don't describe the various business segments in great detail in terms of what's more profitable than the other. You've been around this business long enough. You know which ones are. I can tell you when I did this at CN and when we got involved and did the same thing at CN -- we fixed up the merchandise business and then we went over and started in intermodal, and intermodal at CN was a basket case.

When we were done fixing it over a couple year period, the average profitability of our intermodal business there was better than the corporate average. So, we've got a ton of work to do and I couldn't be happier that Mark's here to do it. We'll just keep updating you. But it's going to be small, it's going to be gradual, and it's going to be a good process that works for our customers as well.

Scott Group -- Wolfe Research -- Managing Director

Okay. That makes sense. Real quick, some number questions -- the raise in the other revenue guidance, is that because customers are not changing behavior or are you rolling it out to more customers? Then do you have any way to, $70 million in real estate in the first half, any way to put a range on what you think is realistic for second half?

Frank Lonegro -- Executive Vice President and Chief Financial Officer

Thanks, Scott. On other revenue, I'd say it's two things -- one, the behavioral changes that we're looking for, obviously through the increases in the rates in the reduction of free days, it just isn't happening as quickly as maybe we thought it was three months ago or was going to three months ago. That's, I think, the answer on that one. We did roll out some additional policies effective July the 1st. That then leads into the run rate there.

On the real estate side, yeah, you're right, we had about $70 million in the first half. So, we had a good first quarter, a good second quarter. You all probably saw the line sale that was announced with OmniTRAX a couple of weeks ago. That combined with some smaller transactions that we may close in the third quarter, I'd say we'll have a good third quarter, not unlike what we saw in Q1 and Q2.

Scott Group -- Wolfe Research -- Managing Director

Helpful, guys. Thank you.

Operator

And we will go to Brian Ossenbeck of J.P. Morgan. Your line is open.

Brian Ossenbeck -- J.P. Morgan -- Analyst

Hey, good afternoon. Thanks for taking my question. I just wanted to talk about the domestic coal side for just a bit. Obviously, the volumes were a challenge this quarter, remain a challenge for the first half of the year. Are you seeing anything from structural competition from new gas fire power plants, gas pipelines going further down south, especially into Florida? Do you still have the confidence that there's going to be no material retirements of coal-fired plants this year or for the next couple years through 2020?

Frank Lonegro -- Executive Vice President and Chief Financial Officer

Hey, Brian, it's Frank. I think the utility story has marginally stayed the same. Nat gas is 275-ish, which isn't all that helpful to the environment, though stockpiles in the south have come down pretty significantly and the cooling degree days are up year over year, we're just not seeing the burn rate go up in coal quite yet, but a lengthy hot summer and a cold winter would certainly help those.

In terms of your structural competition, we don't know of any plant closures that are going to impact us significantly in the next couple of years that are new. Clearly, we have a couple that are going to roll off. We knew about those. We've adjusted our outlooks for those, but nothing new.

Brian Ossenbeck -- J.P. Morgan -- Analyst

Okay. Thank you. If you could, give us a quick update on the leased and licensed, the wires and pipes, the other ancillary revenues. Are those things that you're starting to be able to monetize yet or is that something that will start to pick up in the back half or 2019? Thank you.

Frank Lonegro -- Executive Vice President and Chief Financial Officer

Brian, it's both. We've had an ongoing business of licenses and leases that utilize or cross over the corridor. Mark and his team has been increasing those over time and will continue to deliver and are on track to deliver the $300 million guidance that we gave you at the investor conference over three years.

Brian Ossenbeck -- J.P. Morgan -- Analyst

Alright. Thanks for your time.

Operator

Our next question comes from Matt Russell of Goldman Sachs. Your line is open.

Matt Russell -- Goldman Sachs -- Analyst

Thanks for taking my question. You're obviously ahead of schedule on the network improvement that's boosted the 2018 revenue outlook. Does that also raise the potential for revenue in '19 and '20. The real question is does your 4% revenue target increase beyond the 2018 bump that you're guiding to now?

