CSX’s Foote Optimistic About Traffic Growth

Like any chief executive officer, CSX’s James Foote put his best foot forward last week when addressing investors and the business press in discussing his company’s fourth quarter financial results.

James Foote

He spoke about returning to growth, record low operating ratios and booming intermodal traffic.

There were a few bits of good information in the fourth quarter numbers.

Operating income rose by 5 percent to $1.22 billion even as revenue dropped by 2 percent to $2.8 billion.

Earnings per share were flat at 99 cents. But traffic volume during the quarter rose 4 percent, helped by an 11 percent growth in intermodal traffic.

Merchandise traffic was flat and coal volume tumbled 9 percent.
As for the operating ratio, which measures expenses as a percentage of revenue, it improved by three points to 57 percent.

All comparisons are with the fourth quarter of 2019.

For 2020 as a whole, the news was more grim. Operating income fell 12 percent to $4.3 billion. Revenue dropped 11 percent to $10.5 billion and traffic was down 5 percent.

Intermodal was a bright spot with a 2 percent improvement while merchandise traffic declined by 6 percent and coal volume plunged by 24 percent.

The 2020 operating ratio was 58.8 percent, a slight rise of 0.4 points over 2019.

Foote expects both intermodal and merchandise traffic to outpace the country’s economic growth this year.

He said diverting traffic away from trucks will make that possible.

CSX executives expect merchandise traffic growth to exceed industrial production and they even think coal volume will show growth from 2020 levels.

Chief Financial Officer Kevin Boone said CSX is stepping up hiring locomotive crew members to be prepared for increased traffic volumes and to replace workers lost through attrition.

That might suggest more trains out on the road, yet crew starts in the fourth quarter were down 11 percent.

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.

CSX plans to rebuild 67 locomotives this year, a process that includes adding Trip Optimizer and distributed power capabilities.

Foote said technological advancements will make CSX “smarter, faster, and more reliable.”

This will include increased use of automated train and track inspection, new dispatching and fuel saving systems, increased intermodal terminal automation, new digital tools for employees and customers. 

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