JACKSONVILLE, Fla. — CSX Transportation’s quarterly profits slumped due to a combination of higher costs and lower traffic volume, the railroad reported today.
“The ONE CSX team continued to build momentum this quarter as our merchandise and coal businesses continued to demonstrate significant volume gains,” CEO Joe Hinrichs said on the railroad’s Thursday earnings report. “Though intermodal activity remains challenged, our strong service performance distinguishes us in the marketplace and is attracting shippers to our network. We look forward to meeting the opportunities ahead in the second half of the year and over the long term as we position CSX for sustainable, profitable growth.”
CSX’s operating income declined 13%, to $1.48 billion, as revenue dropped 3%, to $3.7 billion for the quarter. Earnings per share declined 9%, to 49 cents.
The railroad’s operating ratio was 59.9% for the quarter, an increase of 4.5 points, as labor costs rose due to inflation and a higher employee headcount.
Overall volume was down 3% for the quarter due to a 10% drop in intermodal volume. International intermodal was challenged by lower imports and retailers working through a glut of inventory, while domestic volume struggled amid higher truck capacity and lower trucking rates.
Coal volume was up 4% due to export coal strength, while merchandise volume rose 3% due to rising automotive, metals, and minerals traffic.
Key operating metrics improved, as intermodal trip plan compliance was 96%, up from 90% a year ago, and carload trip compliance was 84%, up sharply from 59% a year ago when the railroad was short of train crews.
Although volumes remain soft and vary by commodity, CSX plans to keep its manpower levels up in order to maintain high service levels.
“We’re watching the volumes very carefully and making sure that we have the staffing levels to support sustained high levels of customer service. The reason that’s important … is we gained share in the first half of the year, and that picked up momentum in the second quarter,” Hinrichs says. “And we’re having very good conversations with our customers now that we’re sustaining these higher levels of service….Our focus is really on making sure we have the manpower to be able to sustain that.”
If CSX sees further volume reductions, it will respond accordingly, Hinrichs says. But right now volume is improving.
Other key performance metrics improved compared to a year ago, with average train speed up, terminal dwell down, and on-time train originations up 16 points to 78%. On-time train arrivals were up 21 points, to 71%.
The railroad’s safety measures also improved significantly, with the personal injury rate down 24% and the train accident rate down 16% compared to a year ago.
What will Wall St say about increased OR, caused by lower revenues and increased costs?
Too bad the class ones refuse to supplement the slow down in coal and intermodal with the good Ol loose car…… there’s thousands of potential cars to be had but they won’t touch em.
For freight train operators, a similar problem still prevails on both sides of the Atlantic. Naturally, rail carriers have to cut capacity a bit.
Dr. Güntürk Üstün
JB Hunt Transport Services remains North America’s largest domestic intermodal provider. They are twice the size of the number two provider.
Hunt released its second-quarter earnings on Tuesday (the 18th). Hunt said that June’s volumes were down 4% from June 2022, which showed a slowing in the year-over-year deficit compared with May’s 8% decline. For the second quarter as a whole, J.B. Hunt reported volumes were down 7% from second quarter 2022.
Darren Field, president of the company’s intermodal division said,” the outlook for peak season is murky right now.”