James M. Foote -- President and Chief Executive Officer

I would say at this point in time no for the two principal reasons that I talked about. One is one of the most significant reasons that we have looked at higher volume and revenue in the first half of the year was export goal and one is the principal reasons we're talking about being more optimistic for the second half is because of export coal. I don't know, at this point in time, that anybody could tell you what the future is beyond December 31 of '18 what export coal is going to do. So, it's a little premature for us to start saying that that's going on.

At the second time, because we are in the early stages of this network reconfiguration in intermodal, I don't know what implications that might have on revenue growth in intermodal at this time. So, I'll just have to stick with here's where we are today, what we think the rest of this year looks like in terms of being mid-single digits. For now, we're in the same mode looking at '19 and '20, about where we were three months ago. It sounds like three years ago, but it was only three months ago.

Matt Russell -- Goldman Sachs -- Analyst

That makes a lot of sense. The second question -- still early days on trade and tariffs, but can you talk about high level where you see your business sensitive -- are you hearing or seeing anything from your customers in terms of talking about adjustments relative to the tariffs? Any color around that is helpful?

James M. Foote -- President and Chief Executive Officer

Again, there's so much noise swirling around about tariffs. In terms of the specific impacts on CSX today from any kind of tariff activity, clearly, first, steel, and from a steel standpoint, both finished steel out and/or business in, we have seen some positives as a result of the US steel manufacturers kicking up production.

The second area where there have been some real activities involve export soybeans. Our export grain business in total is around $30 million. About a third of that is soybeans. So, in the grand scheme of things in terms of soybeans going to China, it's really not a factor at all for us.

Then the third area, which again, has not had any real activity, but again, a lot of noise about it is both NAFTA and Europe in terms of tariffs on imported autos. We are not impacted in terms of imported autos from Mexico. We would clearly watch carefully if anything were to be put on imported vehicles from Canada, but nothing has happened there yet.

And in terms of European imports coming in through the East Coast ports, normally, they don't touch rail anyway. So, not much of an impact at all right now. And our customers continue, despite the fact, again, that there's much discussion that this could lead to an economic downturn, our customers seem to continue to be very optimistic about the future.

Matt Russell -- Goldman Sachs -- Analyst

Thank you. Very helpful.

Operator

Our next question comes from Allison Landry of Credit Suisse. Your line is open.

Allison Landry -- Credit Suisse -- Analyst

Good afternoon. Thanks. Maybe that was a good segue to my somewhat pessimistic question, but how are you thinking about CSX's ability to turn what have historically been fixed costs in terms of variable costs in a downturn and is the network at a point where if volumes dried up tomorrow you'd still be able to generate significant OR improvement?

James M. Foote -- President and Chief Executive Officer

Well, that is pessimistic and on such a happy occasion for us here, but I'll try to deal with that and it's not something that Frank and I don't talk about on a regular basis here, having myself been through it a couple times when all of a sudden, yeah, your volumes just go away. And again, because of all the speculation just in the media about tariffs and trade wars. So, we're always going recession scenarios here about what if this and what if that.

Clearly, as we get better and as we get a better handle on our operations, we will be able to more quickly respond and make appropriate adjustments to our variable costs in the event of volume decline. And you always have the wherewithal at your fingertips to reduce your fixed cost to a degree, meaning fixed labor. It's just how much you need to do in order to do that.

Depending upon what kind of an economic decline scenario you came up with, I guess my thoughts are if we, again, assuming a severe decline, if we were able to maintain our plan and the status quo, we would be able to -- we'd be doing a very good job. If it's a minor thing, then it's probably a minor thing and we continue to stick with the program and see what we can do to make our numbers.

Allison Landry -- Credit Suisse -- Analyst

Okay. That was helpful. As my follow-up -- if you think about the disparity between your service metrics and your competitor within the context of your earlier comments about pricing for a better service product, do you expect to pull the growth lever perhaps earlier than what we saw at CP and/or CN?

James M. Foote -- President and Chief Executive Officer

Again, we never push the growth lever in the other direction. We're always in the growth mode. To a lot of this, I wasn't present here, but many of the people that worked here like Frank were. It was tough to grow when your railroad wasn't running. Cars that should have been across your network in three to four days were taking three to four weeks. So, that's difficult to say I'm in a growth mode at that period of time.

