JACKSONVILLE, Fla. — CSX Transportation on Wednesday reported lower quarterly revenue and earnings as coal volume sank and broad pandemic-related traffic declines began.
CSX withdrew its financial guidance for the year due to the economic uncertainty surrounding the COVID-19 pandemic. Executives emphasized the strength of CSX’s balance sheet and said they were considering scaling back this year’s capital spending plan.
“These are unprecedented times. I’ve been through a lot in my career, from Black Monday to the Great Recession and a lot of other unsettling events. But nothing like this,” CEO Jim Foote says. “But I can say with certainty: Strong companies adapt. They make changes and they get even stronger.”
For the quarter, CSX’s operating income declined 3%, to $1.17 billion, as revenue declined 5%, to $2.85 billion. Earnings per share fell 2%, to $1. The operating ratio improved 0.8 points to 58.7%, which CSX said was a Class I first quarter record.
Foote says the financial results were impressive considering a 25% decline in coal revenue and the onset of swift pandemic-related volume declines as the quarter drew to a close.
“I am incredibly proud of the men and women of CSX who are working on the front lines,” Foote told investors and analysts on the railroad’s earnings call. “They have once again shown what outstanding railroaders they are.”
Overall quarterly traffic volume slumped 1%, largely due to a 15% decline in coal shipments. Merchandise volume was up 2%, while intermodal traffic held steady. Only two of CSX’s merchandise traffic segments — automotive and fertilizers — showed a decline. Increased domestic intermodal shipments were offset by lower international intermodal volume, which CSX attributed to the COVID-19 pandemic that extended plant closures in China.
CSX reported mixed results for trip-plan compliance, which measures on-time performance, as it tightened schedules. Compared to the fourth quarter, carload trip-plan compliance fell 1.9 points to 80.7%, while intermodal rose 0.7 points to 96.2%.
“CSX service is currently the best it has ever been,” Foote says, citing trip-plan performance improvements in the first two weeks of April.
Like other railroads, CSX has adjusted its operations quickly as volume declined sharply due to the impact of the coronavirus pandemic. CSX’s traffic volume is down 20% this month through April 18.
CSX has stored 400 locomotives since the end of March, bringing its total active fleet below 2,000, says Jamie Boychuk, executive vice president of operations. Three years ago, before adopting scheduled railroading, the railroad had nearly 4,000 active locomotives, he says.
As volume has declined, CSX has eliminated 50 daily merchandise train starts, a reduction of more than 20%, Boychuk says. Overall, the railroad has cut daily road train starts by 23%.
“Will continue to adjust our network as demand dictates,” Boychuk says, but the railroad will be ready to handle increased volumes whenever the economy begins to recover.
CSX’s key operating measures, including average train speed, terminal dwell, and car-miles per day, all improved compared to a year ago and set first-quarter records for the company.
The railroad’s key safety metrics improved, compared to the fourth quarter as well as the first quarter of 2019, and were among the best in CSX history.
Foote said that CSX would reduce its capital spending to the low end of its range of between $1.6 billion to $1.7 billion but that it would not reduce or defer spending on projects related to safety. The railroad will install the same amount of new rail this year and more ballast than last year, he says.
Maybe chasing away all those customers or flat out ignoring new service requests wasn’t the best idea.
he said service is the best it’s ever been, that’s a big lie. find me a customer of the few they have left that will agree with that statement
Compared with passenger-oriented airlines, the freight RR’s are, to a relative degree, prosperous, in part to the PSR diet. Also, the approach to capital spending during the crisis will be revealed in due time for better or worse.
With EHH gone, CP can now run a railroad as it should be, instead of as a wall street lap dog.
Ian Narita, you don’t…but that’s immaterial.
CP cranks up capital spending in the face of lower traffic, CSX does the opposite. Not amazed, not at all.
How do you maintain a precision schedule with fewer train starts?