TRAINS: David Lassen
JACKSONVILLE, Fla. – CSX Transportation expects intermodal and merchandise volume to grow faster than the economy this year as the railroad continues to win share from the highway.
“We expect to return to growth in 2021,” CEO Jim Foote told investors and analysts on the railroad’s quarterly earnings call Thursday.
Merchandise traffic growth should outpace industrial production, he says, while intermodal is expected to grow faster than merchandise. The coal market, meanwhile, is improving from the low levels of 2020.
Chief Financial Officer Kevin Boone says the railroad is accelerating train and engine crew hiring in the first quarter to prepare for a rise in volumes later this year and to keep pace with attrition.
CSX’s fourth-quarter operating income increased 5%, to $1.22 billion, even though revenue declined 2%, to $2.8 billion. Earnings per share, at 99 cents, was flat but included a 5-cent charge for early retirement of debt. Volume for the fourth quarter grew 4%. Intermodal was up 11%, merchandise was flat, and coal sank 9%.
CSX reported a record fourth-quarter operating ratio of 57%, a 3-point improvement compared to a year ago.
For the year, operating income fell 12%, to $4.3 billion, as revenue declined 11%, to $10.5 billion. The economic impact of the pandemic sent volume down 5% for the year, with intermodal up 2%, merchandise down 6%, and coal off by 24%.
The 2020 operating ratio was 58.8%, up 0.4 points compared to a year ago.
CSX continued to move its freight on fewer but longer trains: Crew stars were down 11% despite the overall volume increase of 4% in the fourth quarter.
The railroad set a capital budget of $1.7 billion to $1.8 billion for this year, slightly above last year’s $1.6 billion.
Among the investments: Technology that Foote says will make the railroad “smarter, faster, and more reliable.” CSX will increase the use of automated train and track inspection, roll out new dispatching and fuel saving systems, increase intermodal terminal automation, and introduce new digital tools for employees and customers.
CSX will rebuild 67 locomotives this year, including adding Trip Optimizer and distributed power capabilities to the modernized units.
For the year, CSX reported a record low number of personal injuries. Although the train accident rate increased slightly from 2019, the railroad said the number of train accidents was at a record low level.