Once the service has improved and where the service is today, we are always looking to get business, more business from current customers, business back from former customers, all of that. But it is, again, it is our philosophy that we want to be the premium service provider in the marketplace and get paid for it.

Allison Landry -- Credit Suisse -- Analyst

Okay. Great. Thank you so much.

Operator

Our next question comes from David Vernon of Sanford Bernstein. Your line is open.

David Vernon -- Sanford Bernstein -- Analyst

Hey, good afternoon, guys. Thanks for taking the question. Jim or Frank, you mentioned earlier in the call that coal had helped you out a little bit in the quarter. Is there any way you can help us to mention how much coal has contributed to the year over year profit development of the company in the first half of this year? What I'm just wondering is how much of the very aggressive improvement in operating income you'd chalk up to PSR versus how much of it you'd chalk up to help from the commodity market?

Frank Lonegro -- Executive Vice President and Chief Financial Officer

Obviously, it's help from a lot of different areas. Precision railroading is clearly one when you look at the levels of efficiency that you're seeing, the headcount reductions you're seeing, the asset reductions you're seeing. Those produce real dollars and significant dollars. If you look at the point that Jim made around export coal, just to dimensionalize it, we moved a little over 11 million tons in the second quarter of this year.

Last year, we moved a little over 8 million tons. So, you can get a feel for the uptick in export coal. At the same time, we saw some reduction in utility coal. So, you've got to net those two things out there, both good pieces of business for us. We want to move them both. But there's a whole lot more that's happening in our couple other than coal.

David Vernon -- Sanford Bernstein -- Analyst

I totally agree with that. But I guess I was just wondering if there was maybe an indication you could give us for directionally how much export coal rates have moved up on a year over year basis in relation to domestic coal rates.

Frank Lonegro -- Executive Vice President and Chief Financial Officer

We generally follow the indices. We don't follow them one for one. When you see the forward curves move up, generally speaking, our pricing is going to follow that, again, not one for one. The highs on the benchmarks are going to be higher than our price and the lows on the benchmark are going to be lower than our price, but we generally are going to follow those.

When you look at it on an RPU basis, you can get a feel for what the export RPU is and what the domestic RPU is. There are times when the export is higher. There are times when the domestic is higher, but it's really going to depend on what those external benchmarks are. But again, there's a lot more happening here. I don't want you to lose sight of that by focusing on coal.

David Vernon -- Sanford Bernstein -- Analyst

Absolutely not losing sight on it, I'm just trying to get you to tell us what happened to the export coal RPU, which we're not going to get to.

James M. Foote -- President and Chief Executive Officer

You're not going to get that from me and you're not going to get that from Frank.

David Vernon -- Sanford Bernstein -- Analyst

Well, we can always get it from the guys at Parker Host. Let me ask you a quick follow-up question, Frank -- when you think about the gains you had in the MS&O from idling some of the spare locomotives, is there a chunk of that that maybe snaps back as you start to run a little bit hotter and leaner or is it all just pure you should run rate these levels on the cost side going forward?

Frank Lonegro -- Executive Vice President and Chief Financial Officer

Remember, you've got real estate in that line item, so be careful about run rating real estate on a per unit basis. I tried to give you some intel on Q3. But when you look at what we're doing, the smaller locomotive fleet is clearly a driver. You've got contractor consultant eliminations which are rolling through that line. You've got, as I mentioned in my opening remarks, less hotel and taxi cost. You've got G&A, fewer people spend less money on the MS&O line. So, as long as you're seeing those things stay the same, excluding the real estate piece, I think you can run rate those.

David Vernon -- Sanford Bernstein -- Analyst

Alright. Thanks a lot for taking the question.

Operator

Our next question comes from Justin Long of Stephens. Your line is open.

Justin Long -- Stephens -- Analyst

Thanks. Congrats on the quarter. I wanted to start and ask about headcount. Do you have any updated thoughts on where headcount will end this year? I'm just curious if your expectations have changed. Based on how the network has performed during the first half of 2018 and what seems to be a better than expected start as it relates to volumes, is there any change to the expectation for headcount that you're targeting in 2020 as well?

