That would be an accomplishment: Since 2011, CSX’s overall traffic volume has been flat while the U.S. gross domestic product grew 37%, according to a review of CSX volume figures and Federal Reserve economic data.
From 2011 through 2018, CSX’s merchandise volume grew 1.7%, coal fell 42%, and intermodal surged 26%.
Foote says railroads have lost traffic to trucks over the years because their service wasn’t reliable or consistent enough.
Now internal and independent surveys of CSX’s customers show the railroad’s service is much improved over the past two years, Foote says.
“What they’re getting in terms of service quality today is off the charts,” he says.
And that, he says, will position CSX for the next phase of its transformation: The railroad will begin to see above average growth in both volume and revenue.
Foote was asked if that meant the railroad would grow faster than GDP, the common measure of economic growth.
“Long term, yes, absolutely I think so,” Foote says, pointing to opportunities in the railroad’s merchandise network, which is less expensive than shipping by truck.
Two things will have to occur for growth to take off at CSX, Foote says.
First, merchandise service reliability, measured by trip plan compliance, will have to improve to around 90% to better compete with trucks. CSX is close, Foote says, but still has a ways to go.
“We will get that business when our service levels get reliable enough,” Foote says, and customers regain trust that the railroad is dependable.
Second, the current economic headwinds will have to subside. Although consumer spending and confidence remain high with unemployment low, the industrial economy is sluggish amid ongoing trade uncertainty. Much of what moves in merchandise service supports the industrial economy, and rail traffic has notched broad declines month after month this year.
Foote notes that it’s mid-November and the traditional fall intermodal peak has not materialized due to changing shipping patterns. “We’re in the peak season and there’s not a peak,” he says.
Intermodal shipments on CSX are running at 98% to 99% compliance with trip plans for containers and trailers, measured from terminal cutoff to terminal availability, Foote says.
The railroad estimates that 10 million highway shipments annually are able to be diverted to its intermodal network, which carried 2.9 million containers and trailers last year.
Foote spoke at the Stephens Nashville Investment Conference on Wednesday.
