CSX CEO Says Better Service Will Bring Traffic Growth

CSX CEO James Foote continued his “our future is upbeat” tour this week, telling an investment conference that substantial improvements in service reliability will enable CSX to grow faster than the overall economy over the long term.

James Foote

Speaking to the Stephens Nashville Investment Conference, Foote said internal and independent surveys of CSX shippers have found they view the service provided by the carrier as having been much improved over the past two years.

“What they’re getting in terms of service quality today is off the charts,” he said.

Foote acknowledged CSX has lost business in previous years to trucks because of unreliable or inconsistent service.

But now Foote projects that CSX should see above average growth in volume and revenue.

In response to an audience question he said that CSX would see gains that exceed the nation’s gross domestic product, a measurement of economic growth.

“Long term, yes, absolutely I think so,” Foote said.

He said shipping merchandise freight by rail is less expensive than shipping by truck.

Since 2011 the U.S. GDP has been 37 percent while CSX’s traffic volume has been flat.

Between 2011 and 2018, CSX’s merchandise volume grew buy 1.7 percent, coal traffic declined 42 percent, and intermodal business rose 26 percent.

The latter is a particularly ripe area for growth, Foote said.

With CSX intermodal shipments meeting their trip plans 98 percent to 99 percent of the time, the carrier believes that 10 million highway shipments annually could be diverted to its intermodal network.

Last year CSX hauled 2.9 million containers and trailers.

Intermodal trip compliance plans are measured from terminal cutoff to terminal availability.

If CSX is to see growth in its merchandise network it will need to get trip compliance for merchandise shipping into the 90 percent range in order to compete with trucks.

Foote said CSX is getting close to that but still have a long way to go to reach it.

“We will get that business when our service levels get reliable enough,” Foote said.

Another factor is that the economy will need to improve, particularly the industrial economy.

The latter has been hindered by, among other things, global trade wars.

Foote acknowledged that intermodal traffic normally surges late in the year but that has not been the case this year.

He attributed that to changing shipping patterns. “We’re in the peak season and there’s not a peak,” he said.

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