James M. Foote -- President and Chief Executive Officer

No. In terms of this year, we're right on -- again, we're slightly ahead of the run rate to get to the 2,000 reduction, but that was planned for, as I said earlier, because of vacations and other purposes, that we would have an accelerated pace in the first half of the year. So, we're right on target to hit the number for this year and nothing has changed in terms of the number for the three-year plan.

Justin Long -- Stephens -- Analyst

Okay. That's helpful. Maybe to circle back on the increased revenue guidance for 2018 as well, is there a way to help us think about how you would allocate this increase between one, a better outlook for export coal, and two, a better outlook for everything else? I'm just curious if that split is 75%, 25%, or how you would quantify that.

James M. Foote -- President and Chief Executive Officer

Without getting into the specific volume details by the various commodity groups, I'm trying to come up with a more simplistic way to answer that. I think if you look at our coal business in the second quarter, I think that's a relatively good run rate. Again, we just got done telling you we had a great second quarter with strong export demand and weak utility demand. That's kind of the norm for us this year, but we expect that kind of run rate to continue in the second half of the year.

So, that will give you some guidance in terms of volume from coal and the rest of it is going to come primarily from merchandise, which is, again, across the board. All of these various commodities that I talk about -- metals, forest product, blah, blah, blah, were all relatively strong in the second quarter. That's just a reflection of good markets and customers recognizing that we've got a good service product. So, that's kind of, I would say, that that will give you a better run rate view of what we think the topline is going to do.

Then, as both Frank and I mentioned, you'd layer in continued reasonable pricing environment, continued recognition of supplemental revenues from the demerged policies that were in existence for many years, but now we're collecting on. And then thirdly, a little bit more fuel surcharge because the price on fuel is going to get up. I think the second quarter will give you a pretty good understanding on why we think the second half of the year is going to be a little bit better than what we originally expected.

The second quarter was a little bit better than we expected. I started talking about that early in the quarter, when I said we're going to be a titch better. Now, we came in with a 6% growth. So, if things stay the way they are right now, I think that leads us down the road of getting a pretty good way to get you a general view of how you get to mid-single-digit topline growth for the year.

Justin Long -- Stephens -- Analyst

Okay. Great. That's helpful. Appreciate the time.

Operator

And our next question comes from Walter Spracklin of RBC Capital. Your line is open.

Walter Sparcklin -- RBC Capital Markets -- Managing Director

Thanks very much. Good afternoon, everyone. I want to come back, Jim, to your answer to a previous question with regards to exactly that, the trends you've been noting in the back half of the year have picked up. I think what you said just now is it wasn't all due to coal. There were other factors due to better pricing and better volume in other areas.

I'm just curious as to why that wouldn't change your view into 2019. Why would it all stop as of December 31st? Wouldn't there be a carry over in the first half of next year even if conditions remain that will lap easier comps that would give you a bit of better lift into next year? I'm just curious why you wouldn't expect it to continue more than just six months.

James M. Foote -- President and Chief Executive Officer

For the two reasons I said -- one, I don't have a clue what coal is going to be like in '19 and '20 and I don't have a clue what the implications are to our intermodal franchise by some of the work we have to do there. So, the uncertainty surrounding those two big components of my business give me pause to say that, "Oh, this is the norm for '19 and '20." I need to get a little further down the road this year to have a clearer view of the year after.

Walter Sparcklin -- RBC Capital Markets -- Managing Director

Okay. Just on the pricing advisement, can you talk to us about the cadence in the negotiations you have now versus one month ago versus three months ago versus six months ago, particularly where trucking comes into play on your intermodal franchise or where you come head to head with your competitor? Are there any capacity constraints that are allowing for the movement of price to come in not easy but easier than it might have one, three, or six months ago?

James M. Foote -- President and Chief Executive Officer

Well, six months ago, we had our hat in our hand telling everybody how sorry we were for not running a very good railroad. So, the environment for us right now compared to where we were at the end of last year is dramatically different. In terms of the pricing environment and the capacity environment, it's a good time to be in the railroad business. It's a good time to be in the transportation business. It's no secret that the pricing environment is strong for everybody.

As I said earlier, we are in this to grow the topline through long-term sustainable, profitable growth. Our play in the stock market, I'm not worried about volume. I'm not worried about highway to rail awards, that kind of stuff. Long-term, sustainable, profitable growth where we provide value to our customers and our channel partners and everybody in the marketplace is our strategy and that is what's going to make CSX the best.

Walter Sparcklin -- RBC Capital Markets -- Managing Director

If I could sneak one last one here, in terms of when you sit down with Mark now in his new role, what do you guys talk about as your objective number one? Is it the intermodal franchise or is there something else that you want to zero in on as his number one objective as he starts the role?

James M. Foote -- President and Chief Executive Officer

One of Mark's strengths and one of the reasons I'm so excited about Mark taking over the job, aside from the fact that he's a really bright guy, he's got great relationship skills and we need to develop long-term, solid relationships with our customers. There's been a lot of turnover here in senior management at this company. We hear this all the time, "We don't know who to call. We don't know who you guys are. You've got a whole new team there. What am I supposed to do? Who do I call if something goes wrong?"

So, number one, fix intermodal, but number two, start to build back the long-term relationships that CSX should have. I'm totally confident that Mark is going to do an exceptional job in that area, not to say that the guy that runs our merchandise group, Michael Rutherford and his team are doing a phenomenal job in that area, but again, I know Mark and I've been around him for a long time. I think that's where he can do some great work for us.

Walter Sparcklin -- RBC Capital Markets -- Managing Director

Okay. Thank you very much.

Operator

Next, we'll go to Ravi Shanker, Morgan Stanley. Your line is open.

Ravi Shanker -- Morgan Stanley -- Analyst

Thanks. A couple of follow-ups here -- just on the intermodal and your comments on the tons of work you still need there and eventually getting that up to an above average marketing profile. Can you just help us understand how much of that is fairly basic blocking and tackling that can be achieved pretty easily versus maybe bigger long-term initiatives like yard automation or something?

James M. Foote -- President and Chief Executive Officer

This is blocking and tackling. This is just running a good railroad. I'd like to be in a position where we were running so well that we can start to look at ways to adopt new technologies to help us run things better. We're a long ways from that. This is basic core fixing a bunch of broken windows.

Ravi Shanker -- Morgan Stanley -- Analyst

I understand. Just a follow-up on IM -- when you think of autos in market, is that primarily in your autos volumes or do you also have smaller components or something running through intermodal?

James M. Foote -- President and Chief Executive Officer

We have auto parts in our intermodal, especially imported parts. And we have auto parts in box cars and merchandise service. But the primary volumes are in finished vehicles that are moving in tri-levels and bi-levels.

Ravi Shanker -- Morgan Stanley -- Analyst

Got it. Is there any way to quantify your overall autos exposure in terms of volumes, kind of combined across segments?

James M. Foote -- President and Chief Executive Officer

Not off the top of my head, but if you get back with Kevin, we can see if we can try to come up with some way for you to -- some percentage, for every finished vehicle, what's a percentage of a car kind of thing. We might be able to come up with something to give you guidance on that.

Ravi Shanker -- Morgan Stanley -- Analyst

Wonderful follow-up. Thank you.

Operator

Our next question comes from Benjamin Hartford at Robert W. Baird. Your line is open.

Benjamin Hartford -- Robert W. Baird & Co. -- Analyst

Thanks. Real quick, Jim -- in the context of intermodal and the work that needs to be done there, as you think about the back half of '18 and through '19, whatever the plan may end up being in terms of volume growth, what do you think the box counts needs within UMAX specifically are going to be to support growth? Will it go in line with volumes or is there enough opportunity as you work through that network and improved velocity that perhaps that fleet size does not need to grow to be able to satisfy volume growth targets?

James M. Foote -- President and Chief Executive Officer

Yeah. Under the current scenario, I don't see us making any investment in boxes for UMAX.

Benjamin Hartford -- Robert W. Baird & Co. -- Analyst

Okay. That's helpful. Thanks.

Operator

Our next question comes from Bascome Majors at Susquehanna International. Your line is open.

Bascome Majors -- Susquehanna International Group -- Analyst

Thanks for taking my question. Frank, years ago, in the prior regime, you guys used to make some directional comments around the profitability of different commodity groups. I know putting hard numbers to that was declined earlier on this call. I am curious with the overall profitability of the franchise moving up 12, 13 points in less than two years here, has the directional contribution of the various revenue groups that you do, has that changed dramatically? I'm just curious if we're in a new game versus the historic playbook of what's the best business for you and what's not.

Frank Lonegro -- Executive Vice President and Chief Financial Officer

Bascome, a rising tide lifts all boats, clearly, in a good pricing environment and a good efficiency environment, you're going to expand your margins. When we look at the profitability, I could show you intermodal moves that are at the top and coal moves that are more toward the bottom and merchandise runs in the same spectrum. So, we've got a good portfolio of business. Obviously, when you see a 58.6 operating ratio across, that portfolio must be pretty good and we're going to continue to optimize it and drive that profitable growth that Jim mentioned.

Bascome Majors -- Susquehanna International Group -- Analyst

Fair enough. Thank you for the time.

Operator

This question comes from Cherilyn Radbourne of TD Securities. Your line is open.

Cherilyn Radbourne -- TD Securities -- Analyst

Thanks very much and good afternoon. I just wonder if you could speak to some of the mixed dynamics in the quarter. RTM is up 7% versus 2% would suggest a pretty big shift. So, maybe you could just give us some color there.

Frank Lonegro -- Executive Vice President and Chief Financial Officer

I think what you're seeing is we did some of the network changes last year as we closed terminals, etc. We probably introduced some out of route miles and we're now pulling those down pretty significantly and we're working on that. I think we'll see that continue to come down and that disparity that you mentioned, I think we'll get a lot closer as we go forward.

Cherilyn Radbourne -- TD Securities -- Analyst

Okay. Maybe just a quick follow-up on the whole intermodal discussion -- as you continue to reposition that network, do you continue to be able to leverage the benefits of a hot trucking market from a volume and a pricing standpoint?

James M. Foote -- President and Chief Executive Officer

A good time to be in the railroad business and it's an even better time to be in the railroad intermodal business. So, yes. As I said earlier, we took 7% of our business off the network last year and we're flat today. So, people are looking for capacity. We want to be able to provide that service and capacity to our customers.

We just want to make sure that we have a rational footprint of an intermodal network when we are going into the marketplace and selling a product to our customers and that's just going to take us some time to straighten that out and we're going to be back there doing whatever we can to help out our channel partners, principally, who work with us who want to use intermodal to reduce their costs as well as the growth that's coming with some of our other partners as their volumes grow enormously with the growth of e-commerce.

So, this is a good time for us to be here. We just need to make sure we fix it and that's what we're embarking upon doing. Look at what we've done already with the company in terms of making improvements and this is just one more area where we're going to take all of our efforts and initiatives and tap into the brain power of guys like Wallace and Harris and make intermodal a huge franchise.

Kevin Boone -- Chief Investor Relations Officer

Amber, I think that wraps up the queue. I would like to thank everybody for joining the call and I'm available for calls afterwards. Thanks.

James M. Foote -- President and Chief Executive Officer

Thank you very much.

Operator

This concludes today's conference. Thank you for your participation in today's call. You may disconnect your lines.

Duration: 73 minutes

Call participants:

Kevin Boone -- Chief Investor Relations Officer

James M. Foote -- President and Chief Executive Officer

Frank Lonegro -- Executive Vice President and Chief Financial Officer

Amit Mehrotra -- Deutsche Bank -- Analyst

Ken Hoexter -- Bank of America Merrill Lynch -- Managing Director

Brandon Oglenski -- Barclays -- Analyst

Tom Wadewtiz -- UBS -- Analyst

Chris Wetherbee -- Citigroup -- Analyst

Scott Group -- Wolfe Research -- Managing Director

Brian Ossenbeck -- J.P. Morgan -- Analyst

Matt Russell -- Goldman Sachs -- Analyst

Allison Landry -- Credit Suisse -- Analyst

David Vernon -- Sanford Bernstein -- Analyst

Justin Long -- Stephens -- Analyst

Walter Sparcklin -- RBC Capital Markets -- Managing Director

Ravi Shanker -- Morgan Stanley -- Analyst

Benjamin Hartford -- Robert W. Baird & Co. -- Analyst

Bascome Majors -- Susquehanna International Group -- Analyst

Cherilyn Radbourne -- TD Securities -- Analyst

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